Insurance Companies Achieving Record-Breaking Performance and Entering the '1 Trillion Won Era'

Clear Improvement in Insurers' Performance with Loss Ratio Improvement
DB Insurance and Hanwha Life Join the 1 Trillion Won Annual Operating Profit Club

[Asia Economy Reporter Changhwan Lee] Domestic insurance companies are entering the era of annual operating profits exceeding 1 trillion KRW. Last year, as COVID-19 spread and outings decreased, loss ratios improved significantly, and with recent interest rate hikes, profits have been rising sharply.

According to the insurance industry on the 11th, DB Insurance announced in its preliminary earnings report that its consolidated operating profit for last year was tentatively estimated at 1.1097 trillion KRW, a 51.8% increase compared to the previous year.

Revenue increased by 3.8% year-on-year to 20.8815 trillion KRW, and net income rose 56.3% to 876.7 billion KRW. Both revenue and profits are record highs. DB Insurance is the second non-life insurer to surpass 1 trillion KRW in annual operating profit, following Samsung Fire & Marine Insurance.

The improvement in DB Insurance’s performance is attributed to the significant spread of COVID-19 last year and the resulting decrease in people’s mobility, which lowered the loss ratio in automobile insurance. Reduced mobility leads to fewer car accidents and casualties, improving the loss ratio.

Last year, DB Insurance’s automobile insurance loss ratio is estimated to have fallen to the low 80% range. In the non-life insurance industry, considering business and operating expenses, a loss ratio above 90% typically results in losses, while below that is considered a good performance.

A DB Insurance official explained, "Operating profit increased last year due to a significant improvement in the loss ratio."

Samsung Fire & Marine Insurance, which announced its preliminary results on the 27th of last month, also showed sharp performance improvement. Samsung Fire’s operating profit last year surged 44.5% year-on-year to 1.509 trillion KRW.

During the same period, revenue rose 1.7% to 24.4444 trillion KRW, and net income increased 48.7% to 1.1264 trillion KRW. Samsung Fire also recorded its best-ever performance as its automobile insurance loss ratio dropped to the low 80% range.

Hanwha Life becomes the first member of the 1 trillion KRW club in the life insurance industry

In the life insurance sector, Hanwha Life became the second company to join the 1 trillion KRW operating profit club after Samsung Life Insurance. Hanwha Life announced that its consolidated operating profit last year surged 293.4% year-on-year to 1.3519 trillion KRW. During the same period, revenue and net income increased 3.6% and 496.2% to 27.1721 trillion KRW and 1.2415 trillion KRW, respectively.

Hanwha Life’s record performance is credited to improvements in its investment portfolio. First, in September last year, Hanwha Investment & Securities was included as a consolidated subsidiary, and a one-time bargain purchase gain of about 300 billion KRW was recorded at the initial consolidation.

The company also explained that improved results from financial subsidiaries such as Hanwha Investment & Securities, Hanwha General Insurance, and Hanwha Asset Management positively influenced the overall performance.

Samsung Life Insurance, which announced its results earlier, also maintained operating profits in the 1 trillion KRW range. Samsung Life reported a net income of 1.5977 trillion KRW last year, a 16.6% increase from the previous year. The significant improvement in net income was due to a special dividend of about 800 billion KRW received from Samsung Electronics in the first quarter of last year. Samsung Life is a major shareholder holding about 8.5% of Samsung Electronics shares.

The insurance industry expects that the trend of improving performance will continue this year, leading to additional companies joining the 1 trillion KRW club. In particular, for non-life insurers, with recent premium hikes of more than 10% in indemnity insurance and expected tightening of insurance claim payment standards, many anticipate continued performance improvements this year.

Accordingly, companies ranked third and fourth such as Meritz Fire & Marine Insurance and KB Insurance are expected to join the 1 trillion KRW operating profit club within a few years. In the life insurance sector, Kyobo Life Insurance is a major candidate for the 1 trillion KRW club.

An industry insider said, "At the beginning of the year, indemnity insurance premiums rose by 14.2%, and the loss ratio is likely to continue improving due to the Omicron variant this year. It is highly likely that insurance companies will continue to improve their performance this year as well."

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