Mirae Asset Life Insurance Issues Industry-First ESG-Certified Subordinated Bonds "KRW 150 Billion Scale"

ESG Management Practice and Securing Capital Soundness

[Asia Economy Reporter Ki Ha-young] Mirae Asset Life Insurance announced on the 24th that it plans to issue subordinated bonds worth 150 billion KRW, the first in the industry to receive ESG (Environmental, Social, and Governance) certification.

At the board meeting held on the same day, Mirae Asset Life Insurance approved the agenda for issuing subordinated bonds and will proceed with the issuance within two months. However, specific conditions such as maturity, interest rate, and amount may change during the submission of the securities registration statement and the demand forecasting process.

ESG bonds can be classified into green bonds, social bonds, and sustainability bonds. Green bonds are bonds issued to raise funds for environmentally friendly projects such as renewable energy or social infrastructure. Social bonds are bonds issued to raise funds for projects that create social value, such as affordable housing supply and unemployment prevention. Sustainability bonds have a mixed nature of green bonds and social bonds.

To issue ESG bonds, it is necessary to have the raised funds evaluated by external evaluation agencies such as credit rating agencies to confirm compliance with ESG standards, and afterwards, the usage details of the funds must be reported to exchanges, etc.

With this subordinated bond issuance, Mirae Asset Life Insurance's capital soundness is expected to improve. The company expects that the RBC ratio will increase by about 9.3 percentage points for every 100 billion KRW of new subordinated bond issuance. Accordingly, it is expected to secure capital soundness in preparation for the new international accounting standards (IFRS17) and the new solvency regime (K-ICS) to be introduced in 2023, and to establish a solid management foundation as a preemptive response to increased interest rate volatility.

Through the resolution at the shareholders' meeting on the same day, the ESG Management Committee was also launched. The ESG Management Committee will take on the practical management and supervision role of ESG management by adding matters related to ESG promotion, such as establishing annual plans related to ESG, reporting implementation performance, and approving sustainability management reports, to the existing roles of the management committee.

Kim Eun-seop, Head of Management Services Division at Mirae Asset Life Insurance, said, "Starting with the announcement of the sustainable management ESG vision in 2020 and the launch of the ESG Management Committee, we are practicing management that reflects non-financial factors such as environment, society, and governance that affect corporate value and sustainability from a long-term perspective." He added, "We plan to further strengthen ESG management through this capital expansion."

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