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21 December 2022Insurance

Korean Re inks coinsurance deal opposed to traditional reinsurance

Korean Re has entered into a coinsurance agreement with Samsung Life in a move it says demonstrated how reinsurers can “provide various solutions beyond traditional reinsurance arrangements in response to the needs of the cedant.”

The transaction relates to the life insurer’s liabilities worth KRW 500 billion.

Korean Re said the agreement came following a year-long discussion between the two parties to analyse the merits and effects of the deal.

Coinsurance is a type of financial reinsurance used commonly in the US and Europe. As opposed to traditional reinsurance where insurance risks involving large man-made and natural catastrophe losses are reinsured, coinsurance allows primary insurers to cede interest rate risk as well as insurance risk, helping to reduce their capital requirements and improve their financial solvency.

Over the last four years, Korean Re has been setting the stage for developing the domestic coinsurance market, with its team of experts looking to explore and expand coinsurance business opportunities in Korea in ways that provide domestic life insurers with more reinsurance solutions in addition to traditional reinsurance arrangements where only risk premiums would be ceded.

The recent agreement with Samsung Life marks Korean Re’s second coinsurance business following the deal with Shinhan Life in January 2022.

"We will build on our latest success to give new growth momentum to our domestic business and lead the development of the coinsurance market in general," Korean Re said in a statement.

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