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Lotte Insurance CI. (Image courtesy of Lotte Insurance) |
[Alpha Biz= Paul Lee] Seoul, South Korea — May 7, 2025 — Lotte Insurance announced that it has postponed the execution of its call option for the 8th subordinated bond ("Lotte Insurance No.8 Subordinated Bond") originally scheduled for May 8, 2025. The decision was made one day prior to the scheduled date, citing regulatory capital requirements.
According to the company, the early redemption of the KRW 90 billion bond would cause its Risk-Based Capital (RBC) ratio to fall below the 150% threshold required by Article 7-10, Paragraph 5 of the Insurance Business Supervision Regulations. Under this regulation, an insurance company may redeem subordinated debt prior to maturity only if its RBC ratio remains above 150% after redemption, and with approval from the Financial Supervisory Service (FSS).
Although the call option was deferred, industry analysts expect limited market impact due to the relatively small size of the bond compared to past cases. For instance, in 2022, Heungkuk Life Insurance’s decision not to redeem USD 500 million in hybrid securities had caused significant market disruption.
Lotte Insurance stated that it plans to implement necessary measures to meet the capital adequacy requirement and aims to reattempt early redemption by May 12.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
