Life Insurers Reduced Dividends, Non-Life Insurers Increased Total Dividend Amounts

Financial Authorities' Dividend Restraint Recommendation Met with 'Caution'
Dividend Payout Ratio Lowered but Scale Increased Due to Earnings Growth

[Asia Economy Reporter Oh Hyung-gil] Major life insurance companies have reduced their dividend payouts compared to the previous year, while non-life insurance companies have increased theirs. The reason for these differing outcomes, despite adhering to the regulatory authorities' recommendations to restrain dividends, is analyzed to stem from the contrasting market conditions and performance of life and non-life insurers.

According to the insurance industry on the 10th, Kyobo Life Insurance recently held a board meeting and decided to pay an annual dividend of 1,000 KRW per share for 2020. This is a 33.3% decrease from the previous year's dividend of 1,500 KRW per share.

The total dividend amount is 102.5 billion KRW, with a dividend payout ratio of 26.8% compared to last year's net income of 382.8 billion KRW. This is a slight reduction from 28.2% the previous year.

The dividend payout ratio is calculated by dividing the total dividends by net income, indicating how much of the net profit earned during the fiscal year was distributed to shareholders.

Earlier, Samsung Life Insurance also decided to pay a dividend of 2,500 KRW per share, down 5.6% from 2,650 KRW the previous year. During the same period, net income increased by 30.3% from 1.0516 trillion KRW to 1.3705 trillion KRW, but the total dividend amount decreased from 475.8 billion KRW to 448.9 billion KRW.

Hanwha Life Insurance plans to pay dividends totaling 22.5 billion KRW, maintaining the same 30 KRW per share as the previous year. Although net income grew more than 300% from 58.6 billion KRW to 241.2 billion KRW, the company ultimately restrained dividend expansion.

Mirae Asset Life Insurance, whose net profit declined by about 8% last year, plans to pay a total of 28.3 billion KRW in dividends, including 100 KRW per common share and 710 KRW per preferred share, a 26.4% decrease from the previous year. Tongyang Life Insurance also decided to pay 220 KRW per share, totaling 34.2 billion KRW, down 4.4% from the previous year.

On the other hand, non-life insurers increased their dividend payouts compared to the previous year.

Samsung Fire & Marine Insurance plans to pay a year-end dividend of 8,800 KRW per share (8,805 KRW for preferred shares), a 3.5% increase from 8,500 KRW (8,505 KRW) the previous year. The total dividend amount rose from 361.3 billion KRW to 374 billion KRW.

DB Insurance raised its dividend per share from 1,500 KRW to 2,200 KRW, a 46.6% increase. The total dividend amount also increased from 94.9 billion KRW to 132 billion KRW. Hyundai Marine & Fire Insurance increased dividends from 880 KRW to 1,000 KRW per share, a 13.6% rise, and Meritz Fire & Marine Insurance raised dividends from 850 KRW to 1,280 KRW, a 50.5% increase.

Non-life insurers explained that although they lowered their dividend payout ratios compared to the previous year, dividend amounts increased due to improved performance amid the COVID-19 impact last year.

This indicates that they have sufficiently complied with the authorities' recommendations to restrain dividends. Previously, the Financial Supervisory Service convened executives of major insurers and recommended maintaining dividend payout ratios at the three-year average or normal levels.

Samsung Fire & Marine Insurance's consolidated net income last year was 757.3 billion KRW, with a dividend payout ratio of 49.4%, down 7 percentage points from 56.2% the previous year. DB Insurance's payout ratio decreased from 24.8% to 23.4%, and Hyundai Marine & Fire Insurance's from 26.0% to 23.9%. Meritz Fire & Marine Insurance's payout ratio increased from 31.4% to 34.9%.

A non-life insurer official said, "Although we reduced the dividend payout ratio, the increase in net income resulted in a larger dividend amount. We plan to maintain shareholder-friendly policies while strengthening responses to capital regulations such as the new International Financial Reporting Standard (IFRS 17)."

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