Hanwha General Insurance Co. is tapping the debt market with a planned 300 billion won ($206 million) subordinated bond sale as Korean insurers face pressure to strengthen their capital buffers.
The Seoul-based insurer may increase the offering to 500 billion won based on investor demand, according to a company statement. The 10-year bonds, which include a call option after five years, are expected to yield between 4.3% and 4.8% annually.
The debt sale comes as Korean insurers work to maintain healthy capital levels under the country’s insurance capital standard known as K-ICS. While Hanwha’s current solvency ratio of 215.8% already exceeds the regulatory minimum of 150%, the new bonds would push that metric to 227.1%.
However, the higher borrowing costs associated with subordinated debt could strain the insurer’s finances. The final pricing will be determined after a book-building process on January 20.
Korean insurers typically aim to keep their solvency ratios above 200% as a safety buffer, even though regulators only require 150%. The K-ICS measure compares an insurer’s available capital to required capital levels.
