Kyobo Life’s Outlook Remains Stable Despite Challenges: Fitch Ratings
Fitch Ratings has affirmed a stable outlook for Kyobo Life Insurance, despite facing challenges in the South Korean life insurance sector. This assessment is driven by Kyobo Life’s improved profitability and the company’s efforts to bolster its capital adequacy.
The company’s contractual service margin (CSM) increased to $4.2 billion (₩6,067 billion) by the end of the third quarter of 2024, up from $4.1 billion (₩5,889 billion) at the end of 2023. This growth occurred despite the introduction of new regulatory guidelines that negatively impacted the CSM of other insurers. Furthermore, the return on equity (ROE) surged to 9% by the end of the third quarter, compared to 4% at the end of the previous year. This improvement reflects the insurer’s strategic focus on protection-type policies, which generate higher CSM, and an increased CSM amortization rate.

Fitch anticipates Kyobo Life’s capital adequacy will recover, supported by the consistent accumulation of CSM and recent debt issuance. The insurer raised $483 million (₩700 billion) through subordinated securities in August 2024 and an additional $414 million (₩600 billion) via hybrid securities in November 2024.
While a lower discount rate has resulted in increased liabilities and a reduced solvency ratio—down to 222% by the end of September 2024 from 265% at the end of 2023—Fitch expects this to recover by the end of the year. However, Kyobo Life’s exposure to risky assets remains a concern. Despite a decrease in risky assets, including stocks and below-investment-grade bonds, the risky-asset ratio rose to 128% by mid-2024 from 112% at the end of 2023 due to a lower capital base. The ratio of below-investment-grade bonds to capital remained below 1% by the end of June 2024, staying within manageable levels.