KB Insurance posts W681.1b in nine-month net profit as investment losses weigh

KB Insurance posted lower nine-month cumulative net profit despite growth in insurance income, as a sharp decline in investment income offset gains from improved loss ratios and actuarial policy changes. Wider volatility in interest rates and exchange rates drove valuation losses on invested assets, pulling down overall earnings.

According to KB Financial Group's third-quarter earnings disclosure released Thursday, KB Insurance's nine-month cumulative net profit attributable to the controlling interest came to 681.1 billion won ($510 million), down 11.2% from 766.9 billion won in the same period a year earlier. Third-quarter net profit was 202.3 billion won, down 75.8 billion won from 278.1 billion won in the previous quarter and down 3.1% from 208.8 billion won in the year-earlier period.

Nine-month cumulative insurance income rose 13.1% to 742.1 billion won from 655.9 billion won a year earlier. Long-term insurance income climbed 8.6% to 741.1 billion won, while general insurance income surged to 48.6 billion won — roughly 2.7 times the 18 billion won recorded in the same period last year. Auto insurance income remained in the red at negative 47.6 billion won, extending losses from negative 44.2 billion won a year ago. The cumulative loss ratio edged up 0.6 percentage points year-on-year to 82.2%. By segment, the long-term insurance loss ratio rose 1.7 percentage points to 82.4%, while general insurance improved 6.4 percentage points to 71.3% and auto insurance fell 0.4 percentage points to 85.0%.

Investment income plunged. Nine-month cumulative investment income fell 43.2% to 224 billion won from 394.2 billion won a year earlier, reflecting valuation losses on invested assets from heightened interest rate and exchange rate volatility. Investment returns over the same period dropped 19.9% to 738.7 billion won from 922.5 billion won. In the third quarter alone, insurance income rose 17.0% quarter-on-quarter to 301.5 billion won on an improved long-term insurance loss ratio, but investment income swung to a loss of 31.6 billion won as valuation losses on securities and derivatives widened. KB Insurance noted, however, that stripping out the base effect from a one-time long-term insurance impairment reversal in the previous quarter — related to the advancement of actuarial assumptions — third-quarter earnings were broadly in line with the prior quarter.

The contractual service margin, a forward-looking profit indicator, grew 16.0% year-on-year to 10.9 trillion won from 9.39 trillion won. The K-ICS solvency ratio stood at 187.9% on a preliminary basis, up 0.4 percentage points from 187.5% in the previous quarter, maintaining a stable level.

"Investment income declined in the third quarter due to heightened financial market volatility from interest rate and exchange rate movements, but we maintained profit at a level comparable to a year ago, supported by CSM growth and impairment reversals following regulatory system changes," a KB Insurance official said. "Going forward, we plan to strengthen our foundation for stable earnings generation through quality growth focused on profitability and sound capital management."