Multiple foreign insurance companies are planning to leave the South Korean market with its slow growth and poor profitability predicted to continue.
The Financial Supervisory Service announced on Dec. 1 that life insurance companies in South Korea posted a net profit of 3,057.3 billion won for the first three quarters of this year, down 24.3 percent from a year earlier. Especially, the net profit of major life insurers such as Samsung, Hanwha and Kyobo fell 36.4 percent to 1,580.9 billion won.
Likewise, foreign life insurers’ net profit showed a year-on-year decline of 16.3 percent with a slow economic growth, an extremely low fertility rate and a low interest rate leading to a rapid decline in insurance profit.
Under the circumstances, Prudential Life Insurance Company of Korea has been put on the market. The company’s risk-based capital ratio as of June this year is 505.1 percent, the highest in the industry. In addition, Tongyang Life Insurance and ABL Life Insurance, which are under contract management by the financial authorities of China, are likely to follow suit and KDB Life Insurance is currently in the process of sale.
In the non-life insurance sector, The-K Non-Life Insurance initiated a sale procedure and MG Non-life Insurance is predicted to be put for sale. In this sector, rapid increases in auto and medical insurance loss ratios led to a 30 percent decline in net profit in the third quarter. The top five non-life insurers’ net profit totaled 1.4 trillion won in that quarter, down 32.9 percent from a year ago.