First Report Card for Insurers After IFRS17... KB Sonbo 'Holding Up Well'

Strong Performance of KB Financial Group's Insurance Subsidiaries
Shinhan Group Also Holds Up Well... Hana Shows Weakness

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This year, the first performance report of insurance companies was released following the introduction of the new accounting standard IFRS17. While affiliated insurance companies of Shinhan Financial Group and KB Financial Group performed well, those affiliated with Hana Financial Group showed somewhat disappointing results.

According to industry sources on the 28th, KB Insurance recorded a net profit of 253.8 billion KRW in the first quarter of this year, an increase of 25.7% compared to the same period last year. The Contractual Service Margin (CSM), introduced for the first time under IFRS17, was also disclosed. CSM is a concept that recognizes future profits generated from insurance contracts over time annually. KB Insurance’s first-quarter CSM was recorded at 8.19 trillion KRW, an 8.0% increase from the 7.582 trillion KRW calculated in the first quarter of last year. A KB Insurance official explained, "The growth in CSM was due to actively increasing long-term life insurance and child insurance, which have a high contribution to CSM, in the first quarter of this year."

The newly introduced Solvency Capital Requirement system (K-ICS) ratio also rose by 8.8 percentage points from the previous quarter to 192.9%. The K-ICS ratio is an indicator that replaced the existing Risk-Based Capital (RBC) ratio and reflects the soundness of insurance companies. The loss ratio, which indicates the ratio of insurance claims paid to premiums received, improved by 1.2 percentage points to 81.7% during the same period.

KB Life Insurance, which changed its name after merging with Prudential Life Insurance, posted a net profit of 93.7 billion KRW. This represents a 1603.6% increase compared to the same period last year. The increase in gains from equity derivatives due to lower bond yields and improved investment returns were major contributing factors. The K-ICS ratio improved by 7.2 percentage points from the previous quarter to 277.6%.

The performance of life insurance companies under Shinhan Financial Group was also evaluated as steady. Shinhan Life’s net profit for the first quarter of this year was 133.8 billion KRW, a 4.8% decrease compared to the same period last year but a 69.4% increase from the previous quarter. The K-ICS ratio remained stable at 220.8%. Shinhan EZ Insurance, newly launched in June last year, recorded a net loss of 900 million KRW. However, the deficit was reduced to less than one-fifth compared to the net loss of 5.2 billion KRW in the previous quarter.

On the other hand, insurance companies affiliated with Hana Financial Group showed sluggish performance, recording losses. Hana Life Insurance posted a net loss of 2 billion KRW in the first quarter of this year, turning to a deficit compared to the same period last year. Hana Insurance also recorded a net loss of 8.3 billion KRW.

An industry insider explained, "It is still difficult to gauge the actual market conditions based on these results alone, and we need to watch the indicators of large listed insurance companies to be announced in the future. Although there is no significant change in the company’s own strength or assets, there may be some confusion for a while because the way of expression has changed."