Seoul: Insurance companies in South Korea witnessed a significant decline in their combined net profit, which fell by 15 percent year-on-year in the first half of this year. This drop was primarily attributed to increased loss rates and a decrease in investment returns, as revealed by recent data.

According to Yonhap News Agency, the Financial Supervisory Service reported that the combined net profit for 22 life insurers and 31 non-life insurance companies amounted to 7.98 trillion won (approximately US$5.76 billion) during the January to June period. This figure represents a decrease of 1.41 trillion won compared to the same period in the previous year.

The year-on-year decline was largely due to a rise in loss rates and a reduction in investment returns, based on insights from the financial watchdog. Life insurance firms experienced an 8.5 percent drop in net profit, totaling 3.33 trillion won in the first half. Meanwhile, non-life insurers saw a more substantial decrease of 19.2 percent, with net profits amounting to 4.64 trillion won during the cited period.

Despite the decline in net profits, the insurance companies reported an increase in insurance premium income, which reached 124.38 trillion won in the first half. This marks an 8 percent rise, or 9.26 trillion won, compared to the previous year, as highlighted in the data.

The report also indicated that the return on assets for these firms stood at 1.24 percent at the end of June, reflecting a decrease of 0.29 percentage points from the previous year. Additionally, the return on equity dropped by 0.44 percentage points to 11.26 percent.

As of the end of June, the total assets of the insurance firms were reported to be 1,301 trillion won, showing a 2.6 percent increase from a year earlier.