Lotte Insurance Posts Cumulative Net Profit of 99 Billion Won in Q3, Up 42% Year-on-Year

Insurance Underwriting Profit Reaches 36.9 Billion Won
Turns to Profit in Q2 and Q3 After Q1 Loss
Risk-Based Capital Ratio Rises to 141.6%, Surpassing Regulatory Recommendation

Lotte Insurance announced on November 4 that its cumulative net profit for the third quarter of this year reached 99 billion won, a 42% increase compared to 69.7 billion won during the same period last year. During the same period, cumulative operating profit was 129.3 billion won, up 45% from the previous year.

Cumulative insurance operating profit for the third quarter stood at 36.9 billion won, maintaining a stable level, primarily driven by long-term protection-type insurance. In the first quarter, Lotte Insurance recorded an insurance operating loss of 11.2 billion won due to temporary and one-off effects from institutional changes such as the "loss ratio assumption by attained age." However, the company returned to profitability in the second and third quarters.

Lotte Insurance Headquarters. Lotte Insurance

Lotte Insurance’s cumulative investment operating profit for the third quarter was 92.4 billion won, showing a significant improvement. In contrast, the company posted a cumulative investment operating loss of 10.9 billion won during the third quarter of last year. The stabilization of investment operating profit is interpreted as the result of ongoing efforts to improve the company’s structure. Since the change in its largest shareholder in October 2019, Lotte Insurance has implemented investment asset rebalancing, including proactive sales of beneficiary certificates, securing safe assets such as bonds, and reducing required capital.

Thanks to stable management performance and structural improvement efforts, the solvency margin ratio (K-ICS) exceeded the financial authorities’ recommended level of 130%. As of the end of the third quarter, Lotte Insurance’s K-ICS stood at 141.6%, up 12.1 percentage points from 129.5% at the end of the second quarter. According to the company, this is the result of stable insurance operating profit generation based on continuous growth in the contractual service margin (CSM) and increased investment operating profit through rebalancing.

The cumulative direct premium for Lotte Insurance’s main product, long-term protection-type insurance, reached 1.8853 trillion won in the third quarter, a 6.1% increase from 1.7765 trillion won in the third quarter of last year. Long-term protection-type insurance accounted for 88.4% of the total direct premium.

The CSM, which serves as the source of future insurance operating profit, was recorded at 2.268 trillion won. The new contract CSM inflow through the third quarter was 314.7 billion won, with 101.2 billion won of that amount generated in the third quarter alone.

A Lotte Insurance representative stated, "Through management centered on intrinsic value that enhances the fundamental competitiveness of insurance, we are continuing to generate stable profits and secure future value. Our structural improvements are driving continued upward trends in management indicators, including K-ICS."

Meanwhile, Lotte Insurance released these provisional management results in the form of a fair disclosure prior to submitting its quarterly report. A company representative added, "Some details of the provisional management results may change during the auditor’s accounting review process."

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