DB Insurance Receives 'AA' Rating for New Type of Basic Capital Securities
Pioneering the Industry's First Issuance of New Type of Basic Capital Securities
DB Insurance Receives AA Rating for Non-Conditional Capital Securities
Limited Issuers Highlight Market Scarcity and Stability
Highest AAA Rating Awarded for I
DB Insurance announced on August 20 that it has received an AA (Stable) rating for its new type of core capital securities (unconditional) from both Korea Ratings and NICE Investors Service.
DB Insurance is currently proceeding with the industry’s first issuance of new type core capital securities as a proactive response to the financial authorities’ announcement regarding the introduction of the 'core capital solvency ratio (K-ICS)' regulation. Only a few top-tier large insurers are eligible to issue these core capital securities, which makes them highly scarce in the market.
The credit rating agencies explained the basis for their ratings, stating, “These new type capital securities have enhanced capital characteristics compared to previous ones, as they do not include a step-up clause, grant the issuer full discretion over interest payments, and are subordinated compared to supplementary capital securities under supervisory regulations.” They added, “However, since only insurers with high interest payment stability are generally able to issue such capital securities, there is no significant difference in capital characteristics compared to existing new type capital securities, so the same rating was assigned.” They further noted, “If an insurer with insufficient distributable profits and low interest payment stability issues new type core capital securities, or if a bank holding company issues conditional new type capital securities (CoCo bonds) with additional write-down or conversion conditions, a further downgrade in rating may be considered.”
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Meanwhile, on August 18, DB Insurance was awarded the highest AAA (Stable) rating in the Insurer Financial Strength Rating by NICE Investors Service. DB Insurance and Samsung Fire & Marine Insurance are the only two non-life insurers to have received the highest rating for insurer financial strength from both Korea Ratings and NICE Investors Service.
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