Korean insurers face call options of $3.21 billlion this year

2023. 2. 6. 14:30
글자크기 설정 파란원을 좌우로 움직이시면 글자크기가 변경 됩니다.

이 글자크기로 변경됩니다.

(예시) 가장 빠른 뉴스가 있고 다양한 정보, 쌍방향 소통이 숨쉬는 다음뉴스를 만나보세요. 다음뉴스는 국내외 주요이슈와 실시간 속보, 문화생활 및 다양한 분야의 뉴스를 입체적으로 전달하고 있습니다.

Hanwha Life Insurance headquarters [Photo by Lee Chung-woo]
Korean insurance companies are facing an increasing burden on their finance as the amount of call options on their subordinated debt and hybrid bonds that mature this year exceeds 4 trillion won ($3.21 billion). Such securities carry high interest rates and are affected by more rigorous accounting and risk-based capital ratio requirements implemented in January.

According to sources on Sunday, hybrid bonds and subordinated debt issued by major insurers will mature one after another from this month. DB Life Insurance Co. and Fubon Hyundai Life Insurance Corp. have to repay 80 billion won of subordinated debt and 60 billion won of hybrid bonds this month. The coupon rates of these securities are 5.2 percent and 6.2 percent, respectively.

Meritz Fire & Marine Insurance Co. is set to repay 100 billion won of subordinated debt that matures in April at an interest rate of 4 percent.

For capital securities, such as subordinated debt and hybrid bonds, it is customary for local issuers to repay early usually with a five-year call option. This year, the volume of call options maturing in the second quarter is 2.11 trillion won. The biggest concern is whether Hanwha Life Corp. will be able to repay $1 billion hybrid bonds in April, which is the largest amount among call options this year.

Hanwha Life Insurance already announced that it will repay them as scheduled and set up a specific plan to raise funds. At the end of September last year, the company’s risk-based capital ratio was 159 percent, slightly higher than the 150 percent recommended by financial authorities. A risk-based capital ratio is a ratio of an issuer’s regulatory capital to its risk-weighted assets.

Copyright © 매일경제 & mk.co.kr. 무단 전재, 재배포 및 AI학습 이용 금지

이 기사에 대해 어떻게 생각하시나요?