Kyobo Life Insurance Issuer Summary

Report date: 2026-05-14
Issuer: Kyobo Life Insurance Co., Ltd.
Sector: Korea life insurance
Primary credit focus: Issuer credit, capital adequacy as a Korean life insurer, earnings and capital volatility under IFRS 17 / K-ICS, and ranking and call risk of hybrid and subordinated debt

1. Business Snapshot and Recent Developments

Kyobo Life Insurance Co., Ltd. (“Kyobo Life” or “the company”) is one of Korea’s major life insurers, alongside Samsung Life and Hanwha Life. For credit analysis, it is necessary to assess not only its major-brand status but also long-duration insurance liabilities, the product shift toward protection-type insurance, CSM under IFRS 17, K-ICS capital regulation, long-term investment assets, and hybrid and subordinated debt together. The company has strong claims-paying capacity and market access, but accounting profit, regulatory capital, investment valuation, and policyholder behaviour do not necessarily move in the same direction.

In FY2025, the company reported figures consistent with a major life insurer in both scale and profitability. Consolidated total assets were KRW 148.1tn, total equity was KRW 8.7tn, operating profit was KRW 1.05tn, and net income attributable to owners of the parent was KRW 752.3bn, with net income rising 12.4% YoY. Separate-basis net income also increased to KRW 763.2bn, making 2025 a year of profit improvement. However, insurance service results declined YoY, so earnings quality needs to be assessed together with investment results, CSM, claims ratios, expenses, and onerous contracts.

On the business side, the core trend is the shift toward protection-type insurance and retirement / pension products. By product, FY2025 premiums were KRW 6.97tn for protection-type insurance, KRW 5.29tn for annuities, KRW 5.49tn for retirement pensions, and KRW 231.4bn for savings-type insurance, with savings-type insurance shrinking. Protection-type insurance is more likely to generate CSM, but it is sensitive to sales competition, claims ratios, lapses, assumption changes, and sales quality, and does not automatically guarantee stable insurance earnings.

On capital, the key support is the post-transitional K-ICS ratio of 205.2% as of 3Q 2025. However, this is not a detailed FY2025-end table of eligible capital / required capital, and the pre-transitional ratio and detailed basic capital ratio have not been confirmed in this report. K-ICS responds to interest rates, discount rates, credit spreads, FX, investment asset valuations, and insurance risk, so the 205.2% ratio should not be treated as a static safety margin.

Ratings are high. The official Credit Ratings page shows Moody’s A1, Fitch A+, and AAA from the three domestic rating agencies. This indicates strong insurance financial strength and market position, but it does not directly guarantee the call, price, or recovery ranking of hybrid or subordinated debt. The acquisition of SBI Savings Bank is treated as an ongoing transaction based on the approval report dated 2026-03-18, and this report does not treat post-completion consolidated effects or synergies as confirmed.

Key metrics are as follows.

2. Korean Life Insurance Industry Context

The Korean life insurance market has long-term demand supported by ageing, retirement preparation, and medical / health protection needs, while also facing low growth, sales competition, IFRS 17, K-ICS, interest-rate and spread volatility, and lapse behaviour. The credit strength of a life insurer cannot be assessed simply by the volume of premium income; it is necessary to assess future profits generated by the in-force book, the duration and interest-rate sensitivity of investment assets and liabilities, and the resilience of regulatory capital together.

Under IFRS 17, CSM, insurance service results, insurance finance income or expenses, risk adjustment, liability discount rates, and assumption changes are important. Kyobo Life’s CSM increased from KRW 6.438tn at FY2024-end to KRW 6.511tn at FY2025-end, but the increase was limited to KRW 72.9bn, while new business CSM declined from KRW 1.3716tn to KRW 1.2781tn. The CSM balance supports future earnings, but replenishment capacity is not growing strongly.

The headline K-ICS ratio is also not sufficient by itself. The FSS requires a ratio above 100%, and Kyobo Life is well above that level. However, given that the ratio includes transitional measures and that interest-rate declines or deterioration in investment asset valuations can move capital, the figure should be assessed dynamically. The increase in the protection-type insurance mix should not be viewed as simply positive either; claims ratios, persistency, onerous contracts, and acquisition costs need to be assessed at the same time.

3. Franchise, Product Mix and Distribution

Kyobo Life’s franchise is supported by its Big 3 position in the Korean life insurance market, long operating history, strong brand, tied-agent-centred distribution base, and mix of protection-type insurance and annuity / retirement pension products. According to the Fitch-related release in Kyobo Newsroom, the company’s share of premium income was approximately 14% as of 3Q 2025. This position matters for policyholder confidence, agent recruitment, product launches, ratings, and market access.

According to the FY2025 annual report, the 13-month persistency ratio was 81.8% in FY2023, 86.0% in FY2024, and 82.9% in FY2025, remaining in the 80% range. This supports the realisability of CSM and sales quality, but because the ratio declined from the prior year in FY2025, early lapses and sales quality should continue to be monitored amid competition in protection-type insurance.

By product composition, protection-type insurance, annuities, and retirement pensions are the main pillars. FY2025 new business APE was KRW 2.2545tn, up 11.0% YoY, while protection-type APE was KRW 1.632tn, accounting for 72.4% of the total. The tied-agent channel accounted for 55.9% of APE, supporting face-to-face explanation and contract persistency. At the same time, tied channels involve fixed costs and workforce management, while expanded use of bancassurance and agencies has both distribution diversification and sales discipline implications.

Product and new business indicators are as follows.

The franchise constraint is that the larger the insurer, the harder it is to avoid industry-wide competition and regulation. While recognising its strong market position, it remains necessary to monitor whether volume-driven sales could reduce the quality of future profits.

4. Financial Profile and Profitability

Kyobo Life’s FY2025 financials show an overall improvement in profits. Consolidated operating profit was KRW 1.051tn, net income attributable to owners of the parent was KRW 752.3bn, and separate-basis net income was KRW 763.2bn. This profit level supports internal capital generation. However, investment results were a major support in FY2025, while insurance service results declined YoY, so the improvement in profit should not be interpreted directly as an improvement in underwriting strength.

On a separate basis, of FY2025 operating profit of KRW 1.0616tn, insurance results accounted for KRW 391.6bn and investment results for KRW 670.0bn. Insurance service results declined from KRW 473.6bn in FY2024, while losses related to onerous contracts increased to KRW 452.0bn. Investment results supported the profit improvement, but include not only interest and dividends but also valuation and disposal gains / losses, FX, and derivative gains / losses. The KRW 574.5bn shown on the business analysis page of the annual report and the KRW 670.0bn in the separate-basis notes differ in presentation scope, so this report uses them to confirm the level and direction.

Key consolidated financial metrics are as follows.

Internal capital generation is a strength, but the constraints are clear. The first is the YoY decline in insurance results. The second is the market dependence of investment results. The third is credit costs, goodwill, and capital allocation if the acquisition of SBI Savings Bank is completed. The 2025 earnings increase is positive, but rather than extrapolating it linearly, it needs to be checked across insurance results, investment results, and capital.

5. Investment Portfolio, ALM and Capital Adequacy

Kyobo Life’s investment portfolio supports credit quality while also being a major source of capital volatility. Separate-basis invested assets were KRW 107.3tn at FY2025-end, consisting mainly of domestic bonds of KRW 44.7tn, overseas securities of KRW 19.5tn, loans of KRW 18.3tn, and beneficiary certificates of KRW 14.3tn. The bond-centred composition reflects ALM management against long-duration insurance liabilities, but the portfolio is not immune to interest-rate and credit-spread movements.

The quality of domestic bonds is high, with AA or higher accounting for 99.6% of domestic bonds at FY2025-end. Overseas bonds were also all investment grade, with 98.7% rated A or higher. On the other hand, the balance of overseas securities increased 13.2% YoY and is exposed to FX, hedging costs, overseas rates, sovereign ratings, and credit spreads. Given that FY2025 FX and derivative gains / losses were negative, the expansion of overseas securities should not be viewed simply as a yield-enhancement strategy, but should be assessed together with hedging and capital sensitivity.

The invested asset composition is as follows.

ALM is the most important management capability in assessing Kyobo Life’s credit. The annual report states that the company is improving its structure by expanding the size and duration of interest-bearing assets and increasing investment yield. The Fitch-related company news release states that the reduction of the asset-liability maturity gap to less than one year was positively assessed. However, because this report has not confirmed an independent detailed duration-gap table or sensitivity table, ALM improvement is treated as an indication.

Capital adequacy is currently strong, but a cautious stance remains appropriate. Post-transitional K-ICS exceeded 200% as of 3Q 2025, domestic bond quality is high, overseas bonds are primarily investment grade, and the company is profitable. On the other hand, detailed FY2025-end eligible capital / required capital, the pre-transitional ratio, and the basic capital ratio have not been confirmed. The increase in overseas securities, sensitivity to interest rates and discount rates, the decline in insurance results, and changes in capital allocation if the acquisition of SBI Savings Bank is completed are monitoring items.

6. Liability Profile and Policyholder Behaviour

Kyobo Life’s liability structure is central to its credit analysis. Consolidated insurance contract liabilities were KRW 97.4tn at FY2025-end, comprising participating insurance contract liabilities of KRW 26.3tn, non-participating insurance contract liabilities of KRW 54.9tn, and variable insurance contract liabilities of KRW 16.1tn. In addition, investment contract liabilities were KRW 18.4tn. Large asset scale supports credit quality, but most of the assets correspond to long-term obligations to policyholders and are not surplus assets freely available to bondholders.

The valuation of insurance contract liabilities is determined by the combination of best-estimate liabilities, risk adjustment, CSM, and insurance finance income or expenses. The separate-basis notes describe direct insurance liabilities as including best-estimate liabilities of KRW 88.9tn, risk adjustment of KRW 1.4tn, and CSM of KRW 6.5tn. CSM is a source of future profits, while best-estimate liabilities depend heavily on future cash flows and discount rates. When assessing an insurer’s credit strength, it is necessary to consider not only the build-up of CSM but also assumption changes on the liability side and insurance finance expenses.

Policyholder behaviour directly affects the liquidity and profitability of a life insurer. Higher lapses affect asset sales, the derecognition of insurance liabilities, CSM adjustments, recovery of commissions, and liquidity. The 13-month persistency ratio of 82.9% remains high, but it declined from 86.0% in the prior year. This does not immediately indicate credit deterioration, but it does show the need to continue monitoring early lapses and sales quality as competition in protection-type insurance intensifies. In health and medical protection in particular, coverage terms can become complex, making future claims, customer complaints, and sales suitability risks more likely to emerge.

Claims ratios and medical / health insurance risk are also important. Kyobo Life is expanding products in women’s health, diabetes, hypertension, hyperlipidaemia, cancer, and cardio-cerebrovascular disease. These products align with customer needs and CSM formation, but loss ratios can fluctuate depending on medical technology, diagnosis behaviour, medical costs, benefit frequency, and product design. Even if sales increase in the short term, CSM quality will decline if future claims ratios exceed assumptions. From a credit perspective, expansion in protection-type insurance needs to be assessed from both the improvement in profitability and the increase in risk underwriting.

Variable insurance contract liabilities also cannot be ignored. Even if variable insurance is structured so that policyholders bear much of the investment risk, it is related to fee income, minimum guarantees, customer behaviour, reputation, sales regulation, and the price of separate-account assets. When markets are strong, sales and fees are supported, but when markets decline, lapses, complaints, guarantee risk, and sales slowdowns can occur. The annual report states that market risk for variable insurance is measured using stress scenarios. This indicates that variable insurance is not a simple low-risk product.

Liquidity for a life insurer differs from liquidity for an ordinary operating company. Premium income, claims payments, maturity benefits, lapses, investment asset liquidity, collateral and hedging, and regulatory requirements move at the same time. Kyobo Life’s asset portfolio is centred on high-quality bonds, and the risk of short-term payment failure is low. However, if policyholder behaviour changes and market conditions deteriorate at the same time, both asset sales and the capital ratio could come under pressure. Liquidity assessment should therefore consider not only cash and deposits, but also the nature of insurance liabilities, the saleability of investment assets, and K-ICS constraints.

7. Capital Structure, Liquidity and Funding

Kyobo Life’s capital structure is a financial-institution-type structure combining common equity, retained earnings, other comprehensive income, hybrid debt, subordinated debt, borrowings, and insurance liabilities. Consolidated total equity was KRW 8.7tn at FY2025-end, including KRW 2.2057tn of hybrid debt. The same amount of hybrid debt is also included in capital items on a separate basis. The existence of hybrid debt supports capital flexibility under K-ICS and market access, but from an investor’s perspective, it carries call, reset, ranking, and regulatory capital risks that differ from ordinary senior debt. Specific interest suspension, principal write-down, regulatory approval, and other loss-absorption terms cannot be fully confirmed from the annual report alone, so the offering documents must be checked before any individual investment.

The separate-basis hybrid debt at FY2025-end consisted of a U.S.$500m overseas hybrid bond issued in June 2022, a KRW 470bn domestic hybrid bond issued in September 2021, a KRW 500bn domestic hybrid bond issued in May 2023, and a KRW 600bn domestic hybrid bond issued in November 2024. The overseas hybrid bond has a coupon of 5.90% and matures on 2052-06-15, while the domestic hybrid bonds have long-term maturities from 2051 to 2054. To the extent confirmed in the annual report, these instruments are callable at the company’s option from five years after issuance and have features such as reference-rate resets and maturity extension. Specific terms for interest suspension and loss absorption have not been confirmed in this report.

On a separate basis, the company has an unsecured subordinated bond with a face value of KRW 700bn, issued on 2024-08-06, maturing on 2034-08-06, and carrying a 4.30% coupon. The annual report states that the company can redeem this subordinated bond in full from five years after the issue date. This is financing with capital and subordination characteristics for an insurer, and investors should not assume that it will necessarily be redeemed after five years. Calls can depend on economic rationale, regulatory capital recognition, regulatory approval, alternative capital funding, and market conditions, but specific regulatory approval provisions and payment suspension / loss-absorption terms have not been confirmed in this report because the offering documents have not been reviewed.

The main capital securities and subordinated debt terms are as follows.

On liquidity, Kyobo Life has a large investment asset base, premium income, high-quality bonds, and cash and deposits. At FY2025-end, separate-basis cash and deposits were KRW 3.36tn, domestic bonds were KRW 44.69tn, and overseas securities were KRW 19.54tn. On a consolidated cash-flow basis, FY2025 net cash flow from operating activities was positive at KRW 5.59tn. These factors support short-term liquidity.

However, liquidity should not be assessed simply by the amount of cash and bonds. Insurers have obligations to pay claims, maturities, and lapses, and investment asset sales affect K-ICS, OCI, profit or loss, hedging, and collateral. Hybrid or subordinated debt calls may also be unexecutable even if liquidity is available. In particular, when K-ICS declines, redemption of capital securities may be constrained in order to maintain regulatory capital.

Funding access is a strength. Kyobo Life maintains Moody’s A1, Fitch A+, and domestic AAA ratings and has issued hybrid and subordinated debt. The Fitch-related release also positively notes the company’s room to maintain short-term capital adequacy through capital securities issuance when needed. This is a major difference from weaker small and medium-sized insurers. At the same time, capital market access depends on market conditions. For U.S. dollar securities, FX, hedging costs, and U.S. dollar rates are important; for domestic securities, Korean rates, domestic investor demand, and regulatory capital recognition are important.

The acquisition of SBI Savings Bank is a new variable for capital and liquidity. If the acquisition is completed as reported, the group’s business portfolio will broaden, but credit risk, deposits, capital regulation, credit costs, system integration, and management complexity will increase. SBI Savings Bank is a savings bank with a large asset base, and the acquisition is not a small investment. At this stage, specific post-completion effects on consolidated capital, goodwill, capital injection, dividend policy, and credit costs have not been confirmed, so a conservative credit assessment should frame it as a strategic expansion with execution risk to be reviewed after completion.

8. Structural Considerations for Bondholders

For bondholders, it is important to distinguish between Kyobo Life’s issuer credit and security ranking. Kyobo Life’s claims-paying capacity is high, but on an insurer’s balance sheet, policyholders are the most important stakeholders, and regulators prioritise policyholder protection and solvency maintenance. Therefore, investors in hybrid and subordinated debt should not confuse the issuer’s high rating with their securities receiving the same protection as senior or policyholder obligations.

The company’s hybrid debt is classified as capital for accounting purposes. This supports capital adequacy for the issuer, while from an investor’s perspective it means there is flexibility in favour of the issuer relative to ordinary corporate bonds. What can be confirmed from the annual report is the issue date, maturity, coupon, optional redemption from five years after issuance, and the broad outline of resets and maturity extension. What kinds of interest suspension, principal write-down, regulatory approval, and other loss-absorption terms may apply in stress have not been confirmed in this report because the offering documents have not been reviewed; the relevant documents need to be checked for individual investments.

Unsecured subordinated debt is also not senior debt. The separate-basis KRW 700bn subordinated bond matures in 2034 and can be redeemed at the company’s option from five years after issuance. Life insurer subordinated debt is generally affected by regulatory capital characteristics, payment ranking, call conditions, and regulatory approval. If investors price the security on the assumption of a five-year call, they need to check K-ICS, alternative capital funding costs, ratings, the regulator’s stance, and market conditions. However, because the detailed terms specific to this subordinated bond have not been confirmed in this report, the discussion here is limited to issuer-level structural risk.

Another structural consideration is that Kyobo Life is positioned close to the core parent company of a financial group. Unlike an insurer such as Tongyang Life, which has become part of a major financial holding company, Kyobo Life itself is the core of a group that includes insurance, securities, asset management, trust, and, if the acquisition is completed, a savings bank. This is not a structure premised on support expectations from an external parent company; Kyobo Life’s own capital, earnings, brand, and regulatory response are central to group credit. Therefore, an expansion such as the acquisition of SBI Savings Bank is a strategic opportunity for the issuer but can also become a capital burden for the issuer itself.

Subsidiary risk also needs to be viewed, albeit in a limited way. Non-insurance financial subsidiaries such as Kyobo Securities and Kyobo Asset Trust carry risks related to securities markets, trusts, real estate, and the financial investment business. Consolidated borrowings and subsidiary debt also include unsecured bonds and short-term financial liabilities of Kyobo Securities and Kyobo Asset Trust. It is necessary to consider not only Kyobo Life’s separate-basis insurance credit but also the extent to which financial business risk increases at the consolidated group level.

For securities investors, the practical framework is as follows. Issuer credit itself is supported by insurance financial strength, K-ICS, earnings, asset quality, and ratings. Hybrid and subordinated debt, however, should incorporate not only the issuer’s payment capacity but also regulatory capital characteristics, ranking, calls and resets, and foreign-currency and domestic-market refinancing conditions. Specific terms such as regulatory approval, interest suspension, and principal write-down are unverified items that should be checked in the individual security documents. It is inappropriate to treat Kyobo Life’s hybrid or subordinated debt as senior-equivalent simply because the issuer is highly rated.

9. Rating Agency View

Kyobo Life’s ratings provide strong external confirmation of issuer credit. The official Credit Ratings page shows AAA ratings from the three domestic agencies in 2025, Moody’s A1, and Fitch A+. According to Kyobo Newsroom, Fitch maintained the A+ / Stable rating in January 2026 for the 14th consecutive year, and Moody’s maintained the A1 / Stable rating in June 2025 for the 11th consecutive year. The domestic three agencies’ AAA insurance financial strength ratings were reported to have been maintained for the 19th consecutive year as of May 2025.

The rating support can broadly be summarised in four points. First is the company’s Big 3 position in the Korean life insurance market and approximately 14% share of premium income. Second is its tied-agent-centred distribution base, product shift toward protection-type insurance, and CSM generation capacity. Third is its post-transitional K-ICS ratio of 205.2% as of 3Q 2025, room to issue hybrid debt, and capital market access supported by domestic and international ratings. Fourth is investment management centred on high-quality bonds and ALM management.

There are also rating constraints. The first is the sensitivity of insurer capital to interest rates, discount rates, and investment valuations. The second is the possibility that protection-type insurance competition could affect new business quality and future claims ratios. The third is that overseas securities and derivative / FX gains and losses can move profits and capital. The fourth is the potential increase in non-insurance credit risk and integration risk if the acquisition of SBI Savings Bank is completed. The fifth is that security risk in hybrid and subordinated debt is not the same as the insurance financial strength rating.

The publicly available rating map is as follows.

This report does not retain the full paid Moody’s, Fitch, NICE, KIS, or Korea Ratings reports. Therefore, the discussion of rating rationale is based on Kyobo’s official page, Kyobo Newsroom, and public reporting. In future updates, if direct rating agency reports are available, rating sensitivities, notching of capital securities, the treatment of the SBI Savings Bank acquisition, and the assessment of K-ICS transitional measures should be reviewed.

10. Credit Positioning

Kyobo Life sits in the top tier among Korean life insurers. Compared with mid-sized to quasi-major insurers such as Tongyang Life, Kyobo Life is clearly stronger in market position, brand, asset scale, ratings, K-ICS, and capital market access. Compared with the largest listed player such as Samsung Life, however, comparisons are needed on public equity capital access, group structure, subsidiary risk, and transparency of capital policy. Kyobo Life is best positioned as a “highly rated life insurer that is large and stable, but not immune to insurance liabilities and capital market volatility.”

Relative to Asian insurers in the same rating band, Kyobo Life’s strengths are its major franchise in the Korean market, long record of maintaining insurance financial strength ratings, domestic AAA ratings, shift toward protection-type insurance, and large CSM. Its constraints are the maturity of the Korean life insurance market, capital volatility under IFRS 17 / K-ICS, overseas securities / FX / hedging, and expansion into non-insurance financial businesses. If the acquisition of SBI Savings Bank is completed, the company will move closer to being a broader financial group, making simple credit comparisons as an insurer somewhat more difficult.

By security class, insurance financial strength, senior credit, and subordinated / hybrid securities need to be separated. Insurance financial strength is high, and domestic and international ratings are strong. If there is senior issuer credit, it is supported by the insurer’s overall assets, earnings, capital, and regulatory supervision. Hybrid and subordinated debt, even from the same issuer, are more heavily affected by calls, resets, ranking, regulatory capital recognition, regulatory approval, and capital preservation under stress. Therefore, when discussing Kyobo Life’s credit positioning, it is necessary to specify which layer of the capital structure the security occupies.

Market spreads and live prices have not been reviewed in this report. Therefore, this report does not make specific rich / cheap judgments. Fundamentally, Kyobo Life has lower issuer risk than mid-sized Korean insurers as a highly rated major Korean life insurer. For hybrid and subordinated debt, however, it is natural to require a risk premium for regulatory capital instruments even from the same highly rated issuer. In particular, if pricing relies too heavily on a first-call assumption, K-ICS and refinancing conditions need to be checked.

The practical investor view is to treat Kyobo Life as a “highly rated insurance credit supported by a major franchise and capital,” while also treating it as a “credit with life insurance liability and capital securities-specific risks.” The level of credit strength itself is high, but if the capital and earnings dynamics of an insurer are misread, risk can easily be underestimated based only on headline net income or ratings.

11. Key Credit Strengths and Constraints

Kyobo Life’s credit strengths are clear. The first is its market position and brand as one of Korea’s Big 3 life insurers. The second is its large customer base and distribution strength, combining protection-type insurance, annuities, and retirement pensions. The third is the support from capital and earnings shown by FY2025 profitability, CSM of KRW 6.51tn, and K-ICS of 205.2% (3Q 2025, post-transitional). The fourth is its ratings and market access, maintaining Moody’s A1, Fitch A+, and domestic AAA. The fifth is its investment portfolio centred on high-quality bonds and ALM management.

The constraints are equally important. First, insurance service results declined in FY2025, and expansion in protection-type insurance alone does not guarantee short-term earnings stability. Second, K-ICS is high but sensitive to transitional measures, interest rates, discount rates, investment valuations, FX, and hedging. Third, overseas securities and investment result volatility move profit and capital. Fourth, hybrid and subordinated debt carry call, reset, and regulatory capital characteristics and are not senior-equivalent. Fifth, if the acquisition of SBI Savings Bank is completed, savings-bank credit, integration, and capital allocation risks will be added to the insurer’s risk profile.

The strengths and constraints are summarised as follows.

The most important strength is the franchise as a major life insurer and the confidence it enjoys in capital markets. Life insurance is based on long-term contracts, and policyholders depend on the company’s continuity and claims-paying capacity over decades. Kyobo Life’s long-term maintenance of high ratings supports this confidence. The most important constraint, however, is that an insurer’s earnings and capital are sensitive to market variables and insurance liability assumptions. If this is ignored, the credit can be overvalued as a simple high-rated credit.

12. Downside Scenarios and Monitoring Triggers

Kyobo Life’s main downside is not an acute liquidity crisis, but a scenario in which capital, earnings, insurance liabilities, and investment assets deteriorate simultaneously. Given its high ratings, K-ICS, and asset scale, the probability of a sharp short-term decline in issuer credit under normal conditions is not high. However, for a life insurer, interest rates, discount rates, investment valuations, claims ratios, and lapse rates have combined effects, and if multiple variables deteriorate at the same time, capital and security valuations can move substantially.

The first downside is a decline in K-ICS. If lower interest rates, lower discount rates, wider credit spreads, weaker equity and overseas securities valuations, FX and hedging losses, and insurance liability assumption changes occur together, K-ICS can decline. The post-transitional ratio of 205.2% as of 3Q 2025 is adequate, but if it approaches the 150% range, it would affect capital securities calls, dividends, ratings, and investor perception. It is necessary to monitor not only the K-ICS level but also eligible capital, required capital, the basic capital ratio, and the impact of transitional measures.

The second downside is failure to recover insurance results. FY2025 insurance service results declined. Even if sales of protection-type insurance increase, the quality of CSM and insurance profits will weaken if claims ratios, expenses, onerous contracts, lapses, or assumption changes deteriorate. In particular, if pricing and underwriting discipline loosen amid intensified competition in health and medical protection, future profits may be reduced later.

The third downside is stress in investment assets and overseas securities. Domestic bonds are high quality but sensitive to interest-rate movements. Overseas securities are primarily investment grade but are exposed to overseas rates, FX, hedging costs, sovereign ratings, and credit spreads. The balance of overseas securities increased to KRW 19.54tn in FY2025. Because investment income supported FY2025 earnings, the future impact of weaker market conditions on earnings and capital cannot be ignored.

The fourth downside is credit and integration risk if the acquisition of SBI Savings Bank is completed. Savings banks have asset risks different from insurance, and credit costs are likely to emerge in economic downturns. Kyobo Life’s acquisition of SBI Savings Bank may be effective for developing a comprehensive financial services platform, but it does not simply increase the low-risk characteristics of the insurer. Post-completion capital burden, goodwill, credit costs, risk management, system integration, and governance need to be checked.

The fifth downside is refinancing and call risk for hybrid and subordinated debt. If market conditions deteriorate, K-ICS declines, and alternative capital funding becomes costly, the issuer may not execute calls as scheduled. Even a highly rated issuer’s capital securities are not ordinary corporate bonds. Investors need to check the first call date, resets, regulatory capital recognition, regulatory approval, and market access in addition to the issuer’s credit strength.

Key monitoring items are as follows.

Upside would come if protection-type insurance sales steadily support both CSM and insurance service results, K-ICS is maintained at around or above 200% with quality, capital volatility from overseas securities and ALM is contained, and, if the acquisition of SBI Savings Bank is completed, the company broadens earnings and its customer base without excessive capital burden. Downside would be a combination of lower insurance results, lower K-ICS, deterioration in investment asset valuations, SBI-related credit costs, and a weaker rating outlook. At present, the basis for the former exists, but post-completion verification of the SBI acquisition is still needed.

13. Credit View and Monitoring Focus

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.”

By security class, issuer credit should be separated from hybrid and subordinated securities. Issuer credit is supported by high insurance financial strength. Hybrid and subordinated debt, however, are heavily affected by calls, resets, regulatory capital, regulatory approval, ranking, and capital preservation under stress. Because market prices have not been reviewed, this report does not make a relative-value judgment, but even on fundamentals alone, it is natural to require a clear risk premium for hybrid and subordinated debt relative to senior debt.

The monitoring focus going forward is, first, whether K-ICS can remain around 200% with quality, not only on a post-transitional basis; second, whether protection-type insurance expansion leads to stable insurance service results and CSM; third, whether overseas securities and ALM can contain capital volatility; and fourth, if the acquisition of SBI Savings Bank is completed, whether credit costs and capital allocation are managed conservatively. If these move in a favourable direction at the same time, the credit view on Kyobo Life would become more comfortable within the high-rating category. Conversely, if lower K-ICS, weaker insurance results, SBI-related burden, and a weaker rating outlook occur together, the current high credit strength would warrant reassessment.

The current conclusion is to position Kyobo Life as a “top-tier Korean life insurer with high insurance financial strength and a major franchise,” recognising strong resilience in issuer credit while explicitly incorporating insurer-specific regulatory, call, and loss-absorption risks for capital securities. Being large and being safe are closely related but not synonymous. Safety is maintained only by continuously confirming K-ICS, CSM, insurance results, investment assets, and capital management if the SBI acquisition is completed.

14. Short Summary & Conclusion

Kyobo Life is a highly rated major life insurer that belongs to the Big 3 in the Korean life insurance market. Issuer credit is supported by Moody’s A1, Fitch A+, domestic AAA, FY2025 earnings growth, and post-transitional K-ICS of 205.2% as of 3Q 2025. At the same time, the decline in insurance service results, moderate CSM growth, capital sensitivity to interest rates, discount rates, and overseas securities, and credit / integration risk if the acquisition of SBI Savings Bank is completed require monitoring. Issuer credit is high, but hybrid and subordinated debt are not senior-equivalent and should be assessed separately for calls, resets, regulatory capital characteristics, and ranking.

15. Sources

Company and primary sources

• Kyobo Life FY2025 Annual Report page
  https://www.kyobo.com/dgt/web/company-introduction/ir/financial-information/en-annual-report
• Kyobo Life FY2025 Annual Report PDF
  https://www.kyobo.com/dgt/web/contents/pdf/ir/fi/ar/FY2025_Kyobo_Annual_Report_eng.pdf
• Kyobo Life official Credit Ratings page
  https://www.kyobo.com/dgt/web/company-introduction/ir/credit-rating/en-credit-grade-imtegra-insur-pay-abil-evalu-domestic
• Kyobo Life Newsroom, Fitch A+ / Stable maintained for 14 consecutive years, 2026-01-21
  https://news.kyobo.com/%EA%B5%90%EB%B3%B4%EC%83%9D%EB%AA%85-14%EB%85%84-%EC%97%B0%EC%86%8D-%EC%B5%9C%EA%B3%A0-%EC%8B%A0%EC%9A%A9%EB%93%B1%EA%B8%89-%ED%9A%8D%EB%93%9D/
• Kyobo Life Newsroom, Moody's A1 / Stable maintained for 11 consecutive years, 2025-06-12
  https://news.kyobo.com/%EA%B5%90%EB%B3%B4%EC%83%9D%EB%AA%85-11%EB%85%84-%EC%97%B0%EC%86%8D-%EB%AC%B4%EB%94%94%EC%8A%A4-a1-%ED%9A%8D%EB%93%9D%EA%B5%AD%EB%82%B4-%EC%83%9D%EB%B3%B4%EC%82%AC/

Rating, transaction and contextual sources

• The Asia Business Daily, domestic AAA insurer financial strength rating for 19 consecutive years, 2025-05-23
  https://view.asiae.co.kr/en/article/2025052309301622630
• Seoul Economic Daily, Kyobo Life clears final hurdle for SBI Savings Bank acquisition, 2026-03-18
  https://en.sedaily.com/finance/2026/03/18/kyobo-life-clears-final-hurdle-for-sbi-savings-bank

Internal working materials referenced

• Internal writing plan, structured metrics file, source registry, knowledge snapshot and issuer notes were used for continuity and drafting discipline. They are not public source documents.

Unverified or pending items

• Paid Moody's, Fitch, NICE, Korea Investors Service and Korea Ratings reports were not retained. Rating discussion is based on Kyobo official pages, company newsroom releases and public reporting.
• Live bond prices, spreads, yield levels and relative value were not reviewed. This report does not make a market-level buy, sell, hold, rich or cheap call.
• The detailed FY2025-end K-ICS eligible capital / required capital table has not been separately verified in this report beyond the annual report and public releases. The K-ICS ratio emphasised in this report is the post-transitional 205.2% as of 3Q 2025 shown in Kyobo materials.
• Detailed offering circulars for the 2022 overseas hybrid bond and domestic hybrid / subordinated instruments were not reviewed. Individual security investment requires the relevant offering documents.
• SBI Savings Bank acquisition effects on purchase accounting, consolidated capital, credit costs, funding, governance and integration plan should be refreshed after official post-closing company disclosure.