[Korea gimmingyeong financial newspaper reporter] is a declining interest rate assets yieojija stable for several years and fell into a deep worry that insurers need to operate highly profitable. In preparation for the introduction IFRS17 also increase the duration of insurance companies assets (residual maturity) is a big burden petite insurers. Because, depending on changes in the cost of debt to the market evaluation method based company it has increased the duration of insurance premiums received from customers.
For example, if you hold 30 nyeonil maturity of the debt is now calculated to 30 years of maturity, but turns into a market assessment to evaluate the upper limit of 20 years duration. Asset liability duration is shorter than the duration of RBC (solvency ratio) is approximately adverse effects on financial stability. Asset and liability duration is an indicator of how much change in the value of the company's assets and liabilities to changes in market interest rates are 1% p. Eventually deulroseon insurer is bound to respond to the increased debt duration to expand our long-term investment.
If the liability duration expand stricter regulations are introduced from next year RBC ratio of domestic insurers is likely to decline significantly further.
Capital losses of a sudden 'cold' look and feel across the non-life insurance industry compared to the third quarter last year, thanks to auto insurance premium hikes rosy future jideon jeomchyeo is reportedly in excess of net income over the past year. Net income increased by retained earnings increased, but this was great losses than debt, capital of insurers plummeted.
◇ gotta boomerang back bonds reclassified tricks
The long-term interest rates declined yieojija insurers were reclassified as available-for-sale bonds last year. Available-for-sale bonds due to the increased valuation is based, depending on bond prices rise when interest rates fall. But late last year, Donald Trump has been elected as President of the United States carried out a rate hike in the interest rate the Federal Council (FED) bond yields also soared.
After that, many of bond insurers losses are also French or RBC ratio plummeted like a snowball. RBC has the financial strength ratio to prepare for losses insurers unexpected reserves and total adjusted capital and total required the insurer to the ratio between capital solution that holds equity in addition to liability reserves to fulfill its insurance obligations for contractors points. In general, securities are classified according to the holding object.
Divided into shares, bonds and short-term trading purposes or held temporarily for-sale securities, held-to-maturity securities with the purpose to hold to maturity, in principle, long-term goals and short-term investments available-for-sale securities, including possible sale price. If the bonds classified as held-to-maturity shall be the market value assessment in accordance with the bond yields to change if classified as available-for-sale not affected by fluctuations in interest rates.
Sale of available-for-sale bond insurers accounted for 46.4% level is 378 causes the third quarter of last year, based on the total 815 trillion won in assets under management.
According to the insurance industry, Dongbu Insurance RBC ratio of Dongbu Insurance last year, one of the major builders have crashed grade as 160%. For the current financial soundness of insurance companies Insurance Business Act stipulates ever keep more than 100% RBC ratio for insurance companies.
Dongbu's RBC ratio was increased 30% p QoQ to nearly 259 percent last year, the end of September. However, it only plunged nearly 100% p in just three months and recorded the 'lowest value ever. " The RBC ratio of 200% under the eastern fire falling reportedly this is the first time.
Dongbu Insurance as well as the RBC ratio also declined when held-to-maturity bonds account the reclassification of available-for-sale as a Hyundai, Meritz, Hanwha Insurance industry predicts. According to industry forecasts that came out to record slightly lower than about 154%, Dongbu Insurance and Hyundai resolution similar to 160%, KB fiddling. Meritz dwaeteumyeo is expected to have a high level of 186% among non-life insurers were also expected to decline compared to about 40 ~ 60% p 3 Hanwha Insurance branch.
Shareholders' equity fell to around the 4.3469 trillion won in the third quarter of 5.1895 trillion won last year's 842.6 billion won. Hyundai also vanished into thin air only 2.8426 trillion won three months to 3 1 trillion from the 6631 to 8482 billion won, respectively.
KB fiddling, but fell slightly in the fourth quarter of 4475 2 billion won 1 trillion from the 5160-2 1 trillion billion won last year's third quarter, considering the capital increase of 170.6 billion won that was the end of last year, the actual decline is a count of up to 239.1 billion won. Meritz Fire & Marine Insurance and Hanwha respectively suffered a loss of 444.2 billion won, 234.1 billion won.
Samsung Fire also open the 15 days 'earnings in 2016 Settlement presentations and EV' said decreased 14.2% p YoY to a record 350.4% 336.2% RBC ratio of the end of last year. In response, Samsung fire official said, "The RBC ratio worsened the impact of last year because of stricter regulations, such as credit risk factor adjusted upward." Non-life insurers are situations deulyeoya to buy bonds with long maturities to increase asset duration in preparation for the introduction IFRS17.
If interest rates continue to rise, but the state is arguing that tune out of financial authorities, which can grow as long as the bond valuation losses need to explode. Industry insiders said that "to debt ratio is also included a large capital reduction impact thereof is high," he said "but recorded a good performance in net profit sectors appearances emergency is jammed in the capital adequacy ratio management of a capital reduction insurers exceeded him." .
◇ capital with Samsung Fire egen 'opportunity'
The analysis also suggests that the capital requirements of insurance companies are thus enhanced 'No. 1 industry, Samsung F & M had rather serve as an opportunity.
Tongyang securities fall to be noted that over the 16-day report, "This year is a clear trend of strengthening capital requirements, including debt duration calculated based on change" and "Samsung Fire & Marine maximum two year solvency ratio (RBC) 1/3 "he said.
Tongyang securities are also enough, "and second-tier expected to market potential weakening of the non-life insurers to capital regulation issues, relative to the Samsung market leadership of the fire will be further strengthened," it said "Samsung Fire has proposed ratio target (83.4 percent) will be achieved, will be able to offset the losses due to the increase in dividend income this year, Samsung's local real estate disposal, "he said.
Shinhan Investment Corp. also said, "Samsung Fire & Marine Insurance recorded a surplus only within the industry and the dominance of the cuts are expected in car insurance premiums." In addition he said that "year-end solvency ratio (RBC) of the second-tier non-life insurers also maintaining a high level of 336.2% as opposed to a sharp drop to less than 180% strength."
Samsung Fire, which had cut the end of last year, seeking auto insurance premiums an average market share of 2.3% (2.7% in personal, commercial 1.6%, commercial 0.4%).
This industry is also "Samsung Fire & Marine Insurance has cut capacity, including a record 98.7% last auto insurance combined ratio," he said. Car insurance markets combined ratio △ Dongbu 99.5%, △ Hyundai 101.7%, △ KB Insurance 101.7%, △ Meritz 106.2%, △ Hanwha Insurance 107.1%, including utdolah the industry average of 100%, most insurers to adjust insurance premiums It is difficult. The insurer's combined ratio in the insurance business as a percentage of premiums spent expense when the lift 100 won, higher than 100% means the saw losses. The insurance industry is second-tier non-life insurers have predicted the net would not be easy to choose the premium cut in an environment where capital requirements are strengthened.
Samsung Fire & Marine Insurance is the ability to pursue a strategy to cut with many years of direct channels (online) to achieve significant economies of scale in operating the short-term level haetgie take the loss ratio increases. Insurance industry officials have divined that "pre-emptive cut auto insurance Samsung Fire will be an opportunity to accelerate the polarization within the industry." One brokerage official also predicted that "it is beneficial with Samsung Fire & Marine Insurance overwhelming capital adequacy in the industry." "At the end of this year, non-life insurance industry has precedence over the interests of capital will be more physical," he said.
17 days jinungseop Financial Supervisory Director "We should exercise fully prepared to manage interest rate risk" insurance companies meet with the Chief Executive Officer (CEO) he said.
Jinungseop Director said, "further US interest rate hikes, Trump Government launched, and rise to the hard Breck seat possibilities in the market interest rates rapidly in the UK," said "through the Asset Liability Management (ALM), etc. Every effort to interest rate risk management groups and, if necessary, vary your interest in improving financial health benefits, such as internal reserves, "he said.
Jinungseop director has also ordered the insurer to proactively prepare for the day IFRS17. Jean ledger "insurance industry will raise from the responsibility reserve adequacy assessment system, solvency ratio (RBC) system improvement IFRS17 soft landing plan so you can prepare well the first half," said "(insurers) product development as premium rate, coverage, etc. so dont be equipped with the reasonableness and fairness, "he said.
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