Korean insurers dominate overseas investment in real estate

Investments mounted to KRW $42.1b.

Korea's financial companies had KRW57.6t ($42.05b) invested in overseas real estate as of 2023, an increase of KRW1.2t ($876m) from the previous quarter. 

This amount represents 0.8% of the financial sector's total assets (KRW6,859.2t).

Insurance companies held the largest share at KRW31.3t ($22.86b) (54.4%), followed by banks at KRW11.6t ($8.47b) (20.2%), brokerages at KRW8.8t ($6.42b) (15.2%), mutual finance companies at KRW3.7t ($2.70b) (6.4%), specialised credit finance companies at KRW2.1t ($1.53b) (3.6%), and savings banks at KRW0.1t ($73m) (0.0%).

By region, North America received 60.3% of the investments, Europe 20.0%, Asia 7.3%, and other or multi-regions 12.4%. 

In 2024, KRW10.6t ($7.75b) (18.3%) of these investments will mature, with 78.0% (KRW44.8t or $32.74b) maturing by 2030. 

Of the KRW35.1t ($25.63b) invested in individual properties, 6.85% (KRW2.41t or $1.76b) were exposed to events of default (EOD).

Despite the significant overseas real estate investments, the overall impact on Korea's financial system is limited due to the sector's robust loss-absorbing capacity. 

The Financial Supervisory Service (FSS) will encourage financial companies to recognise losses promptly and strengthen their loss-absorbing capacity. Additionally, the FSS said it will push for tighter internal controls and improved risk management systems.

($1.00 = KRW1,377)