AM Best Retains Stable Outlook On South Korea's Non-Life Insurance
KUALA LUMPUR, July 22 (Bernama) -- Global credit rating agency, AM Best has maintained its stable outlook on South Korea’s non-life insurance segment, supported by enhanced regulatory frameworks and solid investment performance.
The Best’s Market Segment Report stated that the stable outlook is supported by the country’s regulatory environment, with recent regulatory changes strengthening capital quality, solvency resilience and consistency in International Financial Reporting Standard (IFRS) 17 reporting.
The introduction of the core capital Korea Insurance Capital Standard (K-ICS) ratio, effective January 2027, is expected to encourage insurers to improve fundamental capital with higher loss-absorption features and reduce reliance on supplementary capital securities.
South Korea's non-life insurance industry experienced a decline in underwriting results in 2025, reflecting higher loss ratios in long-term and motor insurance lines. Profitability in the motor segment also weakened due to the cumulative effect of premium rate cuts in previous years and ongoing claims-cost inflation.
“Although underwriting performance in South Korea’s non-life insurance segment weakened in 2025, investment income improved materially, supported by higher interest income, and in some cases, gains from asset disposals and valuation gains.
“AM Best expects investment performance to remain a stable source of profits over the next 12 months, partly mitigating the pressured underwriting profits,” said AM Best director, analytics, Chanyoung Lee.
In a statement, AM Best said a recent premium increase should provide support, although the benefit will be recognised gradually through the earned premium base rather than immediately.
The long-term insurance segment continues to face claims pressure following the end of the medical strike in 2024, while persistent competition has also weighed on profitability.
Meanwhile, AM Best senior financial analyst, Seokjae Lee said intense competition has prompted some market leaders with stronger balance sheet capacity and solvency positions to seek growth opportunities outside the domestic market.
-- BERNAMA