Major insurers affiliated with financial holding groups posted broadly improved K-ICS solvency ratios in the first quarter, helped by rising interest rates that reduced insurance liabilities and by additional capital raising, the industry said.
According to the insurance industry on Tuesday, Tongyang Life’s first-quarter K-ICS ratio rose to 185.8% from 127.2% a year earlier. KB Insurance’s ratio increased to 188%, while Shinhan Life and KB Life improved to about 200% and 277%, respectively.
The K-ICS ratio measures whether an insurer can pay claims even after unexpected losses, serving as a gauge of financial strength.
The main driver was higher interest rates. Insurers typically carry large long-term liabilities, and when rates rise, the present value of those liabilities falls, easing the balance-sheet burden and lifting solvency ratios.
Company actions also contributed. KB Life increased sales of protection-type policies to build its contract service margin, or CSM, reflecting expected future profit from insurance contracts in present-value terms. Tongyang Life strengthened capital through steps including issuing subordinated debt.
Looking ahead, the industry expects a shift from focusing on headline K-ICS ratios to managing solvency based on “core capital.” Starting next year, a system will separately assess the share of capital that can directly absorb losses, such as paid-in capital and retained earnings.
An industry official said securing higher-quality capital will matter more than simply increasing capital.
* This article has been translated by AI.
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