Korean Reinsurance : Re Signed a Coinsurance Agreement with Samsung Life

Korean Re Signed a Coinsurance Agreement with Samsung Life

Korean Re has entered into a coinsurance deal with Samsung Life with respect to the life insurer's liabilities worth KRW 700 billion in October 2023. The agreement came after the two parties intensively discussed and analyzed the merits and effects of the deal for four months. Following a similar deal last year, we signed another large deal with the leading life insurer in Korea, demonstrating what we can do as a reinsurer that provides various solutions beyond traditional reinsurance arrangements in response to the needs of the cedant. The agreement went into force on November 1, 2023, and necessary reporting was made to the Financial Supervisory Service (FSS) at the end of the month.

Coinsurance is a type of financial reinsurance used commonly in the United States and Europe, which involves the ceding of not only risk premiums but also savings and other premiums by the primary insurer to the reinsurer. As opposed to traditional reinsurance where insurance risks involving large man-made and natural catastrophe losses are reinsured, coinsurance 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.

Korean Re has been setting the stage for developing the domestic coinsurance market since 2017 in light of supporting primary insurers with the adoption of the International Financial Reporting Standard 17 (IFRS 17) and the Korean Insurance Capital Standards (K-ICS). Based on this groundwork, we have successfully entered into coinsurance contracts with Samsung Life and Shinhan Life, offering new reinsurance solutions based on non-traditional methods.

Our dedicated team of experts has strived to explore and expand coinsurance business opportunities in Korea in ways that provide domestic life insurers with more reinsurance solutions in addition to traditional reinsurance arrangements. The use of coinsurance in the Korean market can offer various potential advantages for the insurance industry, including effective capital optimization, enhanced financial flexibility, and greater policyholder protection.

As the market is expected to see a rise in demand for coinsurance, Korean Re is poised to proactively address the evolving reinsurance needs of ceding insurers. Building on our latest success in coinsurance deals, we will continue to offer differentiated services and coinsurance arrangements to meet varying demands of the insurance industry.