Insurance Companies Report Surprise Q2 Earnings... "Loss Ratio Improved Due to COVID-19"
Profits Increase as Insurance Payouts Decrease Due to Reduced Vehicle and Hospital Use Amid COVID-19
On the 10th, merchants and visitors near the screening clinic for COVID-19 set up at Namdaemun Market in Seoul are undergoing specimen tests. According to Seoul City and Jung-gu, eight merchants at Kennedy Arcade in Namdaemun Market were confirmed positive for COVID-19. Photo by Moon Honam munonam@
View original image[Asia Economy Reporter Ki Ha-young] The insurance industry recorded favorable results in the second quarter despite the impact of the novel coronavirus disease (COVID-19).
According to the insurance industry on the 17th, the operating profits of major life insurance companies in the second quarter increased by double digits compared to the previous year. Samsung Life Insurance's operating profit in the second quarter rose 35.6% from a year earlier, Hanwha Life Insurance surged 118.27%, and Mirae Asset Life Insurance jumped 64.6%.
The industry analyzed that this improvement in operating profit was due to improved loss ratios and a recovery in the stock market. It was explained that the use of hospitals decreased due to COVID-19, leading to a reduction in payouts for indemnity medical insurance and various disease insurance claims. Additionally, as stock prices rebounded sharply in the second quarter, the scale of variable annuity reserves decreased, turning into profits. Variable annuity reserves are funds set aside to pay the minimum guaranteed insurance amount to policyholders when variable insurance funds incur losses due to stock price declines.
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The non-life insurance industry also saw an increase in operating profits as loss ratios for automobile insurance and indemnity insurance decreased due to the impact of COVID-19. With reduced use of vehicles and hospitals, insurance claim payments decreased, resulting in increased profits. DB Insurance's operating profit in the second quarter surged 100.1% compared to last year, while Meritz Fire & Marine Insurance and Hyundai Marine & Fire Insurance increased by 58.1% and 10.2%, respectively. The loss ratios of the four major non-life insurers up to July stood at 83.5?84.5%, an improvement from 89.3?94.5% during the same period last year.
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