[The Golden Age of Non-Life Insurers] ① Life Insurance and Net Profit Gap Widens by 1.2 Trillion Won in One Year... Industry Landscape Changes

Non-life Insurance Surpasses Life Insurance... Gap Expected to Widen Further

26.6% vs. -6.0%. These are the year-over-year net profit growth rates for non-life insurance companies and life insurance companies last year. While non-life insurers achieved record-breaking performance rallies, life insurers actually contracted. As super-aging begins and generational values sharply diverge, life insurers are increasingly being overlooked. On the other hand, non-life insurers are expected to enjoy a golden age for the time being by continuously launching a variety of products.

According to the Financial Supervisory Service on the 11th, the net profit of 31 non-life insurers last year totaled 5.4746 trillion KRW, an increase of 1.1489 trillion KRW (26.6%) compared to the previous year. This marked the second consecutive year of record-breaking results. The top five non-life insurers?Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, KB Insurance, and Meritz Fire & Marine Insurance?surpassed 4 trillion KRW in net profit for the first time.

Specifically, Samsung Fire & Marine Insurance, the 'eldest sibling,' posted a net profit of 1.1414 trillion KRW (separate basis) last year, up 4.5% from the previous year. DB Insurance also had a record-breaking year, with net profit of 980.6 billion KRW, a 26.2% increase year-over-year. Meritz Fire & Marine Insurance recorded net profit of 868.3 billion KRW, up 30.9% from the previous year. KB Insurance’s net profit surged by an impressive 103.8% to 581.7 billion KRW. Hyundai Marine & Fire Insurance also saw a double-digit increase of 28.0%, posting net profit of 560.9 billion KRW.

In contrast, life insurers’ performance was somewhat gloomy. The net profit of 23 life insurers was 3.7055 trillion KRW, down 6.0% from the previous year. As life insurers retreated, the gap with non-life insurers widened further. While the net profit gap between non-life and life insurers was around 380 billion KRW in 2021, it expanded to about 1.7 trillion KRW last year.

This trend is expected to continue this year as well. Industry-wide growth is anticipated to stagnate. Since insurers must monitor and respond to newly introduced accounting standards 'IFRS17' and the new solvency regime (K-ICS), they have relatively less capacity to focus on growth. According to the Korea Insurance Research Institute, the premium income, which corresponds to insurers’ revenue, is expected to grow by only 0.3% year-over-year for life insurers. In particular, life insurance is expected to see sluggish sales of savings and investment-type policies and a decline in new demand for whole life insurance due to increased financial market volatility. Conversely, non-life insurers’ gross written premiums are expected to increase by 3.9% year-over-year. Growth is expected to continue as long-term and general non-life insurance expand.

Shin Byung-oh, a partner at Deloitte, explained, "With high interest rates persisting, customers of savings-type insurance are clearly switching to high-interest savings bank products or securities company funds. It is not easy to raise premiums even to retain core customers, and the volume of new contracts is expected to decline faster, so the outlook for life insurers this year is not bright."