Lotte Insurance Increases RBC Ratio Through Sale and Leaseback of Headquarters Building

Effect of 8.6%p Increase in RBC Ratio Due to Headquarters Building Sale

[Asia Economy Reporter Ki Ha-young] Lotte Insurance announced on the 30th that its solvency capital ratio (RBC) and financial soundness will improve through a "sale and leaseback" of its headquarters building.

On the same day, Lotte Insurance signed a "sale and leaseback" contract with Capstone Asset Management for its headquarters building located in Namchang-dong. Through this, it secured liquidity of 224 billion KRW without additional capital increase, and the RBC ratio is expected to rise by 8.6 percentage points.

Additionally, through this building sale, it has secured financial soundness to prepare for institutional changes such as the introduction of the 2023 International Financial Reporting Standards (IFRS 17) and the new solvency regime (K-ICS).

The risk factor for real estate assets held by insurance companies will be raised from the current 6% for office use and 9% for investment use to up to 25% with the introduction of K-ICS in 2023.

A Lotte Insurance official said, "As a proactive response to changes in the insurance environment and accounting standards, we decided to sell the building and lease it long-term," adding, "This will have effects such as an increase in the RBC ratio and enhancement of financial soundness."

This content was produced with the assistance of AI translation services.