NH Nonghyup Property & Casualty Insurance postponed a subordinated bond issuance intended to refinance 100 billion won maturing on the 21st, according to insurance industry sources on the 15th. The company's board approved the issuance of up to 100 billion won in subordinated bonds in May, but the insurer delayed the schedule due to sustained high interest rates and anticipated difficulties securing investor demand. The decision reflects broader challenges in South Korea's insurance sector, where major insurers have struggled to attract capital despite offering annual rates exceeding 5% in 2026, as market uncertainty dampens appetite for long-term instruments.
NH Nonghyup Board Approved 100 Billion Won Bond Issuance in May
NH Nonghyup Property & Casualty Insurance holds 100 billion won in subordinated bonds with call options maturing on the 21st, according to insurance industry sources on the 15th. The company's board approved the issuance of up to 100 billion won in subordinated bonds in May to refinance the maturing debt. However, the insurer postponed the issuance schedule due to sustained high interest rates and anticipated challenges in securing sufficient investor demand.
Interest Rate Burden Increased from 3.3% to Over 6%
The subordinated bonds issued by NH Nonghyup in July 2021 carried an annual interest rate of 3.3%. If the company proceeds with refinancing at the current market conditions, it would need to offer an annual rate exceeding 6%, significantly increasing its interest expense burden. The gap between the original 3.3% rate and the current 6%+ requirement represents a near-doubling of financing costs for the insurer.
Heungkuk Fire & Marine and DB Insurance Faced Undersubscription in 2026
Major South Korean insurers have encountered difficulties in capital raising despite offering high rates in 2026. Heungkuk Fire & Marine conducted demand forecasting in March for a 100 billion won subordinated bond issuance but attracted only 85 billion won in commitments. The final interest rate was set at the upper end of the range at 5.5%. DB Insurance opened its issuance limit from an initial target of 300 billion won to a maximum of 600 billion won last month, but demand forecasting yielded only 255 billion won in commitments, resulting in an actual issuance of 410 billion won. The interest rate was determined at 5.30%. Growing uncertainty in financial markets has weakened investor appetite for long-term instruments, contributing to undersubscription across the industry.
NH Nonghyup K-ICS Ratio Reached 145.4% in Q1 2026
NH Nonghyup Property & Casualty Insurance requires capital securities issuance to manage its solvency ratio (K-ICS), a key financial health indicator for insurers. The company's K-ICS ratio before transitional measures stood at 145.4% as of Q1 2026, an increase of 14.5 percentage points from the end of the previous year, showing an improving trend. However, the ratio remains significantly below the domestic property and casualty insurance industry average of 222.4%.
Company Plans Cash Repayment and Future Issuance Monitoring
NH Nonghyup Property & Casualty Insurance plans to proceed with early repayment using its own cash rather than refinancing, due to the interest rate burden. The company will monitor financial market conditions and adjust the timing for reinitiating the subordinated bond issuance. An insurance industry official stated that NH Nonghyup will likely resume issuance efforts after observing interest rate trends and the recovery of investment demand, as K-ICS ratio management remains a priority.
FAQ
What did NH Nonghyup Property & Casualty Insurance do regarding its subordinated bond issuance?
NH Nonghyup Property & Casualty Insurance postponed a subordinated bond issuance intended to refinance 100 billion won maturing on the 21st. The company's board approved the issuance of up to 100 billion won in subordinated bonds in May, but delayed the schedule due to sustained high interest rates and anticipated difficulties securing investor demand.
Why did NH Nonghyup postpone the bond issuance?
The subordinated bonds issued by NH Nonghyup in July 2021 carried an annual interest rate of 3.3%. If the company proceeds with refinancing at current market conditions, it would need to offer an annual rate exceeding 6%, significantly increasing its interest expense burden. The insurer also anticipated challenges in securing sufficient investor demand given industry-wide undersubscription trends in 2026.
How does NH Nonghyup's K-ICS ratio compare to the industry average?
NH Nonghyup Property & Casualty Insurance's K-ICS ratio before transitional measures stood at 145.4% as of Q1 2026, an increase of 14.5 percentage points from the end of the previous year. However, the ratio remains significantly below the domestic property and casualty insurance industry average of 222.4%.
