S. Korean insurers' loan default ratios rise

By Park Bo-ram
SEOUL, June 15 (Yonhap) -- Delinquency ratios on lending by South Korean insurers
climbed in the first quarter as companies were late making repayments due to an
economic downturn, the financial watchdog said Monday.

The average ratio of default loans against total lending by 52 local life and
non-life insurers reached 3.82 percent as of the end of March, compared with 3.76
percent three months earlier, according to the Financial Supervisory Service
(FSS).
At the end of March, an outstanding 79.5 billion won (US$63.1 billion) was
extended by the insurers to households and companies.
Growth in the number of defaulted loans, however, slowed during the first three
months of the year, compared with the previous quarter. The ratio had jumped 0.15
percentage point in the September-December period.
The increasing loan default ratio comes as more companies fail to repay debts
amid sluggish economic activity.
The delinquency ratio for corporate loans stood at 5.27 percent at the end of
March, up 0.21 percentage point from three months earlier while the rate for
household lending dropped 0.02 percentage point to 3.25 percent, the FSS said.
"The current default level is stable compared with a year earlier, and insurers'
ability to cushion potential loan losses is also relatively sound," the FSS said
in a statement.
South Korea's economy grew a mere 0.1 percent in the first quarter from three
months earlier, following a 5.1 percent contraction the previous quarter.
The Bank of Korea, the country's central bank, predicted the economy will shrink
2.4 percent this year with weak exports and domestic demand weighing down the
economy.
pbr@yna.co.kr
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