News Regulations17 Apr 2019

South Korea:Risk-based capital ratio of insurers dips at end-2018

17 Apr 2019

Insurers in South Korea saw their risk-based capital ratio fall in the fourth quarter of last year, as they were required to set aside more capital for operational risks, data from the Financial Supervisory Service (FSS) show.

The risk-based capital (RBC) ratio, or actual solvency capital divided by the minimum solvency capital required, of insurance firms stood at 261.2% at the end of December last year, down 0.7 percentage point from three months previously, reported Yonhap News Agency citing the FSS data.

The ratio for life insurers fell to 271.2% from 272.1%, with that for non-life insurers declining to 242.6% from 242.8%, the FSS said.

The RBC is required to be above the regulatory minimum standard of 100%, the FSS said.

"Insurance companies will be encouraged to improve financial stability in a preemptive manner by boosting and strengthening their crisis situation analysis," the FSS said in a statement.

Insurers in South Korea are required to gradually increase their capital reserves to better cope with changes in global accounting rules, in particular, the the International Financial Reporting Standard 17 about insurance contracts.


 

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