Several foreign investors in insurance companies in South Korea are planning to leave the market because its slow growth and poor profitability are predicted to continue.
Prudential Life Insurance Company of Korea has been put on the market. The company’s risk-based capital ratio as of June this year is 505.1%, the highest in the industry. In addition, Tongyang Life Insurance and ABL Life Insurance, which are under contract management by the financial authorities of China, are likely to follow suit and KDB Life Insurance is currently in the process of being sold, reported Business Korea.
The Financial Supervisory Service announced on 1 December that life insurance companies in South Korea posted a net profit of KRW3.06tn ($2.6bn) for the first three quarters of this year, down 24.3% from the corresponding period a year earlier. The net profit of major life insurers such as Samsung, Hanwha and Kyobo fell 36.4% to KRW1.58tn.
Likewise, foreign life insurers’ net profit showed a year-on-year decline of 16.3%.
Slow economic growth, an extremely low fertility rate and low interest rates are leading to a rapid decline in insurance profit.