South Korea’s leading reinsurer Korean Reinsurance Co. (Korean Re) has formed a strategic alliance with U.S.-based global investment firm The Carlyle Group to jointly develop co-insurance products tailored for Korean insurers.

Korean Re announced Tuesday that it signed a memorandum of understanding with The Carlyle Group on July 31 to develop co-insurance solutions for local primary insurers and collaborate on a wide range of areas including product designing and structuring, reinsurance asset management, capital management and capital raising.

Co-insurance is a reinsurance product that allows insurers to transfer interest rate related risks to reinsurers. South Korea introduced the policy in June to help local insurers reduce insurance liabilities following the adoption of International Financial Accounting Standards 17 (IFRS17) and the new Korean-Insurance Capital Standards (K-ICS).

Korean life insurers are reportedly in talks with reinsurers such as Korean Re to sign a co-insurance contract, according to sources.

Korean Re said it has been preparing for the introduction of co-insurance products since 2018 by setting up a team exclusively dealing with co-insurance underwriting.

The Carlyle Group has also been expanding its insurance business by acquiring a majority stake in Fortitude Re, a reinsurer separated from AIG Group in 2018.

“Through this strategic alliance, Korean Re expects to steadily grow its reinsurance capacity, and to develop and offer differentiated co-insurance solutions, leveraging Carlyle’s asset management expertise, capital raising capabilities and Fortitude Re’s global reinsurance know-how,” Korean Re said in a press release. “Carlyle and Fortitude Re are well-positioned to further expand their asset management and reinsurance businesses, respectively, drawing upon Korean Re’s extensive customer network in Korea.”

Korean Re shares were unchanged from the previous day at 7,160 won in Wednesday morning session.

By Choi Mira

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