Korean insurers' capital adequacy saw improvements in Q3

Korean insurers’ capital adequacy saw improvements in Q3 | Insurance Business Asia

Insurance News

Korean insurers’ capital adequacy saw improvements in Q3

New insurance contracts increased in the period between July and September

Insurance News

By
Kenneth Araullo

The Financial Supervisory Service (FSS) of Korea has released data indicating a continued improvement in the capital adequacy ratios of Korean insurance companies in the third quarter of 2023.

According to a report from The Korea Times, the average capital adequacy ratio of these firms was reported to be 224.2% at the end of September, marking a 0.6-percentage-point increase from the previous quarter.

This increase, while positive, represents a deceleration compared to the 4.7-percentage-point rise observed in the second quarter. The FSS has attributed this growth to an increase in new insurance contracts during the July-September period of 2023 and a reduction in insurance contract liabilities. These factors collectively contributed to an increase in available capital over the quarter.

The capital adequacy ratio is a critical measure under the Korean Insurance Capital Standard (K-ICS), implemented in the previous year. This standard mandates insurers to maintain sufficient capital to ensure fiscal stability.

Breaking down the figures, life insurers showed a capital adequacy ratio of 224.5% at the end of September 2023, a slight increase of 0.2 percentage points from three months earlier. Nonlife insurance companies recorded a more substantial increase, with their ratio rising by 1.1 percentage points to 223.8% over the same period.

The FSS report also highlighted that the total available capital of local insurance firms stood at KRW261.7 trillion (approximately $197.9 billion) at the end of September. This figure represents an increase of KRW2.2 trillion from the previous quarter, further underscoring the overall financial health and stability of the Korean insurance sector.