Weighted nonperforming assets at domestic insurers increased by more than 751.8 billion won over a year, data showed. Weighted nonperforming assets are loans, securities, and real estate held by insurers that are effectively hard to recover, and are one of the indicators used to assess insurers' soundness. The increase appears to reflect rising loan delinquencies among corporations amid the recent economic downturn. Among domestic life and non-life insurers, Lotte Non-Life Insurance recorded the highest weighted nonperforming asset ratio for the third consecutive year.
According to the Financial Supervisory Service on the 29th, the volume of weighted nonperforming assets at 14 life insurance companies and 18 non-life insurance companies operating in Korea stood at 2.4494 trillion won as of the end of last year. That was up 44.3% (751.8 billion won) from 1.6976 trillion won at the end of the previous year. Even excluding 283.7 billion won in weighted nonperforming assets at bridge insurer Yebyeol Insurance, newly tallied for MG Non-Life Insurance at the end of last year for the first time, the total rose 27.6%.
Excluding Yebyeol Insurance, which has halted new business, Lotte Non-Life Insurance had the highest weighted nonperforming asset ratio at 0.72%. Lotte Non-Life Insurance's weighted nonperforming asset ratio climbed to 0.96% at the end of 2023 and has been gradually declining, but it has remained the highest in the industry for three consecutive years. Lotte Non-Life Insurance has continued to see deterioration after failing to recover a real estate project financing (PF) loan extended in 2021 for a commercial building in Yongin, Gyeonggi.
Following Lotte Non-Life Insurance were Hana Life (0.67%), KDB Life (0.58%), Heungkuk Fire&Marine Insurance (0.52%), and Meritz Fire & Marine (0.51%).
According to the Financial Supervisory Service (FSS), insurers' loan receivables totaled 265.2 trillion won, up 3.8 trillion won (1.5%) from the previous quarter. Over the same period, the nonperforming loan ratio rose 0.05 percentage point to 1.03%. With the recovery delayed, corporations' loan arrears appear to have increased. According to the Bank of Korea, the corporate business survey index (CBSI) for all industries in December last year was 93.7. A reading above the average of 100 indicates corporations are optimistic about the overall economy, while a reading below indicates pessimism.
An industry official said, "As corporations that borrowed from insurers fail to repay on time, nonperforming assets are gradually increasing."