KDB Life, which has fallen into a complete capital impairment status, said on the 19th, 'We are actively taking measures to alleviate the anxiety of policyholders and the market.'
KDB Life stated that 'after the introduction of the new accounting system (IFRS17), insurance contracts are evaluated at market value, and due to external factors such as the decline in market interest rates and the additional lowering of the discount rate for insurance liabilities by regulatory authorities, evaluation losses have been reflected in the capital, resulting in capital impairment.'
However, KDB Life clarified that the accounting capital impairment is unrelated to the ability to pay insurance claims or liquidity shortages. A representative from KDB Life explained, '(Capital impairment) is an accounting aspect, and it does not mean that we are unable to pay the insurance payouts that we owe to customers at all.'
According to KDB Life, the total capital (equity capital) of KDB Life was 61.3 billion won as of the end of last year, which is 12.3% of its capital (498.3 billion won). This means that 87.7% of the capital has already been impaired. If the capital impairment ratio of listed corporations exceeds 50%, they are designated as management items, and if the issue is not resolved within two years, they will be delisted.
The equity capital of KDB Life, 61.3 billion won, includes 241 billion won in hybrid capital securities. Although hybrid capital securities are considered equity capital in accounting terms, they are regarded as liabilities that must be repaid in the future. Excluding the hybrid capital securities, the actual equity capital of KDB Life at the end of last year was -179.7 billion won, indicating a complete capital impairment.
The Korea Development Bank acquired Kumho Life (now KDB Life) in 2012 and attempted to sell it from 2014, but all attempts failed. The Korea Development Bank plans to incorporate KDB Life as a subsidiary, normalize it, and then sell it again. However, forecasts suggest that an additional 1 trillion won will be required for the normalization of KDB Life. The Korea Development Bank has already invested 1.5 trillion won into KDB Life through capital contributions and other means.