Immediate Payment Annuity Provisions Total 415.3 Billion Won as of First Half
Samsung Life Insurance Q3 Net Profit Reaches 723 Billion Won, Up 7.3% Year-on-Year
Samsung Life Insurance announced that it will reflect the outcome of the remaining lawsuits related to immediate payment annuities in its accounting after observing their progress, following its recent legal victory in a related case.
On November 13, Lee Wansam, Chief Financial Officer and Head of Management Support at Samsung Life Insurance, stated during the third quarter earnings conference call, "There are a total of four lawsuits regarding immediate payment annuities, and we received a favorable ruling in one of them last month. We will decide when to process this according to the corporate accounting standards and whether to reverse the profit, taking into account the progress of the remaining three lawsuits."
This was in response to a question from Park Haejin, a researcher at Daishin Securities, who said, "I understand that the unpaid immediate annuity amounts have been classified as other provisions. Shouldn't the accounting treatment change now that the payment obligation has been resolved by winning the lawsuit?"
Previously, on October 16, the Supreme Court upheld the lower court's ruling against the plaintiffs in a lawsuit filed by Samsung Life Insurance's immediate payment annuity policyholders seeking unpaid insurance benefits. In preparation for a possible loss in this case, Samsung Life Insurance had set aside 415.3 billion won in immediate payment annuity provisions as of the end of the first half of this year. However, with the legal victory, the payment obligation has been resolved, and the amount is expected to be reversed as profit.
For the third quarter of this year, Samsung Life Insurance's cumulative consolidated net profit attributable to controlling shareholders was 2.1171 trillion won, a 3.7% increase compared to the same period last year (2.0421 trillion won).
Net profit for the third quarter was 723 billion won, up 7.3% year-on-year. Insurance profit for the third quarter was 262 billion won, down 45% from the same period last year. Investment profit for the third quarter was 692 billion won, a 65.9% increase year-on-year. The sharp rise in investment profit was due to the inclusion of 230 billion won in gains from the sale of the Ferrum Tower in Euljiro. Regarding this, a Samsung Life Insurance official commented, "Investment profit in the fourth quarter and next year is expected to remain at the current level. The real estate sale that occurred in the third quarter was a one-off event and is unlikely to recur in the near future."
The cumulative Contractual Service Margin (CSM) for new health insurance contracts in the third quarter was 1.7517 trillion won, a 23.9% increase year-on-year. As of the end of the third quarter, the CSM stood at 14 trillion won, up 8.9% from the end of last year (12.9 trillion won). This is the result of expanding the health product lineup and strengthening the competitiveness of pure health-focused products. The health new contract margin also increased by 0.2 times year-on-year to 16.8 times.
The risk-based capital ratio (K-ICS), which indicates capital adequacy, was 193%.
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