[Edaily Reporter PARK JONG-HWA ] The life insurance industry posted strong results in the first half of this year, driven by investment gains. However, the core insurance business faces challenging conditions—including a widening gap between the projected and actual loss ratios—and competition within the industry is expected to intensify further.

According to the insurance industry on the 17th, the “Big 3” life insurers—Samsung Life Insurance, HANWHA LIFE INSURANCE, and Kyobo Life—posted a combined net profit of 3.5028 trillion won in the first half of this year. This represents an increase of 1.0653 trillion won, or approximately 43.7%, compared to the first half of last year (2.4375 trillion won).

Kyobo Life announced on the 14th that it posted a net income of 704.8 billion won for the first half of this year based on consolidated financial statements. This represents a 21% increase from the first half of last year (582.4 billion won). Samsung Life Insurance and HANWHA LIFE INSURANCE’s net income for the first quarter of this year was 1.8935 trillion won and 904.5 billion won, respectively, marking increases of 36% and 96% compared to the same period last year.

Investment gains were the driving force behind the improved performance of life insurance companies in the first half of the year. This was due to recent rises in interest rates and the continued boom in the stock market. In particular, HANWHA LIFE INSURANCE’s investment gains nearly doubled from 177.6 billion won in the first half of last year to 354.8 billion won in the first half of this year. Samsung Life Insurance’s investment gains also increased by more than 80%, rising from 102.1 billion won to 185.8 billion won.

However, life insurers cannot afford to be complacent. This is because they failed to achieve satisfactory results in the insurance services segment, which is considered their core business. Samsung Life Insurance’s insurance services profit fell by 35.9%, from 831 billion won in the first half of last year to 533 billion won this year. The decline in profits is attributed to a one-time retirement provision of 52.6 billion won, coupled with a 113.0 billion won loss from the difference between book value and market value. Kyobo Life Insurance also saw its first-half insurance profit decline by more than 10%, from 253.6 billion won last year to 227.5 billion won this year. HANWHA LIFE INSURANCE increased its insurance profit compared to last year (176 billion won → 285 billion won), driven by contract service margin (CSM) and risk adjustment (RA) amortization; however, its loss from the difference between book value and market value (14.8 billion won) actually increased compared to last year (6.7 billion won).

As a result, insurance companies have begun focusing on their core businesses by competing to expand CSM, particularly in long-term protection insurance. In the first half of this year, new-business CSM stood at 1.7175 trillion won for Samsung Life Insurance, followed by HANWHA LIFE INSURANCE at 1.3001 trillion won and Kyobo Life Insurance at 806 billion won.

Competition in the life insurance industry is expected to intensify further in the second half of this year, coinciding with industry restructuring. WooriFinancialGroup plans to push forward with the merger of its subsidiaries, TONGYANG LIFE INSURANCE and ABL Life; upon completion of the merger, the combined entity will instantly leap into the top five in the life insurance industry. Korea Investment Financial Group has also been selected as the preferred bidder for the acquisition of KDB Life, signaling its ambition to expand its business into the insurance sector in earnest.