Hyundai Marine & Fire Insurance decided not to pay management performance bonuses to employees this year, citing rising loss ratios in auto insurance and indemnity health insurance last year. This is the first time since 2006 that Hyundai Marine & Fire Insurance has not paid performance bonuses.
Chief Executive Lee Seok-hyun of Hyundai Marine & Fire Insurance notified employees by email on the 10th, saying, "Our profit size last year was insufficient even from an external market perspective, and it also fell well short of the criteria for paying performance bonuses," adding, "We ultimately decided, unavoidably, not to pay performance bonuses." Lee said, "Going forward, we will newly establish the criteria for paying performance bonuses in a way that comprehensively considers profit and capital strength under the new accounting standards, and will provide guidance within this year."
Hyundai Marine & Fire Insurance judged that paying performance bonuses would be difficult, as auto insurance swung to a loss last year and the loss in indemnity health insurance widened. Hyundai Marine & Fire Insurance ranks third among major companies in auto insurance by market share. Among domestic insurers, it has the largest number of in-force indemnity health insurance contracts.
A Hyundai Marine & Fire Insurance official said, "Performance bonuses were decided by comprehensively considering the company's growth trajectory and the required profit level, including capital adequacy and net income," adding, "Each year, they were determined at the company's discretion within the pool of resources for performance distribution." The official added, "Last year's standalone net income is expected to be about 50% of the prior year," saying, "It is insufficient from an external market perspective and also falls short of our internal standards."
Hyundai Marine & Fire Insurance posted 1.0198 trillion won in net income on a consolidation basis last year, up 19.9% from the previous year. This reflects the application of the new accounting standards (IFRS 17). By contrast, Hyundai Marine & Fire Insurance sets performance bonuses under the old accounting standards (IFRS 4). Performance bonuses in Feb. last year were also set under the old accounting standards.
The labor union at Hyundai Marine & Fire Insurance has continually raised issues with these criteria for paying performance bonuses. After the settlement of account board meeting ended on the 6th, the union requested materials from management on the accounting standards and business performance used to determine last year's performance bonuses.