Financial Services Commission to Temporarily Ease Liquidity Evaluation Standards for Insurance Companies

Temporary Relaxation of Liquidity Indicator Evaluation Grade Raised by One Level in Insurance Company Management Performance Evaluation
Until the End of December Evaluation

[Asia Economy Reporter Song Hwajeong] Financial authorities will temporarily relax liquidity evaluation standards by raising the liquidity evaluation rating by one grade to enable insurance companies to actively respond to capital calls for the Bond Market Stabilization Fund.

On the 3rd, the Financial Services Commission and the Financial Supervisory Service met with the life insurance industry (Life Insurance Association, Kyobo, Nonghyup, LINA, Samsung, Shinhan Life, Hanwha Life) at the Korea Insurance Research Institute to share industry issues and review the current financial market situation. Earlier, on the 28th of last month, the financial authorities held a meeting with the non-life insurance industry.

At the meeting, amid increasing market uncertainty, discussions were held regarding the surge in demand for liquid assets due to the rise in deposit interest rates and the increase in cancellations of savings-type insurance policies, which has forced insurance companies to sell bonds and other assets. The insurance industry expressed the opinion that measures are needed to help insurance companies secure liquid assets or ease the burden of holding liquid assets.

Accordingly, the financial authorities decided to temporarily relax liquidity evaluation standards until the end of the December evaluation to enable insurance companies to actively respond to capital calls for the Bond Market Stabilization Fund. Accordingly, the liquidity indicator rating will be raised by one grade during the insurance company management performance evaluation (RAAS).

This follows the liquidity regulation easing measures for insurance companies announced on the 28th of last month, which expanded the scope of recognized liquid assets. At the meeting with the non-life insurance industry, it was decided to include immediately cashable assets such as bonds with maturities over three months that can be traded in active markets, instead of only recognizing assets with maturities of three months or less as liquid assets.

The Financial Services Commission plans to implement these liquidity regulation easing measures through amendments to the Enforcement Rules of the Insurance Business Supervision Regulations within this month.

The financial authorities stated, "While we understand the increasing demand for liquid assets by insurance companies, we ask them to refrain from bond sales as much as possible to stabilize the money market and to actively contribute to market stabilization as institutional investors." They also announced plans to review and promote institutional support measures to help insurance companies respond to the recent volatility and uncertainty in the money market.

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