Non-life insurers suffer declining profitability in Q3

By Lee Min-hyung

Non-life insurers here have posted a sharp decline in earnings during the first three quarters amid deteriorating profitability in their car and indemnity health insurance businesses.

Samsung Fire & Marine Insurance, the nation's largest non-life insurer, reported 585.9 billion won ($501.32 million) in net profit during the period, down 35.1 percent from a year ago.

The drop was attributable to the widening loss ratio in the firm's major insurance businesses. In its quarterly conference call, the company said it would raise a premium rate for its car insurance, in a bid to tackle worsening profitability in the area amid a growing increase in car repair and maintenance costs.

“The loss ratio increase in the car insurance business was expected, but its investment income was below expectations, and its business expense increased,” Daishin Securities analyst Park Hye-jin said.

The firm's third-quarter net profit came in at 159.8 billion won, and the figure was far below earlier market consensus of 187 billion won, according to the analyst.

DB Insurance came in second in net profit of 328.7 billion won in the first three quarters, but the earning is a drop of 27.2 percent from the previous year.

Market experts expected the company to post 400 billion won in its 2019 annual net profit, down 21.5 percent from a year ago, due to similar unfavorable market conditions.

“The company is forecast to report 404 billion won in the annual net profit in reflection of the industry's common factors, such as the increase in loss ratio in the car insurance business,” Hanwha Investment & Securities analyst Sung Yong-hoon said.

An increase in loss ratio of indemnity health insurance is also cited as a major factor driving down their worsening earnings, according to the analysts.

Hyundai Marine & Fire Insurance also posted a 33.9 percent drop in net profit of 236.2 billion won during the first three quarters, compared to a year ago. The company also suffered from the earnings decline for the similar reasons.

KB Insurance followed the list by posting 233.9 billion won in combined net profit during the same period, down 10.3 percent from a year ago.

Among the top five non-insurers, Meritz Fire & Marine Insurance only enjoyed a slight growth in earnings.

The company recorded 212.7 billion won in net profit, up 3.8 percent from the previous year. The growth was driven by the firm's robust sales activities and business strategies to minimize the loss ratio in the areas facing unfavorable market conditions, according to the company.