Hanwha Life Insurance H1 Net Profit 704 Billion KRW... 69% Increase YoY

Impact of Increased Sales in Guaranteed and Whole Life Insurance
Also an IFRS17 'Optical Illusion' Effect
40% Decrease in Net Profit if Applied Retroactively

Hanwha Life Insurance posted a net profit of over 700 billion KRW in the first half of this year. This is attributed to increased sales of general protection products and whole life insurance. However, there are also 'illusion effects' due to the application of IFRS17, so it is expected that future trends will need to be monitored.

Hanwha Life Insurance announced on the 17th that it recorded a consolidated net profit of 704 billion KRW for the first half of this year, a 68.6% increase compared to the same period last year. However, on a quarterly basis, net profit for the second quarter was 240.3 billion KRW, down 24.6% from the second quarter of last year.

New contract annualized premium equivalent (APE) reached 1.8455 trillion KRW, growing 113.3% compared to the second quarter of last year. This was due to increased sales of protection and pension products. Protection APE also rose 113.2% during the same period, totaling 1.1181 trillion KRW. This is believed to be due to increased sales of general protection products and whole life insurance.

The contract service margin (CSM), a profitability indicator newly introduced under IFRS17, also increased. CSM is a concept that evaluates future profits from insurance contracts. It is recognized as a liability at the time of the insurance contract and amortized as profit over the duration of the contract.

Hanwha Life’s CSM stood at 10.1167 trillion KRW as of the end of the first half, a 25.7% increase compared to the same period last year. In particular, growth in new contract CSM was significant. Thanks to strong sales across all product lines including general protection and whole life insurance, it achieved 1.3592 trillion KRW, up 62.9% year-on-year.

The new soundness indicator, the new solvency ratio (K-ICS), recorded 180%. Despite executing a $1 billion overseas hybrid capital securities call option in April, the expansion of high-profit protection products at the beginning of the month and management of duration gaps were effective, according to the explanation.

Meanwhile, the number of insurance planners (FPs) at Hanwha Life’s sales subsidiaries?Hanwha Life Financial Services, Hanwha Life Lab, and People Life?totaled 25,782, a 36% increase compared to the same period last year. The 13th installment retention rate of FPs was 51.9%, up 9.5 percentage points from 42.4% in the same period last year.

However, there are also criticisms that these results include illusion effects due to the introduction of the new accounting standards. When IFRS17 is applied retrospectively, the consolidated net profit for the first half of this year sharply decreased by 39.6% compared to the first half of last year. On a separate basis, it was also recorded at 513.3 billion KRW, down 34.0% year-on-year.

A Hanwha Life official said, "We have focused on expanding sales of high-value protection insurance and enhancing product development and manufacturing capabilities to increase the company's long-term value. In addition, we will expand new contract sales strategies such as reorganizing sales channels in response to the growing influence of insurance agencies (GA) and non-life insurance companies."

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