Authorities' 'Hint' Leads Life Insurers to Cut Dividends... Non-Life Insurers Increase Total Dividends (Comprehensive)

Financial Authorities Recommend Dividend Restraint
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 sizes compared to the previous year, while non-life insurance companies have increased theirs. The reason for these differing outcomes, despite compliance with the regulatory authorities' recommendation 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 profit of 382.8 billion KRW. This is a slight decrease from 28.2% the previous year.

The dividend payout ratio is the total dividend divided by net profit, indicating how much of the net income 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 profit 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.

[Image source=Yonhap News]

Life Insurance 'Big 3' Dividends Decrease or Remain Steady Compared to Previous Year

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

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

On the other hand, non-life insurers increased their dividend sizes 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 increased 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 rose from 94.9 billion KRW to 132 billion KRW. Hyundai Marine & Fire Insurance increased its dividend from 880 KRW to 1,000 KRW, a 13.6% rise, and Meritz Fire & Marine Insurance increased its dividend from 850 KRW to 1,280 KRW, a 50.5% increase.

DB Insurance

Non-life insurers explained that although their dividend payout ratios decreased 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' recommendation to restrain dividends. Previously, the Financial Supervisory Service convened executives of major insurance companies and recommended maintaining dividend payout ratios at the three-year average or normal levels.

Samsung Fire & Marine Insurance's consolidated net profit 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 also 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 the dividend payout ratio was reduced, the dividend size increased as net profit rose. 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.