Review of Operations
Note: This section covers business results for the head office only, with gross written premiums used to measure business volume and the combined ratio calculated under IFRS 4.
Life & Health (L&H)
Financial Solutions
With the introduction of IFRS 17 and K-ICS in 2023, the standards for assessing primary insurers’ financial soundness have been strengthened, resulting in demand for capital management solutions. Major life insurers are increasingly utilizing coinsurance to improve asset-liability management (ALM) and mitigate profit and loss (P&L) volatility, thereby enhancing capital available to shareholders. Looking ahead to 2026, amid a shifting interest rate environment and evolving regulatory requirements, insurers are expected to further strengthen duration management. This is likely to support growing demand for funds-withheld (FWH) coinsurance.
Under K-ICS, primary insurers have also sought effective solutions to manage solvency ratios, and mass lapse reinsurance has been introduced and transacted as one such tool.
In particular, the mass lapse reinsurance market is expected to see renewed demand in 2026, supported by a higher interest rate environment.
We will continue to enhance our expertise in pricing and risk management to further strengthen our leading position through the origination and execution of new structured reinsurance transactions. Where appropriate, we may also leverage our strategic alliance with The Carlyle Group to reinforce our business capabilities and reinsurance capacity. Through these efforts, we aim to contribute to insurers’ capital efficiency while delivering sustainable growth and long-term profitability.
With the introduction of IFRS 17 and K-ICS in 2023, the standards for assessing primary insurers’ financial soundness have been strengthened, resulting in demand for capital management solutions. Major life insurers are increasingly utilizing coinsurance to improve asset-liability management (ALM) and mitigate profit and loss (P&L) volatility, thereby enhancing capital available to shareholders. Looking ahead to 2026, amid a shifting interest rate environment and evolving regulatory requirements, insurers are expected to further strengthen duration management. This is likely to support growing demand for funds-withheld (FWH) coinsurance.
Under K-ICS, primary insurers have also sought effective solutions to manage solvency ratios, and mass lapse reinsurance has been introduced and transacted as one such tool. In particular, the mass lapse reinsurance market is expected to see renewed demand in 2026, supported by a higher interest rate environment.
We will continue to enhance our expertise in pricing and risk management to further strengthen our leading position through the origination and execution of new structured reinsurance transactions. Where appropriate, we may also leverage our strategic alliance with The Carlyle Group to reinforce our business capabilities and reinsurance capacity. Through these efforts, we aim to contribute to insurers’ capital efficiency while delivering sustainable growth and long-term profitability.
Coinsurance
Since its introduction into the domestic market in 2020, coinsurance has grown to exceed KRW 6 trillion in total gross premium reserves. Within this market, Korean Re has completed eight coinsurance transactions totaling KRW 2.1 trillion in gross premium reserves, paving the way for domestic market growth and solidifying its leading position. The market continues to gain momentum, driven by an enhanced regulatory framework and increasing participation from offshore reinsurers, with transactions also expanding beyond life insurers to include non-life insurers.
Since 2022, we have executed multiple coinsurance transactions, beginning with a bank-owned life insurer in January 2022, followed by deals with a major life insurer in November 2022 and November 2023. These transactions were structured as traditional asset-transfer coinsurance arrangements, under which the reinsurer receives upfront consideration at inception.
Building on this track record, we expanded into FWH coinsurance with a global life insurer in December 2024. Under this structure, the cedant retains the initial consideration and pays interest on the withheld funds, while we seek to generate stable earnings through derivatives-based hedging to manage the associated interest rate risk, subject to market conditions and hedge effectiveness.
In 2025, we completed a small transaction with a non-life insurer as an initial step toward broader engagement with the non-life sector. We further strengthened our track record by executing both an asset-transfer and an FWH coinsurance transaction with a major domestic life insurer in October 2025, followed by an asset-transfer coinsurance transaction with a life insurer in November 2025.
Based on our established FWH track record and growing cedant preference for this structure, we intend to expand participation in FWH transactions in an active yet prudent manner. In addition, beginning in 2026, we initiated discussions with life insurers to underwrite flow reinsurance arrangements that provide coinsurance solutions for new business.
While we have achieved strong results in the early stages of the domestic coinsurance market, the competitive landscape continues to evolve. Global reinsurers with established operations in Korea are seeking to expand their domestic footprint, leveraging financial and technical support from their headquarters. At the same time, other offshore reinsurers specializing in coinsurance—often backed by private equity—are also evaluating opportunities in the Korean market.
Mass Lapse Reinsurance
Mass lapse reinsurance, introduced in Korea in 2023, expanded rapidly to an estimated market size of approximately KRW 2 trillion in terms of required capital. However, over the past two years, interest rate cuts and regulatory developments have reduced the number of insurers eligible to cede such reinsurance, resulting in a material contraction of the market. Notwithstanding this decline, demand for mass lapse reinsurance has rebounded since 2026, driven by the sharp rise in interest rates and the strengthening of the K-ICS framework, as insurers seek effective solutions to reduce required capital and enhance available capital.
In addition to mass lapse reinsurance, we have been developing a comprehensive suite of structured reinsurance solutions.
Specifically, we have been providing our clients with various options, including a stop loss reinsurance program, sufficient retrocession capacity supported by our credit rating, and competitive premium rates enabled through retrocession arrangements. Notably, through a conservative underwriting approach—carefully selecting portfolios to be reinsured—we have achieved a strong balance between stability and profitability.
Looking ahead, we view mass lapse reinsurance as a highly secure line of business given the structural characteristics of the coverage and its remote risk profile under the reinsurance arrangement. Accordingly, we are exploring whether similar opportunities may arise in other Asian markets where new solvency regimes are being introduced.
Mass Lapse Reinsurance
Mass lapse reinsurance, introduced in Korea in 2023, expanded rapidly to an estimated market size of approximately KRW 2 trillion in terms of required capital. However, over the past two years, interest rate cuts and regulatory developments have reduced the number of insurers eligible to cede such reinsurance, resulting in a material contraction of the market. Notwithstanding this decline, demand for mass lapse reinsurance has rebounded since 2026, driven by the sharp rise in interest rates and the strengthening of the K-ICS framework, as insurers seek effective solutions to reduce required capital and enhance available capital.
In addition to mass lapse reinsurance, we have been developing a comprehensive suite of structured reinsurance solutions. Specifically, we have been providing our clients with various options, including a stop loss reinsurance program, sufficient retrocession capacity supported by our credit rating, and competitive premium rates enabled through retrocession arrangements. Notably, through a conservative underwriting approach—carefully selecting portfolios to be reinsured—we have achieved a strong balance between stability and profitability.
Looking ahead, we view mass lapse reinsurance as a highly secure line of business given the structural characteristics of the coverage and its remote risk profile under the reinsurance arrangement. Accordingly, we are exploring whether similar opportunities may arise in other Asian markets where new solvency regimes are being introduced.
█ Gross Written Premiums: Financial Solutions
(Units: KRW billion, USD million)
| 2025 (KRW) | 2025 (USD) | 2024 (KRW) | 2024 (USD) | |
| Coinsurance | 454.8 | 317.0 | 209.5 | 153.1 |
| Mass Lapse Reinsurance | 2.1 | 1.5 | 6.2 | 4.5 |
| Total | 456.9 | 318.5 | 215.7 | 157.6 |