Kyobo Life Insurance’s Outlook Remains Stable Despite Asset Risk Concerns
Moody’s Ratings has maintained Kyobo Life Insurance’s stable outlook, citing the insurer’s solid capital position, profitability, and strong market standing. The ratings agency noted that while profitability is expected to remain stable over the next 12 to 18 months, elevated asset risk and uncertainties related to the holding company transition pose potential challenges.
The insurer’s return on capital improved to 4.5% in 2024 from 4.0% in 2023, driven by enhanced underwriting performance. Moody’s expects this positive trend to continue in the near term. However, Kyobo Life’s adjusted high-risk asset ratio increased to 176.6% at the end of 2024 from 131.0% a year earlier, primarily due to a decline in shareholders’ equity. Exposure to domestic project financing and overseas real estate investments remains a concern for the insurer.
The K-ICS solvency ratio decreased to 164.2% from 193.8%, reflecting stricter regulatory requirements and lower interest rates. Despite this decline, Moody’s considers Kyobo Life’s capitalisation solid and anticipates that the solvency ratio will remain within the 160% to 170% range. Financial leverage rose to 19.5% in 2024 from 10.3% in the previous year, following a capital securities issuance, and is projected to stay within the 20% to 25% range.
Moody’s assessment highlights the delicate balance between Kyobo Life’s strong market position and the challenges posed by asset risk and regulatory changes. The insurer’s ability to maintain stable profitability while managing its risk exposure will be crucial in sustaining its financial health in the coming months.
