In a robust financial showing, Korean Re has disclosed a net income of KRW 292.9 billion for the initial nine months of 2023, marking a substantial increase compared to the KRW 114.9 billion recorded during the corresponding period in 2022. The insurance income for the same period also demonstrated positive growth, reaching KRW 194.9 billion.
Despite acknowledging losses attributed to Hankook Tire and the impact of the Turkey earthquake, Korean Re underscored a “significant improvement” in the business performance of life and long-term insurance, as well as certain commercial lines of business.
The investment income for the first three quarters of 2023 witnessed a noteworthy surge, rising to KRW 183.7 billion from the previous year’s KRW -23.2 billion. Korean Re attributed this growth to increased evaluation gains resulting from a revised approach to the classification of financial assets under IFRS 9.
Of note, under IFRS 17, Korean Re highlighted the reclassification of foreign currency exchange gains and losses on insurance contract liabilities from the insurance profit and loss (P&L) to insurance finance income & expenses, a sub-item of the investment P&L.
While insurance revenue for the initial nine months amounted to KRW 4,524.1 billion, slightly down from KRW 4,929.4 billion in 2022, Korean Re emphasized major changes in the income statement based on IFRS 17. The recognition of revenue on an accrual basis, excluding deposits and reflecting services provided, marked a departure from the previous cash basis.
Furthermore, Korean Re noted alterations in accounting for reinsurance commissions under IFRS 17. Fixed reinsurance commissions, irrespective of whether an insured event occurs, are now deducted from insurance revenue, resulting in a reduced appearance of revenue volume. In contrast to the previous treatment under IFRS 4, variable reinsurance commissions are now recognized as part of claims under IFRS 17.
Korean Re clarified, “Both business expenses and claims are recognized in profit or loss, so there is only a classification impact with no effect on net income.” The company’s financial report highlights a resilient performance amid evolving accounting standards and external challenges.
