Insurance Company Loans Increased by Over 11 Trillion Won Last Year

[Asia Economy Reporter Kim Hyo-jin] As corporate loans have increased significantly, the outstanding loan balance of insurance companies surged by more than 11 trillion won last year. Due to the rapid economic downturn caused by the novel coronavirus disease (COVID-19), insurance company loans are expected to increase further in the future.

According to the Financial Supervisory Service on the 17th, as of the end of December last year, the scale of insurance companies' loan receivables was 234.7 trillion won, an increase of 11.2 trillion won (5.0%) compared to the end of the previous year. Compared to the end of the previous quarter (229.3 trillion won), it increased by 5.4 trillion won (2.3%).

In particular, corporate loans increased significantly. The outstanding balance of corporate loan receivables as of the end of December last year was 113 trillion won, up 11.8 trillion won (11.7%) from 101.2 trillion won at the end of the previous year. Household loans were 121.1 trillion won, down 7 billion won (0.6%) compared to 121.8 trillion won at the end of the previous year. Among household loans, insurance policy loans increased by 1.1 trillion won (1.7%) to 65.1 trillion won, while mortgage loans decreased by 2.2 trillion won (4.8%) to 44 trillion won.

Insurance companies' mortgage loans decreased from 46.2 trillion won at the end of December 2018 to 45.6 trillion won at the end of the first quarter last year, and to 45.2 trillion won at the end of the second quarter. By the end of the third quarter, it fell to 44.2 trillion won.

The delinquency rate (based on principal and interest overdue for more than one month) of insurance company loan receivables at the end of December last year was 0.26%, down 0.05 percentage points from 0.31% at the end of the previous quarter. Compared to 0.29% at the end of the previous year, it decreased by 0.03 percentage points.

The delinquency rates for household loans and corporate loans were 0.57% and 0.11%, respectively, both down 0.05 percentage points compared to the end of the previous quarter. The ratio of non-performing loans among insurance company loans at the end of December last year was 0.17%, a decrease of 0.02 percentage points compared to 0.19% at the end of the previous quarter.

A Financial Supervisory Service official said, "We will continue to strengthen monitoring of soundness indicators such as delinquency rates and induce the enhancement of loss absorption capacity through sufficient provisioning for loan losses."