South Korea insurance capital dips to $1.81t in Q4

Under transitional measures, the industry-wide K-ICS ratio dropped to 206.7%.

South Korea's insurance industry reported a decline in capital adequacy ratios under the Korean Insurance Capital Standard (K-ICS) framework in the fourth quarter of 2024, according to the Financial Supervisory Service (FSS).

Under transitional measures, the industry-wide K-ICS ratio dropped to 206.7% at the end of December, down 11.6 percentage points from 218.3% in the previous quarter. 

Life insurers saw their ratio fall 8.3 percentage points to 203.4%, whilst non-life insurers recorded a sharper decline of 16.0 percentage points to 211.0%. 

Without transitional measures, the overall K-ICS ratio stood at 191.3%, a decrease of 11.4 percentage points from the previous quarter’s 202.7%. 

Life insurers’ ratio declined 8.5 percentage points to 182.7%, whilst the ratio for non-life insurers dropped 15.5 percentage points to 203.2%.

Available capital under the K-ICS framework stood at $1.81t (₩248.1t) as of end-December, a $78.84b (₩10.8t) decrease from three months earlier. 

The decline was largely due to a $45.26b (₩6.2t) reduction in accumulated other comprehensive income, driven by increased insurance contract liabilities following a fall in market interest rates. 

Despite a combined $24.09b (₩3.3t) in additional Tier 1 and Tier 2 bond issuances and $5.11b (₩0.7t) in net income, these gains were not enough to offset the overall capital reduction.

The FSS emphasised the need for insurers to reinforce their medium- to long-term solvency by securing high-quality equity capital and improving risk management practices.

($1.00 = ₩1,374.88)