Fubon Hyundai Life plans $551 mn capital expansion ahead of new accounting rule

Fubon Hyundai Life Insurance Co., local subsidiary of Taiwan’s Fubon Life Insurance, will increase its capital by 608 billion won ($551.3 million) to bolster its base ahead of a new global accounting rule in 2023.

Fubon Hyundai Life Insurance said on Monday that its board approved a capital expansion plan that includes issuing 458 billion won in new shares and up to 150 billion won in subordinated bonds. The capital increase will be complete by July and subordinated bond issuance before the end of the year depending on market conditions.

The capital expansion scheme comes as part of efforts to maintain its risk-based capital (RBC) or minimum amount of capital to support operations amid asset growth as well as to meet new capital guideline of the International Financial Reporting Standards (IFRS) 17 and Korean Insurance Capital Standard (K-ICS), the insurer said.

Total asset held by Fubon Hyundai Life Insurance – previously South Korea’s Hyundai Life Insurance – reached 17.5 trillion won as of end of October, last year, up 30 percent from the end of 2018. Its RBC, however, stood at 210.8 percent as of end of October, last year, higher than the financial authority’s recommended level of 150 percent but significantly lower than the life insurance industry average of 303.5 percent.

Fubon Hyundai Life Insurance said that it plans to improve profitability by maintaining steady growth via main sales of retirement pensions and improving product portfolio that blends permanent protection and savings features in bancassurance channel.

The capital expansion, meanwhile, will up overall investment by Taiwan’s Fubon Life Insurance – the largest shareholder of Fubon Hyundai Life Insurance – in the Korean market to over 1 trillion won. Fubon Life Insurance invested 220 billion won in its Korean subsidiary in December, 2015, and 240 billion won in September, 2018. In September, 2019, the Taiwanese insurer invested 358.5 billion won to own 4 percent of Woori Financial Group.

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