Last Year's Q3 Insurance Companies' New Solvency Ratio at 224.2%

Introduced 'KIX' Since Last Year
0.6%P Increase Compared to Previous Quarter
Insurers' Available Capital Grows More Than Required Capital

The Financial Supervisory Service announced on the 16th that the new Solvency Capital Requirement ratio (K-ICS·K-ICS), applied with transitional measures for insurance companies in the third quarter of last year, rose by 0.6 percentage points compared to the previous quarter to 224.2%.

K-ICS is a newly introduced financial soundness measurement indicator that replaced the existing Risk-Based Capital ratio (RBC) starting last year. It is calculated by dividing the available capital of an insurance company by the required capital. The recommended K-ICS ratio by financial authorities is 150%. Transitional measures are systems designed to facilitate the replacement of old laws with new laws during the amendment process. They allow exceptions so that the new regulations can still be applied under the old rules. Currently, transitional measures have been applied to 12 life insurance companies and 7 non-life and reinsurance companies.

After applying transitional measures in the third quarter of last year, the K-ICS for life insurers was 224.5%, up 0.2 percentage points from the previous quarter. During the same period, non-life insurers' K-ICS rose 1.1 percentage points to 223.8%.

The increase in insurers' K-ICS was due to available capital growing more than required capital. As of the end of September last year, after applying transitional measures, the available capital for K-ICS was 261.7 trillion won, an increase of 2.2 trillion won compared to the previous quarter. This was influenced by an increase of 1.8 trillion won in accumulated other comprehensive income due to the effect of reduced insurance liabilities from rising market interest rates, and an increase of 1.1 trillion won in adjustment reserves from new contract inflows. As of the end of September last year, the required capital for K-ICS after applying transitional measures was 116.7 trillion won, which increased by only 7 billion won compared to the previous quarter.

A Financial Supervisory Service official stated, "As of the end of September last year, the K-ICS of insurance companies after applying transitional measures is stable," adding, "However, since volatility is expanding in interest rate and exchange rate sectors and financial market uncertainties continue, supervision will be strengthened to ensure sufficient solvency."