Insurance Companies Moving to Financial Holding Companies... Earnings 'Smile' (Comprehensive)

Loss Ratio Improvement + Expansion of Sales Channels
Notable Growth in Non-Bank Sector... Synergy Plays a Role

[Asia Economy Reporter Oh Hyung-gil] The financial holding companies' affiliated insurance firms continue to show rising performance, leading the advancement of non-bank affiliates. The overall loss ratio in the insurance industry improved due to the impact of COVID-19, and synergies among affiliates such as asset management and expansion of sales channels contributed to the strong results.

According to the insurance industry on the 28th, Prudential Life Insurance's cumulative net profit for the third quarter reached 255.6 billion KRW, surpassing last year's annual net profit of 227.8 billion KRW. Prudential Life Insurance, acquired by KB Financial Group in August last year, improved insurance profitability as the proportion of savings-type products increased due to low interest rates, reducing new contract expenses, and increased investment income through strategic trading of managed assets.

In particular, Prudential Life Insurance's asset yield rate was 4.86% up to the second quarter, ranking first in the life insurance industry. They implemented a strategy of expanding investment income by strategically trading managed assets.

A representative example is the large-scale sale of bonds from the U.S. Prudential headquarters, which generated 149 billion KRW in investment operating profit. However, KB Life Insurance, another life insurer within the KB Group, recorded a net loss of 18.1 billion KRW in the third quarter, continuing its deficit.

Shinhan Life, which started anew as an integrated corporation in July, also received passing marks on its first report card. The cumulative net profit for the third quarter was 401.9 billion KRW, a 4.5% increase compared to the same period last year. Before integration, Shinhan Life and Orange Life posted net profits of 92.2 billion KRW and 216.8 billion KRW respectively in the first half, meaning that after integration, they earned over 100 billion KRW in net profit in the third quarter alone.

Looking at the Annual Premium Equivalent (APE), which gauges new contract growth, it decreased by 18.2% compared to the same period last year up to the third quarter, but on a standalone basis, it increased by 34.4% from 169.2 billion KRW in the second quarter to 227.4 billion KRW in the third quarter.

However, it is regrettable that earned premiums are declining and the loss ratio is showing signs of increase. The cumulative earned premiums for the third quarter were 5.5299 trillion KRW, down 13% from the same period last year. In the third quarter alone, it was 1.7577 trillion KRW, a 16.9% decrease year-on-year. The loss ratio also slightly increased from 83.8% last year to 85.7%.

Hana General Insurance (formerly The-K Non-Life Insurance), incorporated into Hana Financial Group in April last year, also succeeded in turning a profit in just over a year since its launch.

Hana General Insurance recorded a cumulative net profit of 5.9 billion KRW in the third quarter, an increase of 8.3 billion KRW compared to a net loss of 2.4 billion KRW in the same period last year. This growth was largely driven by improvements in automobile loss ratios. Hana General Insurance's automobile insurance loss ratio has maintained a stable average of around 80%. Up to September, the loss ratio was 88.5%, improving by 3.9 percentage points compared to the previous year.

On the other hand, Hana Life Insurance posted a cumulative net profit of 22.8 billion KRW in the third quarter, down 10.9% year-on-year. In the first half of the year, it also recorded a net profit of 20.9 billion KRW, a 10.3% decrease compared to the previous year.

Another financial holding company affiliate, NH Nonghyup Life Insurance and NH Nonghyup General Insurance, continue to show strong performance. The cumulative net profits for the third quarter of Nonghyup Life and Nonghyup General Insurance increased by 77.6% and 78.2% year-on-year, reaching 114.2 billion KRW and 87.6 billion KRW respectively.

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