Life insurance companies take a tumble in H1Life insurance companies suffered a sharp decline in profitability in the first half of this year, affected by increased operating losses and shrinking profits from investment.
The Financial Supervisory Service said on Monday that net profit from 24 domestic and foreign life insurers dropped 32.4 percent to record 2.1 trillion won ($1.7 billion) compared to the same period last year.
The downbeat result was attributed to increased operating losses that posted 11.8 trillion won, up 4 percent over a year ago, as the insurance companies had to provide a large number of lump sum payouts for policies that had matured.
“With the maturity of endowment insurance policies, the payout increased by 2.5 trillion won during the period,” the Financial Supervisory Service said in a statement.
Profits from investments also reduced 5.1 percent to 12.3 trillion won on-year while non-operating profit decreased 12.4 percent to 2.3 trillion won between January and June.
By size of life insurer, the so-called big three players - Samsung Life Insurance, Hanwha Life Insurance and Kyobo Life Insurance - faced a steeper decline rate in net profit at 41.3 percent, followed by foreign players at 24.1 percent. Small- and mid-sized insurers fared better, with a 9 percent reduction rate in net profit.
BY PARK EUN-JEE [firstname.lastname@example.org]