South Korean insurance companies saw their financial health worsen slightly in the first quarter as share price falls eroded capital, data showed Wednesday.
The risk-based capital (RBC) ratio of insurance firms stood at 267.2 percent at the end of March, down 2.4 percentage points from three months earlier, according to the data from the Financial Supervisory Service (FSS).
A key yardstick of financial stability, the RBC ratio -- the actual solvency capital divided by the minimum solvency capital required -- measures an insurer's ability to absorb losses and pay insurance money to policyholders.
Local insurers are required to maintain the ratio at 100 percent or above, while the watchdog advises insurance firms to have ratios of 150 percent or higher.
"The first-quarter reading was well above the regulatory threshold, but insurers will be encouraged to bolster their financial health through capital increases or other preemptive steps," the FSS said.
The first-quarter drop in insurers' RBC ratio was attributed to a fall in their shares prices that led to decreased actual solvency capital.
The RBC ratio for insurance companies fell 3.4 percentage points on-quarter to 281.2 percent, with the figure for non-life insurers rising 0.4 percentage point to 241.9 percent.
Insurance firms in South Korea are required to gradually increase their capital reserves to better cope with tougher global accounting standards for insurers, set to go into effect in 2022. (Yonhap)