KB 324.3 Billion vs Shinhan 309 Billion... Leading Financial Group Insurance Companies

Foreign Life Insurance Companies Among Financial Groups Show 'Strong Performance'

[Asia Economy Reporter Oh Hyung-gil] Insurance companies that have moved under financial groups recorded 'surprise earnings' in the first half of the year, showing smooth sailing after mergers and acquisitions (M&A).

Shinhan Financial Group's Orange Life merged with Shinhan Life last month to form 'Shinhan Life,' while KB Financial Group's Prudential Life is currently operating independently alongside KB Life.

According to the insurance industry on the 28th, Orange Life posted a net profit of 216.8 billion KRW in the first half of this year, a 57.6% increase from 137.5 billion KRW in the same period last year. During the same period, the loss ratio slightly increased from 74.9% to 75.6%, but improved investment yield from 3.48% to 3.74% drove the performance.

Shinhan Life also saw a slight increase in net profit from 91.6 billion KRW to 92.2 billion KRW in the first half. The loss ratio decreased from 94.1% to 91.3%, but the investment yield dropped from 3.23% to 3.1%. The two companies newly launched the integrated corporation 'Shinhan Life' last month.

Simply calculated, the two companies recorded a combined net profit of 309 billion KRW, and if this trend continues in the second half, it is expected to exceed the target of 400 billion KRW for this year, the first year of integration.

Huh Young-taek, Chief Management Officer (CMO) of Shinhan Financial Group, said at Shinhan Financial Group's earnings announcement yesterday, "Shinhan Life's net profit target for this year is around 400 billion KRW, and the profit and loss level is coming out normally, so it is expected to exceed this year's target," adding, "Asset and liability comprehensive management is better managed than any other life insurer, so when the new International Financial Reporting Standard (IFRS17) is introduced, differentiation will be clear."

Prudential Life, which joined KB Financial Group, posted a consolidated net profit of 192.4 billion KRW in the first half alone. On an individual basis, it recorded a net profit of 143 billion KRW, more than double compared to the first half of last year.

It is explained that insurance profits improved due to actively managing profitability through bond replacement and the combined effect of reduced new contract costs from increased sales of savings products. Prudential Life achieved a surplus of 228 billion KRW last year, so performance improvement is also expected this year compared to last year.

However, KB Life, a life insurance company within KB Financial, posted a net loss of 11 billion KRW in the first half of this year, returning to the red. Also, KB Insurance recorded 142.9 billion KRW, similar to the same period last year, due to increased costs from voluntary retirement.

KB Financial plans to strengthen collaboration within the insurance sector of the group before integrating the insurance affiliates whose growth has slowed. Lee Hwan-joo, Vice President (CFO) of KB Financial Group, said in a conference call last week, "By providing continuous financial services tailored to customers' lifelong life cycles, the role of insurance affiliates within the group will expand," adding, "We are strengthening the collaboration system across all areas including products, channels, and organizations."