Insurance Companies' Q1 Net Profit Down 26%... "Q2 Improvement Uncertain"

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[Asia Economy Reporter Oh Hyung-gil] As insurance business losses increased, the net profit of insurance companies in the first quarter decreased by 26% compared to the same period last year.

In the second quarter, the impact of the novel coronavirus infection (COVID-19) is becoming more apparent, making the improvement of profits uncertain.

According to the first quarter insurance company management performance (provisional) released by the Financial Supervisory Service on the 26th, net profit was 1.4662 trillion KRW, down 516.5 billion KRW, or 26.1%, compared to the same period last year.

Life insurance companies' net profit was 778.2 billion KRW, a decrease of 38.4% (485.6 billion KRW) compared to the same period last year.

Insurance business losses increased by more than 2 trillion KRW compared to the same period last year to 7.9043 trillion KRW, due to an increase in guarantee reserve transfers caused by stock price declines. Investment business profit increased by 25.2% to 7.8341 trillion KRW.

Non-life insurance companies recorded a net profit of 688 billion KRW, down 4.3% from the same period last year.

Investment business profit increased by 12.1% to 2.3164 trillion KRW, but high-cost accidents such as the Lotte Chemical Daesan Plant explosion occurred, and insurance business losses increased from 1.0613 trillion KRW last year to 1.3388 trillion KRW due to increased long-term insurance business expenses.

First quarter written premiums amounted to 50.3718 trillion KRW, an increase of 2.9953 trillion KRW (6.3%) compared to the same period last year.

Life insurance written premiums were 26.4456 trillion KRW, up 990.9 billion KRW (3.9%) from last year. Premiums from savings, protection, and retirement pensions increased, while variable insurance decreased due to increased cancellations and non-payments.

Non-life insurance written premiums reached 23.9262 trillion KRW, up 2.004 trillion KRW (9.1%) from last year. Written premiums for all categories including long-term, automobile, general, and retirement pensions increased.

The insurance companies' first quarter return on assets (ROA) and return on equity (ROE) were 0.47% and 4.57%, respectively, down 0.21 percentage points and 2.31 percentage points compared to the same period last year.

Total assets amounted to 1,241.8249 trillion KRW, an increase of 61.4156 trillion KRW (5.2%) compared to the end of the same month last year.

A Financial Supervisory Service official stated, "As domestic and international risks surrounding the insurance industry are increasing, we will continue to monitor the volatility of financial markets such as domestic and foreign interest rates, stock prices, and exchange rates, and strengthen continuous supervision against reckless product development, irregular business competition, and poor asset management that cause deterioration in the soundness of insurance companies."

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