Following the announcement of the “Plan to Improve Capital Regulation” at the Insurance Reform Meeting, as previously reported (Link), on April 29, 2025, the financial supervisory authorities pre-announced amendments to the Enforcement Decree of the Insurance Business Act and the Insurance Business Supervisory Regulations. These amendments aim to rationalize the current K-ICS regulatory standards and ease the conditions for reversing emergency risk reserves. The key points of the proposed amendments are as follows:
 

• Currently, insurance companies with a K-ICS ratio of 150% or higher can redeem subordinated bonds before maturity without additional requirements. The threshold will now be reduced to apply to insurance companies with a K-ICS ratio of 130% or higher.
   

• The applicable K-ICS ratio benchmark for approval of the addition of new insurance product categories, capital reductions, subsidiary holdings, and issuance of debt guarantees to overseas subsidiaries, will be reduced to 130% (from the current 150%, or 200% for issuing debt guarantees to overseas subsidiaries).
   

• The minimum K-ICS ratio benchmarks for insurers to be eligible to apply a ratio of 80% for surrender value reserves will be reduced in accordance with the following schedule:
   

• By eliminating the current conditions for reversing emergency risk reserves (i.e., incurring of net losses or insurance operating losses), insurance companies will be able to reverse emergency risk reserves, without incurring net losses or insurance operating losses, provided that the loss ratio, assessed per type of insurance products, exceeds a set threshold.
   

Industry participants are invited to submit opinions regarding the proposed amendments by June 9, 2025. Thereafter, the proposed amendments will be formally submitted for review and deliberation by the Regulatory Reform Committee, the Ministry of Government Legislation, Vice-Ministerial Committee, and approval by the State Council. The review process and formal promulgation of the proposed amendments are expected to be completed by the third quarter of this year.

[Korean Version]