The risk-based capital (RBC) ratio of insurance companies in South Korea has dropped 6.4 percentage points to 254.5% as of end-September amid rising market interest rates, data from the country’s Financial Supervisory Service (FSS) showed. RBC ratio measures an insurer's ability to absorb losses and pay insurance money to policyholders. Local insurers are required to maintain the ratio at 100% or above, while the watchdog advises insurance firms to have ratios of 150% or higher. According to the FSS, the fall came as a rise in market interest rates and stock market declines caused losses from insurers’ asset holdings. The RBC ratio has been trending down since it was tallied at 283.6% at the end of September 2020.
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