Value context and insight. lkm@koreatimes.co.kr
Prudential Life leads industry with financial soundness
By Lee Kyung-min
By Lee Kyung-min
Prudential Life Insurance Company of Korea maintained the best financial soundness in the industry in 2019, the firm said Wednesday.
According to data from the Financial Supervisory Service (FSS), when measured by risk-based capital (RBC) ratio, a barometer for financial soundness, the local insurance arm of the U.S. insurance giant Prudential Financial topped the list of 24 life insurers in Korea.
It was the only firm with a ratio of over 400 percent, maintaining the top position for the third consecutive year. Its ratio was 461.83 percent in 2018 and 416.58 percent in 2017.
Its competitor Orange Life, a subsidiary of Shinhan Financial Group, had a ratio of 393.91 percent and BNP Paribas Cardif Life Insurance had 365.66 percent.
Calculated by dividing the total adjusted capital of the company by required risk-based capital, the ratio measures the ability of a firm to pay subscribers insurance money after claims are filed.
By law, insurers are required to maintain a ratio of over 100 percent. The financial authority recommends it be at least 150 percent. A ratio of around 200 percent is considered an industry standard.
Prudential's figures stand out given its peers saw their average hovering around 300 percent in 2019.
The industry average was 284.6 percent as of December 2019, 301.2 percent in the third quarter, 296 percent in the second and 285.4 percent in the first.
Prudential Life Korea's portfolio for assets under management has 87.6 percent in holdings of safe assets including cash and government bonds as of March 2019, much higher than the industry average of 50.5 percent.
Prudential reported a net profit of 140.8 billion won ($115.4 million) in 2019 here, the sixth-largest among life insurers operating in Korea.