Nascent insurance units behind banking groups' record profits

Employees of KB Financial Group, the country's largest financial services provider, return from break in front its headquarters on Yeouido, Seoul, in this photo taken in 2018. Korea Times file

By Yi Whan-woo

Major banking groups have been seeing record profits thanks to the contributions from their new insurance affiliates.

The profitability of the insurers is accordingly prompting Woori Financial Group, the country's only financial services company without any insurance business units, to go on the lookout for insurance firms to acquire after it completed its full privatization successfully last year.

KB Financial Group, the largest of the big 4 financial services providers including Shinhan and Hana, saw its net income surpass the symbolic 4 trillion won ($3.34 billion) for the first time last year.

The record earnings included the 336 billion won net profit posted by Prudential Life Insurance Company of Korea, which KB Financial Group acquired in September 2020.

Considered the “cream of the crop” among life insurers, Prudential Life Insurance Company of Korea joined two other insurance arms of its parent company ― KB Insurance and KB Life Insurance.

The earnings reported by the newest insurance unit exceeded KB Insurance's 302 billion won. It was also credited with making up for the 46.6 billion net loss of KB Life Insurance.

“It surely is at the center of KB Financial Group's growing non-banking business portfolio,” a market observer said.

A large logo of Shinhan Financial Group, the country's second-biggest financial services provider, is seen on its headquarters in central Seoul, in this photo taken in 2018. Korea Times file

Shinhan Financial Group also reported its net earnings above the 4 trillion mark for the first time in 2021.

Of the total net income of 4.01 trillion, 391.6 billion came from Shinhan Life, a 72 trillion won-valued life insurer created in July 2021 by merging Shinhan Life Insurance and Orange Life, which Shinhan Financial acquired two years earlier.

The market observers speculate Shinhan Life's profitability will grow this year, as the country's fourth-largest life insurer is now settled with its voluntary retirement scheme and other expenses that were necessary for successful business integration.

Hana Financial Group, the country's third-largest financial services company, posted a record net profit of 3.52 trillion won, with its non-life insurance unit Hana Insurance accounting for 20.7 billion.

Launched in June 2020, Hana Life went into the black for the first time after Hana Financial Group acquired its precursor, The-K Non-Life Insurance, which had suffered hundreds of billions of won in net losses.

Concerning Woori Financial Group, industry sources say it will need to acquire either brokerage houses or insurers, to catch up to Hana while maintaining its lead against the fifth-ranked NongHyup Financial Group.

Woori led NongHyup 2.59 trillion won to 2.29 trillion won in net income last year.

NongHyup has two insurance units ― NongHyup Life Insurance and NongHyup Property & Casualty Insurance.

Between 2020 and 2021, NongHyup Life Insurance increased its net profit by 170 percent to 165.7 billion won, and NongHyup Property & Casualty Insurance's net profit shot up by 85 percent to 86.1 billion won.