Tongyang, Mirae Asset Life shine amid downturn

By Lee Kyung-min

Most life insurance companies operating here have suffered earnings shocks due to falling interest rates amid economic downturn ― but a few players have weathered difficulties on the back of their diversified business portfolios and windfall gains from the sales of its assets.

Tongyang Life and Mirae Asset Life have managed to report a rise in net profits in the July-September period.

Tongyang posted a net income of 68.1 billion won, up 449 percent from 12.5 billion won the year before thanks to its strategy to increase the portion of its protection-type insurance business.

The proceeds from the sales of its subsidiary Tongyang Asset Management to Woori Financial Group, estimated at around 80 billion won, also helped improve its balance sheet.

The third-quarter figure has brought the net profit for the first nine months of the year to 143.4 billion won, up 110.7 percent from a year earlier.

HI Investment & Securities chief researcher Kang Seung-gun said Tongyang's investment return is recovering following a diversified overseas business portfolio.

"While its insurance profit is slowing, the sales of its asset management subsidiary will be used to pay dividends," Kang said.

Mirae Asset Life recorded a net profit of 25.5 billion won, up 80 percent from 14.2 billion won the year before.

The result was thanks to an increase in the sales of its variable insurance products and retirement savings products, the stable source of profit compared to an interest rate-linked investment portfolio.

According to a researcher at the Korea Insurance Research Institute (KIRI), most life insurers have suffered weak earnings in the third quarter, due to fast-declining sales of key products, poor asset management amid low interest rates.

"Insurers will no longer be able to give subscribers a high rate of return due to low interest rates. The low key base rate has led to a substantial drop in the sales of general life insurance, the key products sold by most life insurers, as well as savings products that used to promise relatively high returns," he said.

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