Unwelcome Performances
According to the Financial Supervisory Service, South Korean insurers are estimated to have recorded 2.2351 trillion won in current net income in the first quarter of this year, up 6.3% from a year ago. The estimated amount is a six-year high when it comes to their combined Q1 net incomes.
The current net income of South Korean life insurance companies is estimated to have increased by 3.6% to 1.327 trillion won and that of non-life insurers is expected to have increased by 86.2 billion won to 908.1 billion won.
In the first quarter, the companies are expected to have recorded an increase of 5.2% to 47.4693 trillion won in insurance income. The estimated amount rose by 6.1% to 28.9933 trillion won for life insurance companies with their coverage and saving insurance sales rising by 8.2% and 7.5%, respectively. For the non-life insurance companies, the estimated insurance income increased 3.8% to 18.476 trillion won, led by an 11.9% increase in automobile insurance sales.
Meanwhile, their profitability indices deteriorated a little bit during the same period. For example, their ROA edged down by 0.03 percentage points to 0.93% in the first quarter. Likewise, the ROE fell 0.07 percentage points to 9.36%. Life insurers’ ROA and ROE decreased 0.04 percentage points and 0.24 percentage points to 0.72% and 8.1% while non-life insurance firms’ ROA edged down 0.03 percentage points to 1.58% and ROE edged up 0.23 percentage points to 12.09%.
As of the end of March, South Korean insurers had a total asset of 974.3 trillion won along with 97.7 trillion won in equity capital. The respective amounts rose by 9% and 5.7% year on year.
The Financial Supervisory Service said, “The investment environment is deteriorating as the profit index is declining and the low interest trend is continuing, dropping the return of rate of operating assets,” adding, “The insurers need more efforts to strengthen management improvement down the road when considering capital increase requirements with the introduction of the second phase’s International Financial Reporting Standards (IFRS) 4.