, South Korea
/AbsolutVision from Pixabay

Kyobo Life’s stable outlook holds despite mounting liabilities: Fitch Ratings

Fitch also expects Kyobo Life's capital adequacy to recover.

Kyobo Life Insurance’s outlook remains stable despite challenges in the broader South Korean life insurance sector, driven by improved profitability and efforts to strengthen capital adequacy, Fitch Ratings said.

The company's contractual service margin (CSM) on a separate account basis rose to $4.2b (₩6,067b) by the end of the third quarter of 2024, compared to $4.1b (₩5,889b) at the end of 2023, despite new regulatory guidelines that negatively impacted the CSM of other insurers.

The return on equity (ROE) increased to 9% by the end of the third quarter, up from 4% at the end of the previous year.

This improvement reflects the insurer's strategic focus on protection-type policies, which generate higher CSM, and an increased CSM amortisation rate.

Fitch expects Kyobo Life's capital adequacy to recover, supported by stable CSM accumulation and recent debt issuance.

The insurer raised $483m (₩700b) through subordinated securities in August 2024 and $414m (₩600b) through hybrid securities in November 2024.

Although a lower discount rate has led to increased liabilities and a reduced solvency ratio—down to 222% by the end of September 2024 from 265% at the end of 2023—Fitch anticipates a recovery by the end of the year.

However, Kyobo Life's exposure to risky assets remains a concern. Despite a decrease in risky assets, including stocks and below-investment-grade bonds, the risky-asset ratio rose to 128% by mid-2024 from 112% at the end of 2023 due to a lower capital base.

The ratio of below-investment-grade bonds to capital remained below 1% by the end of June 2024, staying within manageable levels.
 

Follow the link s for more news on

Join Insurance Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Exclusives

Indians face higher premiums on spiralling healthcare costs
Hospital expenses keep rising due to inflation and demand for sophisticated treatments.
Insurance
BMS CEO’s key to success is communication
Asking for support shows self-awareness and commitment to growth.
Insurance
Philippine banks and insurers called to pursue human-centred AI adoption
AI adoption should be centered on financial inclusion, customer experience, and personalisation.