Domestic Life Insurance Companies' Q1 Net Profit at 1.4 Trillion KRW... 45% Sharp Decline Year-on-Year

[Asia Economy Reporter Changhwan Lee] The profits of domestic insurance companies in the first quarter have decreased compared to the previous year.

According to the "2022 Q1 Insurance Company Business Performance (Provisional)" announced by the Financial Supervisory Service on the 30th, the net profit of domestic insurance companies (23 life insurers, 30 non-life insurers) in the first quarter of this year was a total of 3.051 trillion KRW, down 821 billion KRW (-21.2%) compared to the same period last year.

The decline in profits was larger for life insurers. The net profit of life insurers in the first quarter was 1.3991 trillion KRW, down 1.1555 trillion KRW (-45.2%) compared to the same period last year.

Insurance operating profit worsened due to a decrease in savings-type insurance sales, and investment operating profit also decreased by about 1 trillion KRW due to a decline in gains on disposal of financial assets and dividend income.

The net profit of non-life insurers was 1.6519 trillion KRW, an increase of 334.5 billion KRW (25.4%) compared to the same period last year. They posted strong results as insurance operating profit greatly improved (+600 billion KRW) due to a decline in loss ratios caused by COVID-19.

The total premiums earned by all insurance companies in the first quarter were 50.8702 trillion KRW, down 1.6219 trillion KRW (-3.1%) compared to the same period last year due to a decrease in sales of savings and variable insurance.

The Financial Supervisory Service evaluated that insurance companies are facing a reduction in future revenue sources as not only savings and variable insurance but also protection-type first-year premiums have decreased due to COVID-19 and rising interest rates.

It pointed out that, following the recent sharp rise in interest rates, the burden of capital procurement costs is also increasing, especially for insurance companies with poor financial soundness.

Accordingly, it announced plans to strengthen continuous monitoring of insurance operations, profits and losses, and risk management, focusing on insurance companies with weak financial soundness and profit structures.

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