Adoption of Consolidated RBC System and Changes in the Value Relevance of Available Capital

This study empirically analyzes the value relevance of available capital(hereafter AV) by comparing it with the value relevance of equity book value, and whether the value relevance of AV changed significantly due to the adoption of the consolidated RBC system. 
The analysis results are as follows. First, it was reported that the value relevance of AV was significantly lower than the value relevance of equity book value. This indicates that the low value relevance of the insurer’s net profit is not because the valuation of the insurers is based on the liquidation value, but because the usefulness of the insurer’s net profit itself is low. Second, the value relevance of AV has significantly increased since the adoption of the consolidated RBC system. This is interpreted as a result of indicating that the change of RBC system in a consistent direction in IFRS, Basel Ⅲ and Solvency Ⅱ is a desirable direction in terms of value relevance. This study is significant in that it indirectly confirmed the perspective of valuation in the capital market and reviewed the effect of implementing the new supervisory system from the perspective of valuation in the capital market.