Foreign owned life insurers showed firmer financial strength than their local rivals in the first half of the year, thanks to stepped-up preparations for a new accounting rule.
Four foreign-controlled insurance companies made the list of the top five players with the best financial soundness in the January-June period, with smaller domestic firms languishing at the bottom of the standings, reported Yonhap News Agency. The first-half list represents a huge departure from last year's rankings. At the end of last year, three domestic life insurers were among the top five.
As at end-June, ING Life Insurance reported the best risk-based capital ratio of 522.6%, followed by Samsung Life Insurance with 331.8% and LINA Korea with 319.5%. AIA Life Korea came next with 260.9%, trailed by ABL Life Insurance with 250.8%.
Industry sources attribute foreign companies' solid financial soundness to their increased efforts to prepare for IFRS17, scheduled to be implemented in 2021. Under this new accounting rule, insurers' liabilities will be assessed on the basis of market value, instead of book value, at the time of a contract.
Analysts say domestic insurance companies have also been making efforts to bolster their capital base, but they have proved ineffective with small players reporting low RBC ratios.