Financial Holding Insurance Companies Show Mixed Results... Non-life Insurance 'Smiles', Life Insurance 'Frowns'

[Asia Economy Reporter Oh Hyung-gil] Insurance companies affiliated with financial holding companies that are expanding their presence in the insurance industry showed mixed results in the first quarter. Life insurers fell into a slump due to the COVID-19 pandemic, while non-life insurers managed to breathe a little easier.

According to the insurance industry on the 1st, the three major financial holding company-affiliated insurers?KB, Shinhan, and Hana?showed differing first-quarter results this year.

Non-life insurers saw a slight increase in net profit as loss ratios improved due to reduced vehicle usage and fewer medical visits amid the spread of COVID-19. In contrast, life insurers struggled due to sluggish business conditions and continued low interest rates affecting asset management.

KB Insurance posted a net profit of 77.2 billion KRW in the first quarter, a 2.5% increase from 75.3 billion KRW in the previous year. This was attributed to an overall improvement in loss ratios centered on automobile insurance and expanded investment performance.

KB Insurance's first-quarter loss ratio was 86.6%, down 3.0 percentage points from the previous quarter due to the effect of premium increases at the beginning of the year and a decrease in automobile accident rates.

In particular, the automobile insurance loss ratio improved by 15.8 percentage points from the previous quarter to 84.7%. This was due to reduced vehicle usage following social distancing guidelines after the COVID-19 outbreak, which led to fewer car accidents.

KB Life, a subsidiary of KB Financial Group, recorded a net profit of 5.9 billion KRW in the first quarter, a 35.2% decrease from 9.1 billion KRW in the previous year. KB Financial recently decided to acquire 100% of Prudential Life’s shares for 2.265 trillion KRW, and future net profits are expected to vary depending on the synergy between KB Life and Prudential Life.

Shinhan Financial Group’s life insurers, Shinhan Life and Orange Life, both saw net profits decline by more than 20%.

Orange Life posted a first-quarter net profit of 59.5 billion KRW, down 25.9% from 80.3 billion KRW in the same period last year. Shinhan Life’s net profit also fell 26.3%, from 53.9 billion KRW to 39.7 billion KRW. Both companies are scheduled to merge and launch a unified entity in July next year.

Hana Financial Group’s Hana Life was the only life insurer to increase its net profit in the first quarter this year. It recorded a net profit of 19 billion KRW, a 171.4% increase compared to the same period last year. Hana Life explained that the significant increase in net profit was due to a one-time special dividend income from the redemption of investment securities.

This content was produced with the assistance of AI translation services.