South Korea insurance net income skyrockets to KRW7.63t in 2021

Insurance income soared 37.3% for the first nine months of the year.

South Korean insurance companies’ preliminary net income soared to KRW7.63t ($6.4b) for the first nine months of 2021, up 37.3% from the same period last year.

According to data released by the Financial Supervisory Service, net income for life insurance companies grew 17.8% year on year to KRW3.69t whilst nonlife insurance companies’ net income increased 62.6% to KRW3.93t in the January-to-September period. .

The FSS said that the insurance income for life improved compared to a year ago as business expenses decreased and the burden of guarantee reserves came to be eased. 

“By contrast, investment income decreased mainly because interest revenues and gains on disposition of financial assets shrank from a year earlier. Meanwhile, during the period, loss ratios of auto and long-term insurances declined in the wake of the COVID-19 as well as that of general insurance fell because the number of accident cases incurring large losses fell. This contributed to generating greater investment income,” the FSS said

Insurance companies’ premium income for the year to September totaled KRW155.6t, up KRW3.2t or 2.1% from the same period a year earlier. Of the total, KRW82.24t came from life insurance companies, whose sales of variable life insurance and protection-type insurance increased by 9.6% and 2.4%, respectively, from a year ago. By contrast, retirement pension decreased 5.4% and savings-type insurance 3.2% as well from the same period a year ago.

As for nonlife insurance companies, premium income came in at KRW73.38t in the January-to-September period of 2021, up KRW2.49t or 3.5% from a year ago. Sales of long-term insurance grew 5.3% as well as general insurance sales expanded by 8.9% YoY. In addition, auto insurance jumped 3.8% too. However, the retirement pension declined 15.2% from a year ago.

FSS said overall profitability has improved compared to a year ago with return on assets (ROA) rising 0.18%p to 0.77%. In addition, return on equity (ROE) increased 1.88%p to 7.33% YoY. 

“As of end-September 2021, aggregate assets of the insurance companies came in at KRW1,338.3 trillion, up KRW16.9 trillion or 1.3% from the end of December 2020. The growth was attributable to an increase in assets under management. However, shareholders’ equity decreased KRW8.9 trillion or 6.2% to KRW134.4 trillion as higher interest rates made a dent in valuation gains of loans receivables,” the FSS added.

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