Two out of the 55 active insurance companies in South Korea have fallen below the minimum capital thresholds imposed by the market’s financial regulator.
According to a report by Pulse News, MG Non-life Insurance and Fubon Hyundai Life Insurance are being watched by the Financial Supervisory Service (FSS) for failing to meet risk-based capital (RBC) ratios. Current insurance laws require an RBC ratio of 100%, but the FSS recommends a figure of 150%.
As of mid-year, MG Non-life Insurance’s RBC ratio was at 82.4%, prompting the FSS to order the insurer to improve its management status. It aims to obtain additional capital by the end of this month to boost its RBC ratio to above 100%, the report said.
Meanwhile, Fubon Hyundai Life Insurance, formerly known as Hyundai Life, was at 147.7%, just below the recommended ratio. The insurer said that it recently completed a paid-in capital increase of KRW300 billion (US$266.8 million), which will push its RBC ratio to 250% by the end of the year.
The FSS also mentioned several other insurers hovering slightly above the 150% line – Lotte Non-life Insurance at 155.6%, Heungkuk Fire & Marine Insurance at 156.6%, and Hana Life Insurance Co. at 166.9%.
“We will step up our monitoring for some insurers at risk of deterioration of capital availability to enhance financial soundness by increasing capital and strengthening risk management,” the FSS said.
The 24 life insurers and the 31 general insurers in South Korea had an average RBC ratio of 253.5% as of the end of the second quarter of 2018. Both segments posted modest increases in RBC ratio, with life insurance gaining 5.1 percentage points, while general insurance gained 1.1 percentage points.
