Insurance Companies' Q3 Net Profit 5.5747 Trillion Won... Up 6.1% YoY

Increase in Savings Insurance Sales and Stabilization of Car Insurance Loss Ratio
Investment Operations Declined but Insurance Operating Losses Also Reduced

Insurance Company Management Performance (Source: Financial Supervisory Service)

[Asia Economy Reporter Oh Hyung-gil] Insurance companies' net income through the third quarter totaled 5.5747 trillion KRW, marking a 6.1% increase compared to the same period last year. Performance improved as sales of savings-type insurance increased due to low interest rates, and loss ratios for automobile and long-term insurance stabilized.

According to the Financial Supervisory Service on the 24th, the cumulative net income of life insurance companies through the third quarter was 3.1515 trillion KRW, up 3.1% from 3.0569 trillion KRW in the same period last year. Although interest income decreased by 459.2 billion KRW due to falling interest rates, insurance operating losses declined thanks to strong sales performance of savings-type insurance.

Net income for non-life insurance companies recorded 2.4232 trillion KRW, a 10.2% increase from last year. Similarly, interest income decreased by 186.7 billion KRW, but insurance operating losses were reduced due to decreased losses in automobile and long-term insurance amid the impact of the novel coronavirus disease (COVID-19).

Gross written premiums were 81.5401 trillion KRW for life insurance and 70.8883 trillion KRW for non-life insurance, increasing 4.3% and 5.9% respectively compared to the same period last year.

The return on assets (ROA) stood at 0.59%, similar to 0.59% in the previous year, but the return on equity (ROE) fell by 0.26 percentage points to 5.47% from 5.73% in the same period last year.

As of the end of September, total assets of insurance companies reached 1,291.6306 trillion KRW, up 5.6% from 1,223.6068 trillion KRW in the same period last year. Equity capital also increased by 7.0% year-on-year to 141.8177 trillion KRW due to increased retained earnings and valuation gains on available-for-sale securities.

The Financial Supervisory Service explained that the increase in insurance companies' net income is mainly attributed to improved insurance operating losses despite a decrease in investment operating income.

An official from the Financial Supervisory Service stated, "Due to the prolonged COVID-19 pandemic, deteriorating business conditions, and investment environment, there are concerns about the simultaneous decline in long-term profitability and financial soundness of insurance companies. We plan to strengthen continuous monitoring of major risk factors such as financial market volatility, excessive business competition, and deterioration of alternative investment assets, while promoting proactive capital reinforcement to prepare for the introduction of the new International Financial Reporting Standard (IFRS 17) and to enhance loss absorption capacity against volatility."

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