Financial Authorities "Expand Recognition Scope of Insurers' Liquid Assets"…Including Bonds with Maturity Over 3 Months
[Asia Economy Reporter Song Hwajeong] Financial authorities have recently decided to expand the scope of recognized liquid assets in the liquidity ratio regulation for insurance companies by including bonds with maturities of over three months, in response to increased volatility and uncertainty in the funding market.
On the 28th, the Financial Services Commission and the Financial Supervisory Service met with the non-life insurance industry (Samsung, KB, DB, Hanwha, ACE), hosted by the Korea Insurance Research Institute, to share current issues in the insurance sector and review the status of the financial market.
At the meeting, financial authorities agreed to promote measures to respond to the recent increase in volatility and uncertainty in the funding market, including expanding the scope of recognized liquid assets in the liquidity ratio regulation for insurance companies. Until now, only assets with maturities of three months or less were recognized as liquid assets, but going forward, assets that can be immediately converted to cash, such as bonds with maturities over three months that are tradable in active markets, will also be included.
Additionally, financial authorities acknowledged the current difficulties in fund management but expressed expectations that the introduction of the new financial soundness framework (K-ICS) from next year will improve soundness indicators. They urged the insurance sector, as institutional investors, to actively contribute to market stabilization efforts.
The financial authorities plan to hold a market review meeting with the life insurance industry on the 3rd of next month.
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A Financial Services Commission official stated, "Going forward, financial authorities will closely monitor changes in the financial market and promptly implement necessary measures to ensure market stability."
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