Insurers' poor performance poses burden on financial groups

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Korea’s major financial groups’ weak insurance subsidiaries dragged down profits last year, no longer functioning as the growth driver they once were, market watchers said Monday.

The insurers’ investment income improved last year, but their profitability weakened as loss ratios rose. Regulatory shifts also led to revised projections reflecting lower expected future earnings, which translated to an increase in loss-making contracts and tax-related expenses.

Sluggish new sales also played a role, compounded by little success in new products, with a continued bull equity market rally drawing more consumer funds away from insurance.

According to financial market data, the insurance arms of the country’s four top financial groups saw profits fall last year, despite the holding firms' overall record profits.

KB Financial Group's non-life insurer, KB Insurance, reported net profit of 778.2 billion won ($530 million) in 2025, down 5.3 percent from a year earlier. KB Life posted 244 billion won in net income, down 9.4 percent from the previous year.

Shinhan Financial Group's life insurer Shinhan Life saw net profit of 507.7 billion won, down 3.9 percent from a year earlier. Shinhan EZ Insurance recorded a net loss of 32.3 billion won.

Woori Financial Group's Tongyang Life reported a net profit of 124 billion won, down 60.5 percent from the previous year.

Hana Financial Group's Hana Life managed to turn a profit, with a net income of 15.2 billion won.

Despite the sluggish performance, the four financial groups' combined net profit came to 17.9 trillion won last year, the highest level on record and an increase of 9.8 percent year-on-year.

“The insurance subsidiaries are no longer a strong growth driver,” an industry official said. “Claims are rising sharply in auto and health insurance, as medical costs are increasing and accidents are becoming more frequent. This, combined with limited premium increases due to regulations, is pushing insurance businesses to shrink faster. Softening demand for long-term insurance products is also worrisome.”