The Financial Supervisory Service (FSS) of Korea has released data indicating a continued improvement in the capital adequacy ratios of Korean insurance companies in the third quarter of 2023.
According to a report from The Korea Times, the average capital adequacy ratio of these firms was reported to be 224.2% at the end of September, marking a 0.6-percentage-point increase from the previous quarter.
This increase, while positive, represents a deceleration compared to the 4.7-percentage-point rise observed in the second quarter. The FSS has attributed this growth to an increase in new insurance contracts during the July-September period of 2023 and a reduction in insurance contract liabilities. These factors collectively contributed to an increase in available capital over the quarter.
The capital adequacy ratio is a critical measure under the Korean Insurance Capital Standard (K-ICS), implemented in the previous year. This standard mandates insurers to maintain sufficient capital to ensure fiscal stability.
Breaking down the figures, life insurers showed a capital adequacy ratio of 224.5% at the end of September 2023, a slight increase of 0.2 percentage points from three months earlier. Nonlife insurance companies recorded a more substantial increase, with their ratio rising by 1.1 percentage points to 223.8% over the same period.
The FSS report also highlighted that the total available capital of local insurance firms stood at KRW261.7 trillion (approximately $197.9 billion) at the end of September. This figure represents an increase of KRW2.2 trillion from the previous quarter, further underscoring the overall financial health and stability of the Korean insurance sector.
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