The solvency ratio (K-ICS, K-ICS) that shows whether an insurer can pay policyholders on time improved from the previous quarter in the first quarter of this year, helped by a rise in stock prices and an increase in net income.
The Financial Supervisory Service said on the 19th that insurers' solvency ratio stood at 216.1% as of the end of March this year. It rose 3.8 percentage points from 212.3% at the end of Dec. last year.
This figure reflects the "transitional measure" that gradually incorporates the impact of the increase in liability following the introduction of K-ICS in 2023. Previously, insurance liabilities were measured at cost, but after K-ICS was introduced, the valuation shifted to mark-to-market, significantly increasing the size of liabilities. Financial authorities are allowing the increased liabilities to be recognized over several years to ease the shock from the system change.
By sector, the solvency ratio of life insurance companies was 207.7%, up 1.8 percentage points from the previous quarter, while that of non-life insurers was 229.7%, up 7.8 percentage points over the same period.
On a basis before applying the transitional measure, insurers' solvency ratio was 202.6% as of the end of March this year, up 5 percentage points from 197.6% at the end of Dec. last year. Over the same period, life insurance rose 4 percentage points to 190.7%, and non-life insurance increased 7.8 percentage points to 222.4%.
The Financial Supervisory Service said, "As uncertainty in financial markets persists, we will concentrate supervisory capacity to ensure insurers secure sufficient solvency," adding, "In particular, we plan to closely monitor insurers with weak capital structures."