"Insurance Companies Must Manage Risks of Alternative Investments and PF Loans"

Financial Supervisory Service Holds Internal Control Workshop for Insurers
Over 80 Insurer Internal Control Officers Attend

The Financial Supervisory Service (FSS) gathered internal control officers from insurance companies to analyze financial accidents that have occurred and discuss improvement measures for vulnerable areas.

On the 14th, the FSS held the '2023 Second Half Internal Control Workshop' for about 80 audit officers from insurance companies at its headquarters in Yeouido, Yeongdeungpo-gu, Seoul, and the training center in Tongui-dong, Jongno-gu.

At the event, key issues such as ▲strengthening internal controls to prevent financial accidents ▲enhancing risk management capabilities for high-risk assets ▲and precautions related to liquidity of retirement pensions were discussed.

Regarding measures to strengthen internal controls, the enhancement of risk management capabilities for high-risk assets was addressed first. As the high-interest rate trend continues, there is concern over increased losses in high-risk assets such as insurance companies' alternative investments and real estate project financing (PF) loans. Therefore, the results of alternative investment risk analysis were shared, precautions were provided, and companies were encouraged to strengthen their own risk management.

In addition, to prepare for the real estate market downturn, companies were urged to proactively respond by expanding loss absorption capacity for PF loan assets and establishing management plans for each project site.

Considering the demand for fund outflows such as year-end retirement pension contract maturities, thorough liquidity preparedness was requested. If necessary, companies were advised to prepare contingency plans for various scenarios and to proactively prepare by diversifying bond sales and borrowing funds (repurchase agreements, overdrafts, etc.).

An FSS official stated, "We will continue to support insurance companies in enhancing the effectiveness of their internal control functions and strengthening their own risk management capabilities through various channels such as workshops and meetings, so that they can practically improve their internal control capabilities."