Moody's Downgrades South Korea Life Insurance Industry Outlook from 'Stable' to 'Negative'

[Asia Economy Reporter Ki Ha-young] On the 1st, international credit rating agency Moody's announced that it has downgraded the outlook for the Korean life insurance industry from 'stable' to 'negative.'

Moody's analyzed, "The spread of COVID-19 has increased risks to an already vulnerable economy, and interest rates are expected to remain low for the next 12 to 18 months," adding, "Investment returns for life insurance companies are expected to decline."

The average negative spread for life insurers expanded from 0.69% in 2018 to 0.85% in the first half of last year. The average operating yield stood at 3.4%, marking an all-time low.

Moody's added, "Although reliance on savings-type insurance is decreasing, which will improve underwriting profits, the economic downturn and low interest rates will hinder the growth of life insurers for the time being." It also forecasted that due to the impact of Korea's health and medical policies this year, insurers' investment returns will decline and high loss ratios will occur.

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