Insurers’ risk-based capital ratio down in Q3

(Yonhap)

Insurance companies in South Korea saw their risk-based capital ratio fall in the third quarter of last year amid rising market interest rates, data showed on Tuesday.

The risk-based capital ratio (RBC) of local insurance companies stood at 254.5% at the end of September, down 6.4 percentage points from three months earlier, according to data from the Financial Monitoring Service (FSS).

The fall came as a rise in market interest rates and falling stock markets led to losses on their assets, according to the FSS.

The ratio has been on a downward trend since it was recorded at 283.6% at the end of September 2020.

The RBC ratio is derived from the actual solvency capital divided by the minimum solvency capital requirement. It measures an insurer’s ability to absorb losses and pay out insurance money to policyholders.

Local insurers are required to keep the ratio at 100% or higher, while the watchdog advises insurance companies to have ratios of 150% or higher.

Insurance companies here are required to gradually increase their capital reserves to better cope with tougher global accounting standards for insurers, which are expected to come into effect in 2022. (Yonhap)

Sallie R. Loera