Insurance Companies' Q1 Net Profit Down 770 Billion KRW... Non-life Insurers Underperform Life Insurers

Insurance Companies' First Quarter Net Profit at 4.097 Trillion KRW, Down 15.8% Year-on-Year
Premium Income Reaches 62.731 Trillion KRW, Up 6.9% from Last Year

In the first quarter of this year, insurance companies' net profit decreased by approximately 770 billion KRW compared to the same period last year. Non-life insurers performed worse than life insurers due to a deterioration in loss ratios for products such as auto insurance.

According to the "First Quarter Insurance Company Business Performance (Provisional)" report released by the Financial Supervisory Service on May 27, insurance companies' net profit stood at 4.0967 trillion KRW, down 15.8% (769.9 billion KRW) from the same period last year. During the same period, the net profit of life insurance companies (22 firms) was 1.6956 trillion KRW, a decrease of 10.9% (208.3 billion KRW), while non-life insurance companies (31 firms) recorded 2.4011 trillion KRW, down 19% (561.6 billion KRW).

The core insurance profit of life insurers was 1.1572 trillion KRW, a 9.6% decrease compared to the same period last year. Investment profit was 1.013 trillion KRW, down 13.6%. Both insurance profit and investment profit worsened due to an increase in loss burden expenses and a decrease in gains from the disposal and valuation of financial assets. Non-operating profit and loss recorded a deficit of 66.4 billion KRW, with the loss widening compared to the first quarter of last year (a deficit of 59.2 billion KRW).

Non-life insurers' insurance profit plummeted 35.8% year-on-year to 1.9498 trillion KRW. This was due to a higher loss ratio in core businesses such as auto insurance. As of last month, the auto insurance loss ratio at the five major non-life insurers was 85.1%, up 4.9 percentage points from the same period last year. In contrast, investment profit rose 46% year-on-year to 1.3273 trillion KRW, thanks to increased bond valuation gains due to falling interest rates. Non-operating profit and loss recorded a deficit of 17.9 billion KRW, with the loss widening compared to the first quarter of last year (a deficit of 14.3 billion KRW).

Premium income, a key business indicator for insurers, reached 62.7311 trillion KRW, up 6.9% (4.0618 trillion KRW) year-on-year. During the same period, life insurers saw premium income rise 11% (3.0728 trillion KRW) to 31.1121 trillion KRW, while non-life insurers' premium income increased 3.2% (989 billion KRW) to 31.619 trillion KRW. For life insurers, premium income from protection-type insurance, variable insurance, and retirement pensions increased compared to the same period last year, except for savings-type insurance, which declined by 13.4%. For non-life insurers, premium income from auto insurance (-2.9%) and retirement pensions (-3.3%) decreased compared to the same period last year, while long-term insurance (6.6%) and general insurance (4.4%) increased.

The return on assets (ROA), which represents the ratio of net profit to total assets, was 1.27%, down 0.32 percentage points from the same period last year. In contrast, the return on equity (ROE), which indicates how much profit insurers generated with their equity capital, rose 0.06 percentage points to 11.94%.

Insurers' total assets amounted to 1,300.6 trillion KRW and total liabilities to 1,168.1 trillion KRW, up 2.5% and 3.7%, respectively, compared to the end of last year. Over the same period, equity capital decreased by 6.9% to 132.5 trillion KRW.

A Financial Supervisory Service official stated, "Despite the increase in investment profit, net profit decreased year-on-year due to a rise in loss burden expenses and higher loss ratios, which led to a decline in insurance profit. Going forward, as uncertainties in financial markets such as stock prices, interest rates, and exchange rates may increase, it is necessary for insurers to manage their financial soundness."