Hyundai Life has started restructuring its operations, the second life insurer to undertake the exercise since the start of this year, after KDB Life.
The two small and medium-sized life insurers started restructuring prior to the introduction of the International Financial Reporting Standard (IFRS 17) which will come into effect in 2021 and which would require additional reserves among insurers.
On 6 September, Hyundai Life received applications for voluntary retirement from its employees which number about 450, reported Business Korea citing industry sources.
The need for Hyundai Life to restructure is blamed on the fact that its RBC ratio slid and its deficit expanded despite a capital increase by Fubon Life Insurance of Taiwan last year. As of 30 June this year, Hyundai Life's RBC ratio sat at 164%, barely exceeding financial authorities' recommended level of 150%. In the first half of this year, Hyundai Life continued to suffer losses when it reported a loss of KRW9 billion (US$8.0 million).
Prior to this, KDB Life announced 200 voluntary retirements in June.
Industry expectations are that in addition to KDB Life and Hyundai Life, more insurers may start to restructure themselves.