By Kim Eun-jin | Business Korea | March 13, 2025<\/p>\n
Introduction of New \u2018Core Capital K-ICS\u2019<\/strong><\/p>\n Financial regulators are tightening solvency requirements for insurance companies by lowering the Korea Insurance Capital Standard (K-ICS) ratio while introducing a new Core Capital K-ICS ratio. Since core capital refers to paid-in capital and retained earnings, the new regulation is expected to make it more difficult for insurers to meet solvency requirements by issuing subordinated bonds.<\/p>\n On March 12, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) announced a capital regulation enhancement plan for the insurance sector. Under this plan, the K-ICS ratio, which indicates an insurer\u2019s financial solvency, will be lowered by up to 20 percentage points. The K-ICS ratio indicates an insurer\u2019s ability to pay insurance claims, calculated as available capital relative to required capital. While the statutory minimum is set at 100 percent, regulators have recommended maintaining at least 150 percent. Falling below this level has, in practice, posed obstacles for insurers, such as obtaining approval for subsidiary ownership or early redemption of subordinated bonds.<\/p>\n Despite overall improvements in insurers\u2019 financial soundness due to declining interest rates, their K-ICS ratios have started to fall. According to the Korea Insurance Research Institute, a 1 percentage point drop in interest rates results in a 25 to 30 percentage point decrease in the K-ICS ratio due to the long-term nature of insurance policies. To counteract this, insurers have been issuing hybrid securities and subordinated bonds since last year to bolster capital and maintain their K-ICS ratios. Data from the Korea Securities Depository shows that insurers issued 8.66 trillion won ($5.97 billion) in hybrid securities and subordinated bonds in 2024, a 1.7-fold increase from 3.15 trillion won in the previous year.<\/p>\n","protected":false},"excerpt":{"rendered":" By Kim Eun-jin | Business Korea | March 13, 2025 Introduction of New \u2018Core Capital K-ICS\u2019 Financial regulators are tightening solvency requirements for insurance companies by lowering the Korea Insurance Capital Standard (K-ICS) ratio while introducing a new Core Capital K-ICS ratio. Since core capital refers to paid-in capital and retained earnings, the new regulation… Read More »Stronger Capital Regulations to Make Subordinated Bond Issuance More Challenging for Insurers<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"off","neve_meta_content_width":70,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[9,3],"tags":[],"class_list":["post-2013","post","type-post","status-publish","format-standard","hentry","category-korea","category-news"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/posts\/2013","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/comments?post=2013"}],"version-history":[{"count":1,"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/posts\/2013\/revisions"}],"predecessor-version":[{"id":2014,"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/posts\/2013\/revisions\/2014"}],"wp:attachment":[{"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/media?parent=2013"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/categories?post=2013"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/insurance.vincent-chen.com\/en\/wp-json\/wp\/v2\/tags?post=2013"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}