Korean Re entered into a coinsurance deal with Samsung Life concerning the life insurer’s liabilities worth KRW 700 billion in October 2023.
The agreement follows post-intensive discussions between the two parties and the analysis of the merits and effects of the deal for four months.
The agreement went into force on November 1st, 2023, and necessary reporting was made to the Financial Supervisory Service (FSS) at the end of the month.
Korean Re has been at the forefront of developing the domestic coinsurance market since 2017 in light of supporting primary insurers by adopting the International Financial Reporting Standard 17 (IFRS 17) and the Korean Insurance Capital Standards (K-ICS).
It has since successfully entered into coinsurance contracts with Samsung Life and Shinhan Life, offering new reinsurance solutions based on non-traditional methods.
Following a similar deal last year, Korean Re signed another large deal with the leading life insurer in Korea, demonstrating the reinsurer’s ability to provide solutions beyond traditional reinsurance arrangements in response to the needs of the cedant.
According to the reinsurer, the use of coinsurance in the Korean market can offer various potential advantages for the insurance industry, including effective capital optimisation, enhanced financial flexibility, and greater policyholder protection.
The Korean market is expected to see a rise in demand for coinsurance, Korean Re is proactively addressing the evolving reinsurance needs of ceding insurers.
Coinsurance is a type of financial reinsurance used commonly in the United States and Europe, which involves ceding not only risk premiums but also savings and other premiums by the primary insurer to the reinsurer.
This type of reinsurance allows primary insurers to cede all risks including interest rate risk as well as insurance risk, helping to reduce their capital requirements and improve their financial solvency.
The reinsurer also published a reported net income of KRW 292.9 billion for the first 9M of 2023, with an insurance income of KRW 194.9 billion.
