Initiate Korea insurers: navigating growth with decent solvency and policy tailwind

Research evidence excerpt

Initiate Korea insurers: navigating growth with decent solvency and policy tailwind

ity to reputation risk,

thanks to HLINSU and KYOBOL’s substantial market position, as well as TYANLI’s

Lefu Li, CFA

shareholder background; 2) a deep Korea domestic bond market, which enabled lifers to Research Analyst

issue benchmark capital bonds when the access to USD bonds market was effectively Merrill Lynch (Hong Kong) +852 3508 2142

shut; 3) government support during the transition to the K-ICS from 2023 to 2033. lefu.li@bofa.com

OW HLINSU’55; MW TYANLI’35 and others

With overall spreads approaching all-time tights, we initiate coverage only on HLINSU

6.3 2055 nc’30 (A3/A-, stable) with OW on its attractive valuation vs. similarly rated low-

A insurance peers. The risk premium offered on rating-adjusted basis is quite attractive,

in our view, as the non-call and coupon deferral risks appear manageable. At the same

time, we are MW on TYANLI 6.25 2035 nc’30 (Baa2/BBB, stable) with strong parental

support from WFG largely priced in. We are MW on the shorter-dated HLINSU 3.379

2032 nc’27 and KYOBOL 5.9 2052 nc’27 with tight spreads and thin liquidity.

Deep onshore bond market and regulators’ policy support

Korea’s local bond market is one of the deeper fixed-income markets in EM Asia. All three

lifers could issue sizable capital bonds, up to c. USD500mn, and also buy long-duration

fixed income assets to match their insurance liability; In terms of K-ICS, Korean lifers

can use transitional measures resulting in higher reported K-ICS ratios. The regulator

also lowered the recommended K-ICS ratio to 130% in 4Q25 from 150%. All three lifers

have maintained K-ICS ratios above the requirement threshold. We also believe they are