Insurance Companies' RBC Ratio Declines... "Proactive Financial Soundness Enhancement Supervision"

Insurance Companies' RBC Ratio Status (Source: Financial Supervisory Service)

[Asia Economy Reporter Oh Hyung-gil] The financial soundness of insurance companies deteriorated last year.

On the 26th, the Financial Supervisory Service announced that the Risk-Based Capital (RBC) ratio of insurance companies stood at 275.1% as of the end of December last year, down 8.8 percentage points from 283.9% at the end of September last year.

The RBC ratio, which measures the financial soundness of insurance companies, is the value obtained by dividing the 'available capital,' which is the amount of capital that can cover losses from various risks, by the 'required capital,' which is the amount of loss if various risks materialize.

The available capital of insurance companies recorded KRW 174.5 trillion, an increase of KRW 900 billion, influenced by a decrease in bond valuation gains due to rising interest rates but an increase in other comprehensive income due to rising stock prices.

The required capital reached KRW 63.4 trillion, increasing by KRW 2.2 trillion due to an increase in credit and market risk amounts following the growth of operating assets.

Among life insurance companies, Heungkuk Life Insurance had the lowest RBC ratio at 172.1%, followed by Hana Life Insurance at 185.1%, KB Life Insurance at 188.4%, and DB Life Insurance at 191.3%.

Among non-life insurance companies, MG Non-Life Insurance fell below the financial authorities' recommended level (150%) with 135.2%, followed by Heungkuk Fire & Marine Insurance at 161.8%, Lotte Non-Life Insurance at 162.3%, and KB Non-Life Insurance at 175.8%.

An official from the Financial Supervisory Service said, "The RBC ratio significantly exceeds the 100% standard, which is the basis for fulfilling insurance payment obligations," adding, "However, if there are concerns about RBC ratio vulnerability due to future interest rate fluctuations and the impact of COVID-19, we plan to strengthen crisis scenario analysis and capital expansion to proactively enhance financial soundness through supervision."

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