South Korea’s non-life insurers saw their net profit plunge 24.6 percent in the first nine months of the year due to increased losses from long-term insurances and auto premiums, data showed Monday.

According to data released by the Financial Supervisory Service, the combined net profit of local non-life insurance firms came to 2.2 trillion won ($1.86 billion) in the January-September period, down 24.6 percent from the same period a year ago. It marks the second consecutive on-year fall during the cited period.

The plunge this year was mainly attributed to increased losses from long-term insurance products and auto premiums despite increased investment earnings.

Data showed that non-life insurers logged an operating loss of 3.7 trillion won from insurance in the first 9 months of the year, widening 106.2 percent from last year.

By insurance type, non-life insurers incurred 3.3 trillion won in operating loss from long-term premiums in the first three quarters ended September, up 48.1 percent from the same period a year ago. The firms were affected by increased operating expenses amid fierce sales competition and increased payment to cover indemnity insurances.

Non-life insurers also ran up an operating loss of 824 billion won from auto insurances, up 303.1 percent. The increase was attributed to a rise in maintenance cost and insurance production cost.

The firms raised 447.5 billion won worth of operating profit from general insurances such as those related to natural disasters in the January-September period, down 32.1 percent from a year ago.

Data showed that non-life insurers earned 6.7 trillion won in investment profit, up 14.5 percent from last year, thanks to a rise in disposable credit such as high-interest bonds.

Original premium, or total revenue, increased 5.2 percent to 66.9 trillion won amid increased competition to sell long-term insurance products. Revenue had decreased every year since 2014 before turning upwards this year.

Original premium from long-term insurance jumped 4.8 percent and auto insurance 4.3 percent in the January-September period versus a year ago.

Non-life insurance firms’ total return on assets stood at 0.95 percent as of September, down 0.42 percentage points from the same period a year ago, while their return on equity was at 7.12 percent, down 3.68 percentage points amid global low interest rate environment.

The firms’ total assets amounted to 318.97 trillion won as of end of September, up 10 percent from a year ago. Total debt increased 8.5 percent to 274.77 trillion won and equity capital 20.3 percent to 44.2 trillion won, data showed.

By Lee Eun-joo

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