Life insurers’ profits sink due to benefit payoutsLife insurance firms in Korea saw their combined net profit decrease 21.7 percent in the first quarter due mainly to growing payments in benefits, government data showed Wednesday.
The combined net profit of 24 local life insurance companies stood at 1.32 trillion won ($1.22 billion) in the January to March period, down 341.6 billion won logged in the same period last year, according to data from the Financial Supervisory Service (FSS).
The weaker bottom line is responsible for losses of 5.67 trillion won in the overall insurance operations, which grew 9.98 percent, or 566.4 billion won, from the same period last year.
“Their income from saving-type products fell 2.7 trillion won in the first quarter, while insurance payments surged 1.9 trillion won,” the FSS said in a release.
Since December last year, the insurance firms have been on a campaign to pay dormant benefits that clients have failed to claim.
The total volume of such unclaimed benefits presumably reached 7.4 trillion won, according to the watchdog.
Their combined investment income edged down 1.03 percent on-year to 5.97 trillion won, as the rise in interest rates affected their disposition gains of available-for-sale securities, the data showed.
The top three life insurance firms − Samsung Life Insurance, Hanhwa Life Insurance and Kyobo Life Insurance − accounted for 58.8 percent of the total market share, followed by eight overseas life insurers that took up 23 percent, according to the FSS.
The return on assets, a key gauge of profitability, edged down 0.21 percentage point to 0.59 percent for life insurers, and the return on equity shed 2.38 percentage points to 7.03 percent, the data showed.
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