Hungkuk life, subordinated debt issues ... Insurers recapitalization jaengeoleum

[Korea gimmingyeong financial newspaper reporter] Hungkuk life is reportedly preparing to subordinated debt issued in the recent scale of 100 billion won. Hanwha Life also issued 5,000 billion in hybrid securities sets out a recapitalization.

Scheduled for introduction in 2021 IFRS17 (New International Financial Reporting Standards) as part of the season is the "Barn fill 'of Insurers of the year. The accounting of the insurance capital and reduced debt significantly increased when IFRS17 introduced. Market evaluation methods of debt, ie claims payable is due to change in market at current cost. Insurers have to join at the time interest rates as granular as a kind of contract service margin, risk-adjusted discount rate taking into account the time value of money, predict future cash flow expected cash flow of future cash flows, including four classifications of calculating the liabilities Future income we have to reflect the liability calculations and so can only increase the insurance burden.

Also accelerated pace of monetary authorities. FSS naenwatda Enforcement Regulations for the Supervision of Insurance Business amendments to strengthen the RBC (solvency ratio) of Regulation phased implementation insurers to keep pace with IFRS17. The gist of it is that stricter regulations that extend the debt ceiling limit as far as 20 to 30 years to reflect the real value of insurance liabilities.

As a result, the insurance industry expects to fall about 100% p RBC ratio of most insurers. The first half of last year based on the average RBC ratio is expected to be close to 269.1% Non-life insurers, life insurers based on 150% of FSS cases Recommendation 100% p decline to 297.1% as expected. Some insurance companies are short of the average RBC ratio is a situation that can even be targeted corrective action.

In particular, the financial authorities have dropped since the fourth quarter of last year from systematic to the subsidiaries and calculated connect to RBC RBC RBC managed to Hungkuk of life significantly. RBC Hungkuk of the fire is staying at a lower level, so only a year of the end of June for 150%.

The financial authorities are discussing a full-fledged soft landing prior to the recapitalization measures such as the introduction IFRS17. This has been implemented as part of the regulatory measures, such as RBC, calculated based on strengthened since the end of last year.

DGB Life issued subordinated debt of 40 billion won this year by private way. KDB Life is also promoting a plan to receive capital increase in the size of the subordinated debt of 50 billion won promotion from the end of last year, but in January issued a subordinated private placement of 6 billion won industry and the majority shareholder banks.



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