Investment Gains Offset Losses in Insurance Business
South Korea’s life insurance companies suffered a combined operating loss of 17 trillion won (US$15.17 billion) in their life insurance business in the first nine months this year. However, they managed to post a net profit during the period on the back of investment gains that more than offset the losses in the insurance business.
According to data released by the Financial Supervisory Service (FSS) on Nov. 29, the nation’s 24 life insurers, including eight foreign firms, saw their combined net profit increase by 229.5 billion won (US$204.73 million) to 4.04 trillion won (US$3.6 billion) for the January-September period.
The combined net profit of the life insurance firms increased 6 percent on-year in the first nine months of the year, supported by a one-time profit from Samsung Life Insurance's disposition of some of its stakes in Samsung Electronics.
Life Insurers posted 16.85 trillion won (US$15.03 billion) in operating loss in insurance operation from January to September this year. Their loss grew by 1.26 trillion won (US$1.12 billion) compared to a year earlier, hit by a decline in sales of savings-type insurance products and an increase in claim settlements due to the growing cancellations and matured products.
However, their investment returns recorded 18.5 trillion won (US$16.5 billion). The operating profit from their investment business rose by 1.43 trillion won (US$1.27 billion), or 8.4 percent, including the 1.1 trillion won (US$977.52 million) gains of Samsung Life Insurance on sales of Samsung Electronics shares. In addition, their non-operating profit came to 3.77 trillion won (US$3.36 billion), up 314.3 billion won (US$280.37 million), or 9.1 percent, from a year ago. This was largely thanks to 323.7 billion won (US$288.76 million) worth of growing income from commissions on robust sales of variable life insurance products.
The nation’s three large insurance companies, including Samsung, Hanwha and Kyobo, had a cumulative net profit of 2.49 trillion won (US$2.22 billion) in the third quarter, up 307.2 billion won (US$274.04 million), or 14.1 percent, from a year earlier.
Small and mid-size companies and bank-run life insurance firms also saw their net profit grow by 99.3 billion won (US$88.58 million) and 1.9 billion won (US$1.69 million), respectively, to 456.5 billion won (US$407.23 million) and 232.6 billion won (US$207.49 million).
On the other hand, the combined net profit of the eight foreign insurance firms in South Korea fell by 178.9 billion won (US$159.59 million), or 17.2 percent, on-year to 862.8 billion won (US$769.67 million).
The combined premiums received by life insurance companies stood at 77.89 trillion won (US$69.49 billion), down 3.84 trillion won (US$3.42 billion), or 4.7 percent, from the same period last year. This was because the gross premiums of savings-type insurance products dropped by 4.88 trillion won (US$4.35 billion), while that of coverage insurance products grew by 595.1 billion won (US$530.87 million).