The country’s leading life insurer Samsung Life Insurance recorded a 25% drop year-on-year of net profit from insurance sales and investment returns to KRW640bn (£448m, $582m ,€517m).
South Korea’s second largest insurer Hanwha Life’s net profit fell by 31% to KRW260bn while the net profit of Kyobo Life Insurance also shrunk by 9% to around KRW380bn for the first six months of the year.
All three said they suffered a decline in insurance sales due to the weak economy. The volume of new policies sold by Samsung Life fell by 19.7% in the first half while Hanwha Life fell by 12.1%.
Instead, policy cancellations rose by 6.9% for Samsung Life and 4.9% for Hanwha Life.
“The industry is under a triple whammy - the pressure of having to build up more loss reserves due to the adoption of the new accounting standard, poor investment returns on low interest rates and decreasing insurance sales,” an industry source told South Korea’s Pulse News.
The news comes as South Korea’s insurance industry is under increasing pressure to boost capital to meet stronger accounting standards in compliance with the International Financial Reporting Standard 4 (IFRS 4) phase II, set to be introduced by 2020.
Hanwha in Indonesia
Last week, Korean media reported that Hanwha Life, will invest a further KRW150bn into its Indonesian arm in a bid to expand its foothold in the country’s booming insurance sector.