Due to COVID-19 Surge, Outings Decrease... Insurance Companies' Profits Soar 36% Last Year

Source: Financial Supervisory Service

[Asia Economy Reporter Changhwan Lee] Domestic insurance companies recorded their highest-ever performance last year. A major reason was the improvement in loss ratios as people went out less due to COVID-19.

According to the "2021 Insurance Company Business Performance (Preliminary)" announced by the Financial Supervisory Service on the 23rd, the total net profit of domestic insurance companies (23 life insurers, 30 non-life insurers) last year was 8.2667 trillion KRW, an increase of 2.1967 trillion KRW (36.2%) compared to the previous year, marking an all-time high.

Life insurers’ net profit was 3.9403 trillion KRW, up 489 billion KRW (14.2%) from the previous year. Although insurance operating profit deteriorated (-0.7 trillion KRW) due to a decrease in savings-type insurance sales, investment operating profit increased significantly (1.6 trillion KRW) thanks to higher interest and dividend income.

Non-life insurers’ net profit surged by 1.7077 trillion KRW (65.2%) to 4.3264 trillion KRW compared to the previous year. This was due to a decrease in insurance operating losses as automobile insurance loss ratios and long-term insurance expense ratios fell amid the COVID-19 impact, along with an increase in investment operating profit.

Last year, the total premiums earned by all insurance companies amounted to 224.9 trillion KRW, an increase of 3 trillion KRW (1.4%) from the previous year.

Life insurers recorded 120.5457 trillion KRW, up 958.5 billion KRW (0.8%) from the previous year. Sales of variable insurance (6.1%), retirement pensions (5.8%), and protection-type insurance (2.1%) increased.

Non-life insurers recorded 104.3734 trillion KRW, up 2.0562 trillion KRW (2.0%) from the previous year. Sales of long-term insurance (5.2%), automobile insurance (3.7%), and general insurance (8.8%) increased, while retirement pensions (-15.7%) sharply declined.

As performance improved, profitability also improved. Last year, domestic insurance companies’ return on assets (ROA) and return on equity (ROE) were 0.62% and 5.95%, respectively, rising by 0.15 percentage points and 1.51 percentage points compared to the previous year.

Total assets reached 1,358.7 trillion KRW, increasing by 37.3 trillion KRW (2.8%) from the end of the previous year due to an increase in operating assets from premium income.

The Financial Supervisory Service emphasized that, in preparation for the expanding uncertainties surrounding the insurance industry, insurance companies need to strengthen long-term profitability and asset management risk control and secure financial soundness.

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