Hyundai Marine & Fire Insurance 3Q Cumulative Net Profit 786.4 Billion KRW... 8% Decrease YoY

Insurance Profits Increased but Declined Due to Guideline Application and Other Factors

Hyundai Marine & Fire Insurance posted a net profit of approximately 780 billion KRW through the third quarter of this year. While automobile insurance performance was solid and the profit and loss from long-term insurance experience improved, the cumulative net profit decreased due to the application of the IFRS17 guidelines and costs related to voluntary retirement.

On the 14th, Hyundai Marine & Fire Insurance announced that its cumulative net profit for the third quarter of this year reached 786.4 billion KRW, down 8.0% compared to the same period last year. Operating profit was 1.6919 trillion KRW, and insurance profit was 754.5 billion KRW, decreasing by 11.5% and 16.7% respectively from the previous year. Hyundai Marine & Fire Insurance explained, "The main factor for the decline in performance is the application of the Financial Supervisory Service’s IFRS17 guidelines. Additionally, costs temporarily increased due to the implementation of voluntary retirement, and large losses from respiratory diseases also impacted the decrease in net profit."

Previously, the Financial Supervisory Service judged that non-life insurers had inflated their performance by loosely assuming loss ratios for indemnity medical insurance and lapse rates for no- and low-surrender value insurance when adopting the new accounting standard IFRS17. Therefore, stricter application guidelines were created and reflected starting from the third quarter results.

The net profit for the third quarter was 289.4 billion KRW, a 21.1% increase compared to the second quarter of last year (181.7 billion KRW). It also rose 59.3% compared to the previous quarter. However, this is because Hyundai Marine & Fire Insurance chose to apply the Financial Supervisory Service’s guidelines retroactively to past results, not just from the third quarter onward. Before applying the retrospective method, Hyundai Marine & Fire Insurance’s second quarter net profit was 244.4 billion KRW. In this case, the quarter-on-quarter growth rate decreases to 18.4%. Among non-life insurers that have announced third quarter results so far, only DB Insurance and Hyundai Marine & Fire Insurance have applied the retrospective method. In June, the Financial Supervisory Service stated that the prospective method, applying the new accounting standard guidelines from the third quarter onward, is the principle, and that the retrospective method can only be applied through this year.

Specifically, insurance profit for the third quarter was 338.8 billion KRW, a 24.5% increase compared to the same period last year. Hyundai Marine & Fire Insurance explained, "There were no major large-scale accidents, and the insurance profit improved due to a base effect from seasonal factors (Typhoon Hinnamnor damage in September 2022). In automobile insurance, despite increased traffic during the Chuseok holiday, insurance profits grew due to a decrease in natural disaster damages compared to the previous year."

New contracts for long-term insurance also increased by 6.4% year-on-year to 42.7 billion KRW. Hyundai Marine & Fire Insurance stated, "Growth was maintained as contract service margin (CSM) amortization income increased by 25.5%. The size of the experience variance (difference between expected and actual) also improved by 46.5 billion KRW compared to the previous quarter, reducing the deficit."

Meanwhile, as of the end of the third quarter, Hyundai Marine & Fire Insurance’s CSM stood at 8.8671 trillion KRW, up 6.6% from the end of last year. The CSM for new long-term insurance contracts in the third quarter was recorded at 446.3 billion KRW. CSM is a concept that amortizes and recognizes the profit expected from insurance contracts annually and serves as an indicator reflecting the insurer’s future profits.

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