**Reflecting External Factors Such as IFRS 17 Introduction, Market Interest Rate Decline, Insurance Liability Discount Rate Reduction**
**Not Related to Actual Insolvency or Cash Flow Deficiency**
KDB Life Insurance has entered an accounting capital erosion phase, but the company clarified that there is no issue with its capacity to pay insurance claims or cash flow deficiency.
**KDB Life Insurance, which has recently entered an accounting capital erosion phase, has expressed its intention to actively take measures to alleviate concerns of policyholders and the market.**
On the 19th, KDB Life Insurance issued a statement, saying, “After the implementation of the IFRS 17 system, the evaluation losses were reflected in the capital as insurance contracts are assessed at market value, and due to external factors such as the decline in market interest rates and the additional reduction in the discount rate for insurance liability evaluation by regulatory authorities, it has been reported as capital erosion.”
The company further explained, “This is unrelated to the actual capacity to pay insurance claims or cash flow deficiency. It is a different concept from the company’s actual payment capability or the security of the contracts signed by policyholders. It does not mean that the company is unable to pay the insurance money owed to customers.”
In reality, the risk-based capital ratio (K-ICS) of KDB Life Insurance was 158.2% as of the end of December last year (after transitional measures) and is expected to exceed the regulatory guideline of 150% as of the end of March this year (after transitional measures).
As a subsidiary of the state-owned Korea Development Bank (KDB), KDB Life Insurance is working closely with financial authorities and its major shareholder KDB to resolve the current situation swiftly.
A representative from KDB Life Insurance stated, “We are striving to overcome the challenging internal and external environments surrounding the insurance market, and to create a robust profit by diversifying our product portfolio and business portfolio for solid growth. We ask for your trust and support as we provide accurate information and practical responses.”
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