Non-life insurers suffer worsening profits in Q1

By Kim Bo-eun

Local non-life insurers suffered a major setback in their earnings in the first quarter of 2019 due to mounting competition amid lingering uncertainty caused by market volatility.

According to data from the Financial Supervisory Service, non-life insurers' combined net profits stood at 718.9 billion won between January and March, down 18 percent from 880.9 billion won a year earlier.

Non-life insurers' operating income from investments grew, but they faced decreasing net profits due to increased sales expenses.

Their income from insurance policies grew 3.3 percent from the same period a year earlier, but expenses associated with signing new contracts also grew amid competition.

In contrast, life insurers saw their combined net profits rise 2.6 percent to 1.26 trillion won in the first quarter from 1.23 trillion won in the same period a year ago.

Figures show that life insurers' profits were driven by operating income from investments, despite losses in insurance sales.

The average return on assets (ROA) and return on equity (ROE) of non-life insurers and life insurers each fell by 0.08 percentage points and 1.21 percentage points to 0.68 percent and 6.88 percent in the first quarter from a year earlier.

"Uncertainty of the finance market is growing due to the volatility of stock prices and exchange rates stemming from the trade conflict between the U.S. and China," the FSS said.

"Insurers, instead of competing for sales, need to heighten internal competitiveness and enhance risk management amid market volatility."

The FSS said it would strengthen supervision and inspections so side effects of excessive sales expenditures, such as mis-selling and degradation of financial health, can be curbed.