Lotte Sonbo, Q1 Net Profit 40.9 Billion KRW...27.5% Decrease YoY

Investment Sales Performance 9.8 Billion KRW... 81.9% Sharp Decline
"Temporary Valuation Loss of 16.1 Billion KRW on Interest-Bearing Assets"

Lotte Insurance announced on the 16th that its net profit for the first quarter of this year recorded 40.9 billion KRW, a 27.5% decrease compared to the same period last year. Operating profit for the same period was 51.1 billion KRW, down 32.7%.

Insurance profit and loss amounted to 41.4 billion KRW, an 86.1% increase compared to the same period last year. Long-term insurance profit and loss, which was 16.8 billion KRW in the first quarter of last year, increased by 145.7% to 41.4 billion KRW, driving the growth of insurance profit and loss.

The insurance contract service margin (CSM) for the first quarter recorded 2.4306 trillion KRW. This is a net increase of 34 billion KRW compared to the end of 2023 (2.3966 trillion KRW). The new contract CSM for the first quarter was 126.7 billion KRW.

The variance ratio was recorded at 0.8%. The variance refers to the difference between expected insurance claims and expenses and the actual insurance claims and expenses incurred, serving as an indicator of the accuracy of actuarial assumptions under the new international accounting standard (IFRS 17).

The persistency rate of long-term protection insurance, which directly and indirectly affects the CSM, was 88.1% at the 13th month and 74.1% at the 25th month, showing a level similar to the end of last year. The proportion of long-term insurance within total gross written premiums was 89%. Lotte Insurance’s gross written premiums for the first quarter were 670.9 billion KRW, of which 597.5 billion KRW was long-term insurance. The new monthly premium for long-term protection insurance recorded 10.2 billion KRW.

According to the balanced growth strategy across channels, the exclusive agency organization showed remarkable growth. The new monthly premiums acquired by the exclusive agency organization in the first quarter were 1.9 billion KRW, an increase of 17.8% compared to 1.3 billion KRW in the first quarter of last year. As of the end of the first quarter, the number of exclusive agency planners was 4,232. Among them, 1,165 exclusive planners newly joined through the sales support platform ‘Wonder’, launched in December last year.

Investment business performance was 9.8 billion KRW, sharply down 81.9% from 53.8 billion KRW in the same period last year. A Lotte Insurance official explained, "As the proportion of interest-bearing assets increased due to securing safe assets, the investment business performance was significantly affected by valuation gains and losses caused by market interest rate fluctuations." Temporary valuation losses on interest-bearing assets recorded 16.1 billion KRW. The official added, "Interest-bearing assets reflecting valuation losses are safe assets with principal guaranteed, and the valuation losses will be fully reversed at maturity," and "If the market environment improves, such as interest rate cuts in the second half of the year, these valuation losses will also be reversed."

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