K-ICS Ratio of Insurers Slightly Down to 215.2% at End of June... Non-Life Insurers See Increase

Down 0.8 Percentage Points from Previous Quarter
Life Insurers at 206.8%, Non-life Insurers at 230.9%

In the second quarter, the ability of insurance companies to pay out insurance claims showed a slight decline compared to the previous quarter. Financial supervisory authorities announced plans to closely monitor insurance companies, particularly those with weak capital structures, in order to improve the quality of their capital and strengthen risk management.

According to the "Status of Insurers’ New Capital Adequacy Framework (K-ICS) Ratios as of the end of June 2026," released by the Financial Supervisory Service on the 16th, the K-ICS ratio for insurance companies, after applying transitional measures, stood at 215.2%. This represents a decrease of 0.8 percentage points from the previous quarter’s 216.0%.

The K-ICS ratio for life insurance companies dropped by 0.7 percentage points from the previous quarter to 206.8%, while the ratio for non-life insurance companies rose by 1.2 percentage points to 230.9%.

The K-ICS ratio is a soundness indicator showing an insurance company’s ability to meet its insurance claim obligations, calculated by dividing available capital by required capital. Available capital refers to the amount of capital the insurer holds, including paid-in capital and retained earnings. Required capital is the amount insurers need to hold to pay insurance claims to policyholders.

The Financial Supervisory Service recommends that insurers maintain a K-ICS ratio of at least 130%. If the K-ICS ratio falls below 100%, prompt corrective actions such as management improvement advisories, requirements, or orders may be issued.

The main reason for the decline in insurers’ K-ICS ratios was that the increase in available capital was smaller than the increase in required capital. As of the end of June, available capital under the K-ICS rose by 22.2% (69.1 trillion won) from the previous quarter to 380 trillion won, while required capital also increased by 22.6% (32.6 trillion won) to 176.6 trillion won.

The rise in available capital was attributed to net income of 4.5 trillion won during the period and a 61.2 trillion won increase in accumulated other comprehensive income due to stock price gains. However, as a result of higher stock prices, the risk capital for equity holdings rose by 35.2 trillion won, which significantly raised required capital as well.

Looking at the change in K-ICS ratios by sector, among life insurers, Chubb Life posted the highest increase compared to the previous quarter, rising by 22.4 percentage points to 256.1%. In contrast, KB Life experienced the largest drop, falling by 28.8 percentage points to 223.4% during the same period.

Among non-life insurers (excluding reinsurers), NH NongHyup Property & Casualty Insurance posted the largest increase from the previous quarter, up by 65.1 percentage points to 254.7% at the end of the second quarter. The non-life insurer that saw the largest decline was MyBrown, which fell by 282.7 percentage points to 231.1%.

A Financial Supervisory Service official stated, "We will focus our supervisory capacity so that insurance companies can secure sufficient solvency to respond to rapidly changing external environments, including the recent rise in market interest rates." The official added, "In particular, we plan to closely monitor insurance companies with weak capital structures to improve the quality of their capital and strengthen risk management."

This content was produced with the assistance of AI translation services.