Lotte Non-Life Insurance(000400) turned a profit in the second quarter this year. Losses in the investment institutional sector narrowed while insurance operations delivered stable earnings.
Lotte Non-Life Insurance disclosed on Aug. 14 that it posted an operating profit of 3.1 billion won and a net profit of 1.3 billion won in the second quarter this year. In the first quarter, it recorded an operating loss of 28.5 billion won and a net loss of 19.8 billion won, but both figures swung to a profit in the second quarter.
Second-quarter insurance operating profit was 26.5 billion won, maintaining a level similar to the previous quarter (27.2 billion won). The contractual service margin (CSM), which reflects future insurance profit, stood at 2.2431 trillion won as of the end of June, down 265.9 billion won from the end of last year. Original premiums for long-term protection-type insurance were 638.6 billion won, up 10.1 billion won from the same period a year earlier.
Investment gains and losses remained in the red, but the loss narrowed. Second-quarter investment gains and losses were minus (-) 23.5 billion won, an improvement of 32.2 billion won from the first quarter (-55.7 billion won). As yields on 20-year Treasury bonds rose, temporary valuation losses occurred in interest-bearing assets and some foreign-currency assets.
Capital soundness indicators also improved. The provisional basic capital solvency ratio (K-ICS) at the end of the second quarter was -5.4%, up 16 percentage points (p) from the previous quarter (-21.4%). Basic capital was -91 billion won, an increase of 259.8 billion won from the end of the first quarter (-350.9 billion won).
Net worth was 993.5 billion won, up 288.8 billion won from the previous quarter. Improvement in accumulated other comprehensive income (OCI) related to insurance contracts contributed to the increase in net worth. The total solvency ratio was 161.9%.