South Korea’s Insurance Capital Declines to $1.81 Trillion in Q4 2024
South Korea’s insurance industry reported a decline in capital adequacy ratios under the Korean Insurance Capital Standard (K-ICS) framework in the fourth quarter of 2024, according to the Financial Supervisory Service (FSS).
Under transitional measures, the industry-wide K-ICS ratio dropped to 206.7% at the end of December, down 11.6 percentage points from 218.3% in the previous quarter. Life insurers saw their ratio fall 8.3 percentage points to 203.4%, whilst non-life insurers recorded a sharper decline of 16.0 percentage points to 211.0%.
Without transitional measures, the overall K-ICS ratio stood at 191.3%, a decrease of 11.4 percentage points from the previous quarter’s 202.7%. Life insurers’ ratio declined 8.5 percentage points to 182.7%, whilst the ratio for non-life insurers dropped 15.5 percentage points to 203.2%.
Available capital under the K-ICS framework stood at $1.81 trillion (₩248.1 trillion) as of end-December, a $78.84 billion (₩10.8 trillion) decrease from three months earlier. The decline was largely due to a $45.26 billion (₩6.2 trillion) reduction in accumulated other comprehensive income, driven by increased insurance contract liabilities following a fall in market interest rates.
Despite a combined $24.09 billion (₩3.3 trillion) in additional Tier 1 and Tier 2 bond issuances and $5.11 billion (₩0.7 trillion) in net income, these gains were not enough to offset the overall capital reduction.
The FSS emphasised the need for insurers to reinforce their medium- to long-term solvency by securing high-quality equity capital and improving risk management practices.
