Seoul-based LIG Group is planning to divest all shares of its nonlife insurance division, as part of its strategy to gather the required funds to compensate investors for losses from a financial fraud scandal in 2011.
Unveiling its divestment strategy, the South Korean insurance company said that it will sell its 20.96% stake, representing 12.5 million shares in LIG Insurance Co, as reported by The Korean Times.
Sources familiar with the matter were quoted by the news portal as saying that the company is looking for the potential acquirer, and the deal is expected to fetch in between KRW400bn-KRW500bn ($378m-473.6m) for LIG group.
A statement from the group was quoted by the news agency as saying, "The decision was inevitable in a bid to secure cash and promptly save investors."
The decision to divest stake follows a court directive, whereby the company was ordered to recompense investors for issuing fraudulent corporate papers (CP) worth approximately KRW215bn ($203m).
According to an estimate, nearly 700 investors sustained losses as the chairman and LIG Nex1 vice chairman Koo Bon-sang issued the fraudulent CPs that were due in 2011.
LIG Insurance, whose capital assets are estimated at KRW18trn ($17bn), has been the flagship unit of the group and is the country's fourth largest non-life insurance firm.
Image: LIG group to sell nonlife insurance business. Courtesy: Mike Johnson.