Insurance Company's RBC Ratio Falls 6.4%p to 254.5%

Financial Supervisory Service Publishes Insurance Companies' RBC Ratios as of September

[Asia Economy Reporter Jin-ho Kim] The solvency ratio (RBC), a key financial soundness indicator for insurance companies, has shown a slight decline.

According to the Financial Supervisory Service on the 11th, as of the end of September, the RBC ratio of insurance companies stood at 254.5%, down 6.4 percentage points from 260.9% at the end of June. The non-life insurance sector recorded 241.2%, an increase from 238.9% at the end of June, but the life insurance sector fell by 11.1 percentage points to 261.8% compared to 272.9% at the end of June.

The RBC ratio is calculated by dividing 'available capital,' which covers losses from various risks, by 'required capital,' the amount needed to cover losses if those risks materialize. The RBC ratio measures the financial soundness of insurance companies and is mandated by the Insurance Business Act to be maintained above 100%.

Available capital decreased by 2.4 trillion KRW. Despite an increase of 800 billion KRW from issuing subordinated bonds and hybrid capital securities, the valuation gains on available-for-sale securities dropped by 3.4 trillion KRW due to rising interest rates and falling stock prices.

Required capital increased by 600 billion KRW due to a 300 billion KRW rise in insurance risk from increased premiums and a 300 billion KRW increase in credit risk from asset growth.

A Financial Supervisory Service official stated, "We plan to strengthen monitoring of domestic and international interest rate fluctuations and the impact of COVID-19 spread. If there are concerns about RBC ratio vulnerabilities, we will supervise to enhance financial soundness through proactive capital expansion measures."

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