S. Korean insurers report 50% gain in H1 bottom line

South Korean insurers saw nearly 50 percent on-year growth in their first-half bottom line thanks mainly to one-off factors including special dividend payouts, reduced coverage ratio in car insurance and reversal of variable insurance allowance, data showed Monday.

The combined net income of life and non-life insurers came to 5.67 trillion won ($4.87 billion) for the January-June period this year, up 49.9 percent on year, according to data published by Financial Supervisory Service (FSS) on Monday.

Life insurers earned 3.14 trillion won, gaining 58.1 percent from the previous year owing to a 2.5 trillion won fall in variable insurance allowance on the back of rises in stock prices and interest rates. Their interest income, meanwhile, fell by 285.6 billion won due to effects of selling high-interest bonds in the year-ago period.

Non-life category’s net income expanded 47.5 percent on year to 814.6 billion won. The gain was owed to decreased losses from long-term insurances and auto premiums, as well as base effects from last year’s massive loss from an explosion at Lotte Chemical complex.

Profit from investment earnings, however, fell by 92.7 billion won as the proceeds from the disposal of financial assets fell due to a rise in interest rate.

The special dividend payout from Samsung Electronics Co. also contributed to the insurers’ profit gains. But counting out such one-off factors, insurers' profit is at a similar level to last year, the FSS explained.

In January-June, local insurance firms earned 105.2 trillion won from insurance sales, up 3.2 percent on year.

Life insurers’ premium income totaled 55.68 trillion won, up 2.8 percent from a year ago. Income from variable insurance premiums saw the biggest on-year gain of 10.9 percent to 9.24 trillion won.

Non-life insurance companies earned 49.51 trillion won in premium income, up 3.6 percent on year thanks mainly to general insurance premiums which expanded 9.4 percent to 6.21 trillion won.

Insurance firms’ return on assets (ROA) averaged at 0.86 percent in the first half, down 0.26 percentage point from last year. Return on equity (ROE) was up 2.42 percentage points to 8.14 percent.

Their combined assets stood at 1,331.8 trillion won as of end-June, up 0.8 percent on year. Equity capital, however, fell 5.3 percent on year to 135.6 trillion won.

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