SEOUL, April 15 (Yonhap) -- Insurance firms in South Korea saw their risk-based capital ratio fall in the fourth-quarter of last year, as they were required to set aside more capital for operational risks, data showed Monday.
The risk-based capital (RBC) ratio, or actual solvency capital divided by the minimum solvency capital required, of insurance firms stood at 261.2 percent at the end of December last year, down 0.7 percentage point from three months ago, according to the data by the Financial Supervisory Service (FSS).
The ratio for life insurers fell to 271.2 percent from 272.1 percent, with that for non-life insurers declining to 242.6 percent from 242.8 percent, the FSS said.
The RBC is required to hover above the regulatory standard of 100 percent, the FSS said.
"Insurance companies will be encouraged to improve financial stability in a preemptive manner by boosting and strengthening the crisis situation analysis," the FSS said in a statement.
Insurance firms in South Korea are required to gradually increase their capital reserves to better cope with changes in global accounting rules.
South Korea is one of more than 100 nations that will adopt the new global bookkeeping standard, known as the International Financial Reporting Standards 17, starting in January 2021.
When adopted, some insurers in South Korea will face capitalization pressure because the new rules require insurers to report liabilities based on their market value, instead of the book value of insurance policies.
(News Focus) Korea won set to lose further ground amid trade tensions, Fed concerns
Korea won set to lose further ground amid trade tensions, Fed concerns
Economic uncertainty prompts rush to safe assets
BOK faces growing calls to cut rate amid grim outlook
BOK stands pat, but analysts divided on chance of rate cut