The size of contracts held by domestic life insurers fell by about 30 trillion won in one year. The decline is seen as the result of subscribers canceling policies to raise investment funds amid the recent stock market boom. Among the three major life insurers (Samsung Life Insurance, Hanwha Life Insurance, Kyobo Life Insurance), Samsung Life Insurance saw the largest drop in contract holdings.
According to the Life Insurance Association on the 7th, as of the end of Feb., the contract holdings of 22 life insurers stood at 2,302.9187 trillion won, down 1.3% from the same period a year earlier (2,332.4608 trillion won). Samsung Life Insurance's contract holdings were 589.3721 trillion won, down 12.5383 trillion won (2.1%) from a year earlier. Kyobo Life Insurance's contract holdings were 307.2326 trillion won, down 1.6078 trillion won (0.5%), and Hanwha Life Insurance's were 302.5692 trillion won, down 2.4453 trillion won (0.8%).
Samsung Life Insurance said its contract holdings declined as it reduced sales of limited-pay whole life policies, which are unfavorable for increasing profitability under the new accounting standard (IFRS 17).
The decline in life insurers' contract holdings is seen as the result of funds moving into the stock market amid the recent rally. As of the end of Feb. this year, the KOSPI stood at 6,244.13, up 3,711.35 points (146.5%) from a year earlier.
According to the Korea Financial Investment Association, investor deposits rose from 87.829 trillion won at the end of last year to about 106 trillion won at the end of Jan. this year, and increased to 118.7488 trillion won at the end of Feb. In the first quarter of this year (Jan.–Mar.), the surrender refunds at the three major life insurers were 4.8986 trillion won, up 16.3% from the same period a year earlier (4.2104 trillion won).
With life insurers' net profit declining, a drop in contract holdings could strain insurers' liquidity and dampen investment. According to the Financial Supervisory Service, life insurers' net profit last year was 4.968 trillion won, down 11.8% from a year earlier. Insurance profit fell by 352.7 billion won due to an increase in loss-making contracts and adverse mortality/expense variances, and investment profit also decreased by 125.5 billion won.
An official in the life insurance industry said, "With the recent stock market boom, more subscribers are canceling their policies."