Heungkuk Life Insurance Did Not Exercise Call Option... Financial Authorities Say "No Concern of Default"

[Asia Economy Reporter Changhwan Lee] As Heungkuk Life Insurance decided not to exercise the call option (early redemption right) on its foreign currency hybrid capital securities, concerns are emerging that the issuance of foreign currency bonds by domestic companies in the global market will shrink.

However, financial authorities explained that since Heungkuk Life Insurance's business performance is sound, there will be no incidents such as default or inability to pay insurance claims.

According to the insurance industry on the 2nd, Heungkuk Life Insurance decided not to exercise the call option on the $500 million foreign currency hybrid capital securities scheduled for the 9th.

Heungkuk Life Insurance had intended to raise redemption funds by issuing hybrid capital securities, but as the financial market contracted and difficulties arose, it made this decision.

This is the first time in 13 years since Woori Bank's subordinated bonds in 2009 that a domestic financial institution has not exercised the call option on hybrid capital securities.

Hybrid capital securities come with call option conditions, so not exercising early redemption does not mean a default, but it is regarded as an implicit practice in the market.

This is why concerns are arising that other financial institutions may face difficulties in raising overseas funds due to Heungkuk Life Insurance's recent decision.

However, financial authorities stated that they were aware of Heungkuk Life Insurance's decision in advance and that default or insurance claim payment issues are not problematic.

The Financial Services Commission, Financial Supervisory Service, and other financial authorities explained that it was necessary to comprehensively consider the impact of not exercising the early redemption right, the funding situation for early redemption, and the conditions for refinancing overseas bonds.

Accordingly, Heungkuk Life Insurance judged that negotiating and adjusting the conditions according to the agreement between the parties at the time of bond issuance was a reasonable choice.

They emphasized that Heungkuk Life Insurance's profitability and business performance are sound, there are no problems with insurance claim payments to policyholders, and that Heungkuk Life Insurance itself is not facing any default issues.

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