Financial Supervisory Service Announces '2024 Insurance Company Management Performance'
Investment Profit: Life Insurers Up 80.6%, Non-life Insurers Up 22.1%
Equity Capital at 142.1 Trillion KRW... Down 15.5% Year-on-Year
Last year, insurance companies experienced sluggish performance in their core business but achieved significant profit growth through successful investments.
According to the '2024 Insurance Company Management Performance (Preliminary)' released by the Financial Supervisory Service on the 25th, the net income on a separate basis of 22 life insurance companies last year was 5.6374 trillion KRW, an increase of 7.1% compared to the previous year. During the same period, the net profit of 32 non-life insurance companies rose by 3.1% to 8.5066 trillion KRW.
In terms of segment performance, both life and non-life insurers saw a decline in insurance profit compared to the previous year. Insurance profit, a key revenue indicator of the insurance core business, is the amount obtained by subtracting incurred losses and operating expenses from the insurance premium income collected from customers. Last year, life insurers' insurance profit was 4.2625 trillion KRW, down 15.7% year-on-year. The strengthening of the reserve standards for Incurred But Not Reported (IBNR) losses last year led to increased one-time costs for some large life insurers, affecting the decrease in insurance profit. IBNR refers to the amount for which an insurance claim obligation has arisen due to an insured event but has not yet been claimed by the policyholder. Non-life insurers' insurance profit last year was 8.2466 trillion KRW, a 1% decrease from the previous year. The increase in the loss ratio of automobile insurance was the main cause of the decline in insurance profit.
In the investment segment, both life and non-life insurers delivered outstanding results. Insurance companies invest a portion of the premiums paid by customers in stocks or bonds to generate income. Last year, life insurers' investment profit was 3.0248 trillion KRW, up 80.6% year-on-year. During the same period, non-life insurers' investment profit increased by 22.1% to 3.2577 trillion KRW. Both life and non-life insurers saw improvements in investment profit due to increased interest and dividend income.
Last year, insurance companies' earned premiums totaled 241.0445 trillion KRW, up 1.4% (3.4353 trillion KRW) from the previous year. Earned premiums refer to the premiums collected by insurance companies annually. Life insurers' earned premiums were 113.44 trillion KRW, a 0.9% increase year-on-year. Compared to the previous year, earned premiums for protection-type insurance (13.1%), savings-type insurance (2.7%), and variable insurance (0.4%) increased, while retirement pensions decreased by 26.2%. Non-life insurers' earned premiums were 127.6045 trillion KRW, up 1.9% year-on-year. Earned premiums for long-term insurance (5.2%) and general insurance (7.4%) increased, but automobile insurance (-1.8%) and retirement pensions (-7.2%) declined compared to the previous year.
The return on assets (ROA), a management indicator for insurance companies, rose by 0.03 percentage points to 1.13% compared to the previous year. The return on equity (ROE) increased by 1.08 percentage points to 9.12%.
Total assets of insurance companies amounted to 1,273.2 trillion KRW, and total liabilities were 1,131.2 trillion KRW, increasing by 3.8% and 6.9% respectively from the previous year. Equity capital was 142.1 trillion KRW, down 15.5% year-on-year.
A Financial Supervisory Service official said, "Although insurance companies' net income increased last year, equity capital decreased due to the rise in insurance liabilities caused by falling interest rates and the realization of discount rates," adding, "Given the potential expansion of uncertainties in financial markets such as stock prices, interest rates, and exchange rates in the future, insurance companies must closely manage their financial soundness."
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