Hyundai Life Insurance slashes workforce by one-third

Mounting debt levels said to be behind employee layoffs

Hyundai Life Insurance slashes workforce by one-third

Insurance News

By Gabriel Olano

Hyundai Life Insurance, the insurance arm of the South Korean automotive giant, has let go almost a third of its employees in a massive layoff due to rising debt levels, according to reports.

Of its 450 employees, 120 underwent a voluntary retirement program, which sources say was prompted by cumulative losses reaching KRW200 billion (US$195 million) by the end of June.

However, the company’s financial health remains above water, as its risk-based capital ratio stood at 164%, exceeding the recommended level of 150%, according to a report by the Korea Herald.

Hyundai Life Insurance has been engaged in negotiations with its parent Hyundai Motor Group over a rights issue, according to sources familiar with the matter. The move seeks to improve the insurer’s capital base ahead of the introduction of the new IFRS17 rule in 2021, governing the accounting of insurance products.

Under IFRS17, the liabilities of insurers will be calculated based on market value, instead of book value, when a contract comes into effect. While the rule enables insurers to be more resilient against market stresses, the firms must expand their capital base, placing a burden on their finances.

Another insurer, KDB Life Insurance, cut 230 employees in its own voluntary retirement program between July and August. KDB had the lowest risk-based capital ratio among Korean life insurers at 128.4%.

Related stories:
South Korea’s big three general insurers post 50% profit jump
AXA to lay off around 250 jobs in Hong Kong – report
Lloyd’s of London confirms plan to slash jobs

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