South Korean life insurers see sharper capital dip in Q1 2025

As of end-March 2025, the average K-ICS ratio stood at 197.9%.

The capital adequacy ratios of South Korean insurers declined in the first quarter of 2025 under the new K-ICS (Korea Insurance Capital Standard), according to data released by the Financial Supervisory Service (FSS).

As of end-March 2025, the average K-ICS ratio stood at 197.9% under transitional measures, down 8.7 percentage points from 206.7% three months earlier.

Life insurers saw a sharper drop, with their ratio falling 12.7 percentage points to 190.7%.

Non-life insurers recorded a smaller decline of 3.4 percentage points, settling at 207.6%.
Without transitional measures, the overall capital adequacy ratio fell to 184.2% from 191.3% in the previous quarter.

The life segment declined 10.5 percentage points to 172.2%, whilst the non-life sector slipped 2.3 percentage points to 200.9%.

Available capital rose by $0.9b (₩1.3t) over the quarter to $182.0b (₩249.3t), supported by insurers’ net profits and the issuance of new capital securities.

The decline in market interest rates and changes in discount rate assumptions also affected valuations.

However, required capital rose by $4.3b (₩5.9t) to $92.0b (₩126.0t) during the same period.

The increase was driven mainly by a $2.2b (₩3.0t) rise in disability and morbidity risk, reflecting higher sales of long-term protection products.

Interest rate risk also climbed $1.2b (₩1.7t) due to a widening mismatch between assets and liabilities.

The FSS said it will continue monitoring insurers’ asset-liability management (ALM) and advise weaker firms to improve their risk controls amidst the ongoing rate environment.

($1.00 = ₩1,366.46)