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Samsung Group's financial units ― Samsung Life, Samsung Fire & Marine Insurance and Samsung Securities ― posted disappointing earnings in the first half of the year due to the ever-worsening business environment in Korea.
Reflecting growing skepticism about their second-half earnings, Samsung Group Vice Chairman Lee Jae-yong held an in-house meeting earlier this month with CEOs of the group's financial units, including Samsung Life CEO Hyun Sung-chul, Samsung Fire CEO Choi Young-moo and Samsung Securities CEO Jang Seok-hoon, to discuss solutions to their deteriorating earnings and future growth engines.
"They discussed the current low interest rate trend and its influence on earnings of the group's financial subsidiaries," a Samsung Group official said.
According to data released by the Financial Supervisory Service (FSS), Samsung Life posted a 756.6 billion won ($623.2 million) net profit in the first half of the year, down 47.7 percent from the 1.44 trillion won posted during the same period last year.
Samsung Fire also suffered a 36 percent year-on-year decline in earnings to 426.1 billion won in the first half.
Both companies still managed to maintain the leading position in the nation's life insurance and non-life insurance industries but their earnings are expected to deteriorate further down the road.
Market observers said it will be difficult for these two units to recover in the second half of the year.
"The nation's business environment is unlikely to be improved in the near future," said an industry insider who asked not to be named.
"Life insurance products are not attractive to customers anymore. Nonlife insurers have suffered a worsening loss ratio in the actual insurance sector. The global uncertainties aren't expected to be eased anytime soon. The domestic financial market has already been too saturated. There is no favorable factor."
Another factor behind their deteriorating business environment is the introduction of International Financial Reporting Standard (IFRS) 17 taking effective in January 2022.
The IFRS 17, a new set of global accounting standards for insurers replacing the current IFRS 4, will require insurers to measure the liabilities of their insurance contracts by market, not book value. It was originally scheduled to be introduced in January 2021, but last November the introduction was postponed a year to January 2022.
"It will be a tremendous pressure for domestic insurers to secure enough cash reserves to meet the IFRS 17 standard," said an insurance company official who asked not to be named.





































