Korean nonlife insurers' earnings from their investments hit an all-time low level in the first quarter of fiscal 2012 amid volatile market conditions, industry data showed Tuesday.
The average investment return for the country's top 15 nonlife insurers reached 4.43 percent in the April-June period, the lowest figure since related data began to be compiled in 2001.
The number lags behind 5.1 percent reported by local life insurers over the cited period, the data showed. The tallied insurance firms close their books on March 31.
The decline in their investment return comes as Korean nonlife insurers face difficulty in managing their assets due to a lack of high-yield investments and a slump in the stock and housing markets.
"Top investment destinations, including bonds, stocks and property assets, are suffering valuation losses," said an official from a local nonlife insurer.
"Some of the nonlife insurers' return from asset management is expected to hover below the 4 percent range in the second half of the year," he added.
Meanwhile, nonlife insurers' lackluster sales performance also added to the gloomy outlook on the industry, market watchers said.
Samsung Fire & Marine Insurance Co., the country's leading nonlife insurer, reported an operating loss of 19.3 billion won ($17.4 million) in the first quarter, while LIG Insurance Co. lost 5.1 billion won in the first quarter, the data showed.
Local nonlife insurers are accordingly tightening their belts by enforcing the voluntary retirement program and slashing rates on savings-type insurance to put their balance sheets in better shape, market watchers said.
Savings-type insurance, which includes annuity insurance, refers to a policy designed to safeguard retirement income for senior citizens, rather than covering healthcare expenditures and other costs. (Yonhap)