Insurance companies in South Korea experienced a notable decline in their combined net profit during the first quarter of 2024, according to data released by the Financial Supervisory Service.
Data reveals that the collective net profit of 22 life insurers and 31 non-life insurance companies in the country totaled KRW4.84 trillion ($3.54 billion) in the period spanning January to March, reflecting a decrease of KRW605 billion, or 11.1%, compared to the same quarter in 2023, as reported by Yonhap News Agency.
The decline in profits is primarily attributed to a reduction in investment returns, stemming from elevated interest rates, which consequently led to a depreciation in the value of the insurance companies’ financial assets, stated the financial regulator.
In terms of premium income, life insurers witnessed a modest increase of 1.7% year-on-year, reaching KRW1.25 trillion in 1Q2024, while non-life insurers experienced a significant surge of 27.9%, reaching KRW3.05 trillion.
However, the return on assets for both life and non-life insurers witnessed declines of 53.2% and 17.5% respectively, compared to the previous year.
As of the end of March, the insurance companies’ average return on assets stood at 1.58%, down by 0.27 percentage points from the previous year. Additionally, their return on equity dipped by 2.03 percentage points to 11.95% over the same period.
Total assets of the insurance companies amounted to KRW1,222.6 trillion as of March 31, showing a slight decrease of KRW2 trillion, or 0.2%, from the previous year.
