ABL Life Signs First Domestic Co-Reinsurance Agreement with RGA Reinsurance

Reducing High-Interest Burden to Improve Financial Soundness

ABL Life announced on the 31st that it has signed a co-reinsurance contract with RGA Reinsurance, the first of its kind in the domestic insurance industry.

[Asia Economy Reporter Oh Hyung-gil] ABL Life announced on the 31st that it has signed the first-ever co-reinsurance contract in the domestic insurance industry with RGA Reinsurance.

ABL Life will cede part of the contracts of the annuity insurance product 'Allianz Power Insurance' to RGA Reinsurance Korea Branch as co-reinsurance.

Co-reinsurance is a system where the primary insurer cedes underwriting premiums such as risk premiums and savings premiums to the reinsurer, and both the primary insurer and reinsurer jointly bear responsibilities such as payment of insurance claims, surrender refunds, maturity benefits, and reserve accumulation.

The primary insurer can share liabilities with the reinsurer to reduce debt burden and improve financial soundness.

ABL Life explained that since 2014, it has been reviewing co-reinsurance to reduce interest rate risk on high-interest fixed products and manage capital. Although it signed a co-reinsurance contract with RGA in 2017, the contract was canceled due to the underdeveloped co-reinsurance system.

Last year, financial authorities revised the Insurance Business Supervision Regulations and Enforcement Rules to allow insurance companies to utilize co-reinsurance to strengthen capital soundness.

Song Min-yong, CFO of ABL Life, said, "We expect that risks caused by economic uncertainties such as interest rate declines will decrease, thereby mitigating future volatility in the company's finances." He added, "We plan to review various financial soundness improvement measures using reinsurance before 2023, when International Financial Reporting Standards (IFRS 17) and the new solvency regime (K-ICS) will be introduced."

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