Hanwha Life, 3Q Cumulative Net Profit 577.9 Billion KRW... 27% Decrease YoY

Impact of Investment Division Losses
Cumulative CSM Decreases by 330 Billion Won... New Contract CSM Increases

Hanwha Life Insurance recorded a net loss of over 40 billion KRW in the third quarter of this year. While the insurance sales division posted profits, losses exceeding 250 billion KRW in the investment division appear to have impacted the overall results.

On the 15th, Hanwha Life announced a net loss of 40.8 billion KRW for the third quarter of this year. This marks a turnaround from a net profit of 310.1 billion KRW in the third quarter of last year. However, on a cumulative basis for the third quarter of this year, the company posted a net profit of 577.9 billion KRW. Still, this is a disappointing performance, down 26.6% compared to the third quarter of last year.

The insurance sales division performed well, but significant valuation losses in the investment division are believed to be the cause. Hanwha Life’s third-quarter insurance division profit was 172.6 billion KRW, a decrease of only 5.2% compared to the same period last year.

New contract annualized premium equivalent (APE) reached 2.5651 trillion KRW, driven by an expansion in organizational scale and increased sales of protection-type products. This represents an 87% increase compared to the same period last year. The sales expansion of high-profit general protection products such as the flagship 'Signature Cancer Insurance 3.0' and 'The Worry-Free Dementia Insurance' led to a 118% increase in protection-type APE, reaching 1.7932 trillion KRW compared to the same period last year.

In the investment division, interest income alone amounted to 668.7 billion KRW, but due to insurance finance costs (392.5 billion KRW), losses related to fair value measurement financial instruments recognized in profit or loss (353.7 billion KRW), and derivative-related expenses (558.8 billion KRW), the division recorded a total loss of 252.4 billion KRW.

The profitability indicator CSM, introduced under the new accounting standard IFRS17, decreased compared to the previous quarter. CSM (Contractual Service Margin) is a concept that amortizes and recognizes profits expected from insurance contracts annually, reflecting the insurer’s future profits. Hanwha Life’s CSM stood at 9.7991 trillion KRW as of the end of the third quarter, down 337.6 billion KRW from 10.1167 trillion KRW at the end of the first half. This is attributed to the impact of the IFRS17 guidelines issued by the Financial Supervisory Service (FSS). Earlier, the FSS judged that insurers had inflated their performance by loosely assuming loss ratios for indemnity medical insurance and other factors when adopting IFRS17, and thus established stricter application guidelines to be reflected from the third-quarter results.

New contract CSM performed well. As a result of actively expanding sales of high-profit general protection products, it reached 691.6 billion KRW. The cumulative new contract CSM was 1.8559 trillion KRW, a 48.6% increase compared to the same period last year.

The new solvency ratio (K-ICS), which indicates soundness, was 182%. Hanwha Life explained this as the effect of continuous inflows of new contract CSM and reinsurance underwriting of large lapse risks.

Meanwhile, Hanwha Life continued to expand its organizational scale by strengthening its sales organization maintenance system. The number of financial planners (FPs) at Hanwha Life’s sales subsidiaries?Hanwha Life Financial Services, Hanwha Life Lab, and People Life?reached 26,589, a 37.2% increase compared to the same period last year. This was attributed to steady hiring of about 1,000 FPs in the first half and about 900 in the third quarter.

The 13th-month contract retention rate (one year after insurance subscription) was 83.1%. This improved by 1.1 percentage points compared to the previous quarter through strengthened maintenance systems and management. A Hanwha Life official said, "We will maintain solid strength by securing future profit resources through stable new contract sales growth."

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