Changes in Samsung Life Household Ledger with IFRS17 Introduction: "Assets Increase by 17 Trillion"

Net Profit Also Up 38%... Strong Financial Health

Samsung Life Insurance is expected to see its capital increase by 17 trillion won and its net income attributable to controlling shareholders rise by 38% with the introduction of the new accounting standard 'IFRS17.'

According to industry sources on the 12th, Samsung Life Insurance recently disclosed the financial impact of adopting IFRS17 in its business report for the previous year. It anticipated an increase in both capital and net income. As of the end of last year, under the previous accounting standards, Samsung Life Insurance's consolidated capital stood at 24.168 trillion won. However, with the adoption of IFRS17, it is projected to rise to around 41.552 trillion won, an increase of over 17 trillion won. Net income attributable to controlling shareholders is also expected to increase by 38% to 2.186 trillion won.

The Contractual Service Margin (CSM), which has emerged as an important indicator under IFRS17, was also recorded at 11 trillion won as of the end of last year. CSM is a concept where insurance premiums and expected profits are not recognized all at once but are allocated annually as insurance operating profit. The new contract CSM was announced to be around 3.3 trillion won.

The significant increase in capital is interpreted as being due to the decrease in liabilities, which were previously measured at cost (-37 trillion won), being twice the decrease in assets (-19 trillion won). Baeseung Jeon, a researcher at Ebest Investment & Securities, explained, "Although insurance contract liabilities appear to have decreased by 16 trillion won on the surface, it is necessary to consider the reclassification of variable-related special account liabilities, which were previously classified as other liabilities, into insurance contract liabilities," adding, "The 180 trillion won in insurance contract liabilities consists of Best Estimate Liabilities (BEL) of 166 trillion won, Risk Adjustment (RA) of 3 trillion won, and CSM of 11 trillion won."

Insurance profit and loss, including approximately 1.1 trillion won in CSM amortization and experience adjustments, was estimated at 1.833 trillion won. Investment profit and loss stood at around 400 billion won on a consolidated basis. Not only did the apparent net income increase significantly, but other comprehensive income also improved substantially due to changes in the BEL discount rate following last year's interest rate hike. Researcher Jeon explained, "Even considering one-time gains such as corporate tax refunds and sale profits last year, the company maintained a profit capacity of around 2 trillion won."