Insurers in South Korea saw their risk-based capital ratio rise in the second quarter, thanks to a modest gain in profits and investment income, according to data from the Financial Supervisory Service (FSS).
The average risk-based capital ratio of life insurers rose to 263.3/5 at 30 June from 258.2% at 31 March and the ratio for non-life insurers increased to 234.8% at 30 June from 233.7% at 31 March, Yonhap News Agency reported, citing the FSS.
The ratios were well above the minimum regulatory standard of 100%, the FSS said.
"Insurance companies will be encouraged to improve financial stability in a pre-emptive manner by boosting capital and strengthening the crisis situation analysis," the FSS said in a statement.
Insurance firms in South Korea are required to gradually increase their capital reserves from the end of this year to better cope with changes in global accounting rules, namely, the implementation of the International Financial Reporting Standards 17, starting in January 2021.
When adopted, some insurers in South Korea will face capitalisation pressure because the new rules require insurers to report liabilities based on their market value, instead of the book value of insurance policies.