The net profit performance of major insurance companies affiliated with financial holding companies through the third quarter of this year was mixed. Places where investment profits increased made up for sluggish insurance profits and losses and did well, but places where investment sectors were sluggish saw their net profits fall by nearly half. The industry expects that stable asset management capabilities will determine the direction of performance in the highly volatile financial market environment in the fourth quarter.
As a result of compiling the performance of major insurance companies affiliated with financial holding companies (Shinhan Life, Hana Life Insurance, Tongyang Life Insurance, iM Life, KB Insurance, KB Life, NH Nonghyup Life Insurance) on the 1st, the total net profit through the third quarter of this year was 2.0223 trillion won, a 5.7% decrease from the same period last year (1.9064 trillion won). Insurance profit and loss was KRW 2.2346 trillion, a 9.7% decrease from the same period last year (KRW 2.018 trillion), while investment profit was KRW 838.3 billion, a 51.3% increase from the previous year (KRW 554 billion).
Looking at insurance companies, Shinhan Life Insurance, KB Insurance, and Hana Life Insurance maintained surpluses with stable operational performance. NH Nonghyup Life Insurance, KB Life Insurance, iM Life Insurance, and Dongyang Life Insurance showed a slight decline in performance.
First, Shinhan Life showed solid trends in both insurance sales and investment profits. Shinhan Life’s cumulative net profit in the third quarter was KRW 514.5 billion, a 10% increase compared to the same period last year (KRW 467.1 billion). Due to strong sales of new products, insurance profit and loss (KRW 573.8 billion) increased by 4.4%, showing stable growth, and investment profit and loss (KRW 178.9 billion) also increased by 49.6%, boosting performance. Shinhan Life is the only holding company-affiliated life insurance company with a cumulative net profit exceeding 500 billion won.
KB Insurance succeeded in defending its performance with a sharp increase in investment profits despite a worsening loss ratio. Cumulative net profit in the third quarter was 766.9 billion won, an increase of 3.6% compared to the same period last year (740.2 billion won). Insurance profit and loss decreased by 25.9% from KRW 885.4 billion to KRW 655.9 billion, but investment profit and loss recorded KRW 394.2 billion, a three-fold increase compared to the previous year due to increased interest income due to the purchase of ultra-long-term government bonds and expansion of investment in alternative assets.
Hana Life Insurance continued its growth thanks to strong sales of protection products and a reduction in risky assets. Net profit based on internal standards (retroactive method) was KRW 30.2 billion, an increase of 76.6% compared to the previous year (KRW 17.1 billion). However, based on the holding company disclosure standard (forward method), it recorded 17.7 billion won, a 26.3% decrease. Pre-tax profit in the insurance sector was KRW 25.8 billion, an increase of KRW 3 billion from the previous year, and profit and loss in the investment sector was KRW 10.9 billion, an increase of KRW 7.8 billion.
Declining performance…deteriorating profitability in the insurance sector
NH Nonghyup Life Insurance’s performance declined as its insurance profits and losses decreased despite the increase in investment profits. Cumulative net profit was 210.9 billion won, a 14.9% decrease from the same period last year (247.9 billion won). Investment profit and loss soared 126% to KRW 65.2 billion, but insurance profit and loss decreased by 26.5% to KRW 306.1 billion due to an increase in insurance premiums paid and unreported loss (IBNR). However, in the insurance sector, growth centered on protection insurance continued. Due to the impact of the expansion of protection products such as dementia, nursing, and life insurance, new CSM contracted recorded KRW 433.4 billion.
KB Life Insurance also showed a trend of increasing investment profit and loss and decreasing insurance profit and loss. Cumulative net profit was 254.8 billion won, a 2.3% decrease from the previous year. Insurance profits and losses (KRW 215 billion) decreased by 10.5%, but investment profits (KRW 145.2 billion) increased by 14.1%, minimizing the decline in performance. The decreased insurance profits and losses are due to a decrease in actual vehicle profits and losses and an increase in loss contracts.
iM Life Insurance’s net profit fell by nearly half due to a slump in the investment sector. Cumulative net profit in the third quarter was KRW 19.2 billion, a 56.8% decrease from the same period last year (KRW 44.4 billion). Insurance profit and loss increased by 27.2% to KRW 35.1 billion, but investment profit and loss decreased by 166% to -KRW 9.6 billion compared to the same period last year (KRW 14.4 billion), turning into a deficit. However, the retention rate for the 25th session steadily increased to 82.7%, continuing expectations for improved sales structure.
Tongyang Life Insurance performed poorly in both insurance and investment in the first quarter after being incorporated into Woori Financial Group. Cumulative net profit in the third quarter was KRW 109.9 billion, a 55% decrease from the previous year (KRW 244.8 billion). Insurance profit and loss decreased by 52.9% to KRW 95 billion, and investment profit and loss also decreased by 52.3% to KRW 53.5 billion. The actual vehicle loss amounted to 65.1 billion won, putting a burden on profitability. However, an official from Tongyang Life Insurance explained, “We are establishing a stable profit base by strengthening the profit structure centered on insurance products and improving asset management efficiency.”
The insurance industry believes that sluggish insurance profits are likely to continue in the fourth quarter. For both life and non-life insurance, the burden of actual car insurance is increasing due to rising risk loss rates, an increase in the number of business days, and normalization of medical expenses. According to a recent Insurance Research Institute survey, 48.6% of insurance company CEOs responded that net profit will decrease this year. This is the highest figure among all CEO surveys.
