Insurance Companies' 3Q Cumulative Net Profit 7.7 Trillion Won... Non-Life Insurers Smile, Life Insurers Cry

Cumulative Life Insurers' Net Profit Down 20% in Q3 This Year
Insurance Premium Revenue Declines and Investment Operating Profit Falls Amid Bond Market Slump
Non-Life Insurers' Net Profit Up 22%... Loss Ratio Drops and Foreign Exchange Gains Included

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[Asia Economy Reporter Minwoo Lee] The cumulative net profit of domestic insurance companies for the third quarter of this year exceeded 7.7 trillion KRW, increasing by about 130 billion KRW compared to the same period last year. While life insurance companies experienced a decline due to reduced premium income and falling bond prices, non-life insurance companies posted solid results with increased premium income and higher foreign exchange gains due to the rising exchange rate.

The Financial Supervisory Service (FSS) announced the "2022 January-September Insurance Company Business Performance (Provisional)" report on the 22nd. According to the FSS, the net profit of domestic insurance companies, including 23 life insurers and 31 non-life insurers, totaled 7.7612 trillion KRW from January to September this year. This represents a 1.7% (130.7 billion KRW) increase compared to the same period last year.

Specifically, the net profit of life insurers was 2.9437 trillion KRW, down 20.3% (747.8 billion KRW) from the same period last year. Insurance operating profit deteriorated due to decreased premium income, and financial asset disposal gains declined as bond prices fell, leading to reduced investment operating profit.

On the other hand, non-life insurers recorded a net profit of 4.8175 trillion KRW, up 22.3% (878.5 billion KRW) during the same period. Insurance operating profit improved due to a decline in long-term insurance loss ratios, and investment operating profit increased as foreign exchange gains rose with the exchange rate.

A similar trend was observed in insurance operations (earned premiums). Life insurers recorded 77.6871 trillion KRW, down 5.5% (4.5546 trillion KRW) compared to the same period last year, while non-life insurers increased by 7.2% (5.2559 trillion KRW) to 78.6437 trillion KRW. As a result, the total earned premiums for the first three quarters of this year reached 156.3308 trillion KRW, a 0.5% (70.13 billion KRW) increase from the same period last year.

Life insurers saw sales of protection-type insurance and retirement pensions increase by 2.6% and 3.3%, respectively, while savings-type insurance (-6.0%) and variable insurance (-29.8%) experienced significant declines. Non-life insurers saw a balanced increase across all categories, including long-term insurance (4.8%), automobile insurance (3.0%), general insurance (9.5%), and retirement pensions (33.5%).

Meanwhile, total assets of insurance companies stood at 1,305.7972 trillion KRW and 84.3109 trillion KRW, decreasing by 3.9% (52.9148 trillion KRW) and 37.4% (50.2926 trillion KRW), respectively, compared to the end of last year. Although the exchange rate rose, the increase in government bond yields led to a 152.1% (51.7 trillion KRW) decline in the valuation gains of available-for-sale securities during the same period. Return on assets (ROA) was 0.78%, and return on equity (ROE) was 9.45%, up 0.01 percentage points and 2.12 percentage points, respectively, from the same period last year.

Overall, despite a 37.09 billion KRW decrease in investment operating profit compared to the same period last year, net profit increased due to a 64.39 billion KRW improvement in insurance operating losses. Insurance operating profit improved as the loss ratio of long-term insurance in non-life insurers declined, despite an increase in cancellations of savings-type insurance in life insurers. However, investment operating profit could not offset the impact of the bond market contraction despite foreign exchange gains.

An FSS official stated, "We will strengthen continuous monitoring of major risks and encourage loss absorption capacity enhancement, focusing on insurance companies with concerns about financial soundness amid increased volatility in interest rates and exchange rates and worsening real estate market conditions. Additionally, considering the introduction of the new accounting standard IFRS17, we plan to promote proactive capital reinforcement."

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