South Korea’s Financial Services Commission (FSC) has issued a management improvement order to Lotte Non-Life Insurance Co., requiring the insurer to submit a revised plan to strengthen capital adequacy after regulators rejected its earlier proposal.
The decision was approved at the FSC’s fourth regular meeting held on 4 March. The measure follows a previous management improvement recommendation issued to the insurer on 5 November 2025.
FSC said the improvement plan submitted by Lotte Non-Life Insurance lacked sufficient detail, feasibility, and supporting evidence, leading the FSC to reject it on 28 January.
Under the new order, the insurer will have to submit an updated management improvement plan within two months to the Financial Supervisory Service (FSS). The plan should include measures such as asset disposals, cost reductions, organisational restructuring, capital increases, and potential asset sale strategies aimed at strengthening capital adequacy.
If approved by the FSC, the insurer will have 18 months to implement the improvement measures. The FSC said the action is a preventive supervisory measure aimed at strengthening capital management rather than a response to deterioration in the company’s financial condition.
The regulator noted that the escalation from a recommendation to a management improvement order was triggered automatically under relevant laws after the initial plan was rejected. Lotte Non-Life Insurance will continue normal operations during the implementation period, the FSC added.
The company’s solvency ratio stood at 142% at the end of September 2025, above the regulatory minimum of 100%, indicating policyholder obligations such as insurance claims payments and retirement pension management remain secure.
The FSC said it will continue to supervise the insurer closely alongside the Financial Supervisory Service to ensure the company prepares and implements its improvement plan in line with regulatory requirements.
In January, the regulator announced that it will enforce a 50% core capital ratio under its K‑ICS regime from 2027, operating a nine‑year transition framework through to the end of 2035. Under the framework, insurers with a core capital ratio between 0% and 50% will be subject to corrective action, starting with management improvement recommendations.
