Kyobo Life Insurance (KYOBOL)

Kyobo Life’s current credit strength can be assessed as a highly rated insurance credit positioned in the upper tier of Korean life insurers. The major franchise, approximately 14% share of premium income, Moody’s A1, Fitch A+, domestic AAA, FY2025 earnings growth, and K-ICS of 205.2% (3Q 2025, post-transitional) strongly support issuer credit. The credit direction is basically stable at present. To view it as improving, it would be necessary to confirm recovery in insurance service results, an increase in the CSM balance and new business CSM with quality, the quality of K-ICS including both pre- and post-transitional measures, and contained capital burden if the acquisition of SBI Savings Bank is completed. However, given the YoY decline in insurance service results, the market sensitivity of K-ICS, overseas securities, capital securities, and SBI-related credit risk, the pace of improvement should not be overestimated. The probability of a sharp short-term change in level or direction is not high under normal conditions, but the view would need to be revisited if interest rates, discount rates, investment valuations, claims ratios, and SBI credit costs deteriorate simultaneously.

The supports for issuer credit are the company’s scale as an insurer, long-term contract base, distribution capability, earnings, and capital. Kyobo Life does not have fragile capital market access or policyholder confidence like a weak small or medium-sized insurer. Its long-term maintenance of high ratings, the fact that domestic and international rating agencies assess its market position and capital positively, and its FY2025 consolidated net income attributable to owners of the parent of KRW 752.3bn all indicate issuer resilience. Expansion in protection-type insurance can also contribute to improving the quality of future earnings.

The largest constraint is the volatility of capital and earnings as a life insurer. K-ICS is strong, but it is a post-transitional figure and is sensitive to interest-rate and discount-rate changes. CSM is large, but its FY2025 increase was limited and new business CSM was lower than the prior year. Insurance service results declined. Investment results supported earnings, but they include valuation, disposal, FX, and derivatives. Therefore, rather than viewing Kyobo Life as having “simple improvement in both earnings and capital,” it is more appropriate to view it as “a strong issuer, but still at a stage where the quality of improvement needs to be confirmed.”