Korean insurers post profit growth thanks to new financial standard – insiders

IFRS17 may end up benefiting non-life insurers more than their life counterparts

Korean insurers post profit growth thanks to new financial standard – insiders

Insurance News

By Kenneth Araullo

The new International Financial Reporting Standard 17 (IFRS17) is powering the first-quarter performances of Korean insurers, according to several insiders within the industry. This comes in line with reports from February that investors are starting to stake more in the country’s insurance sector as IFRS17 becomes the norm in the first quarter of the fiscal year.

According to these sources, the new standard may be more favourable to the non-life sector because of the higher guaranteed insurance proportion, something which is enhanced by the new standard.

According to a report from Business Korea, the new accounting standard values insurance liabilities at market value over cost. Gains and losses over the entire contract period will also be recognized instead of cashflow. As a result, IFRS17 has lower liabilities than IFRS4, which boosts corporate earnings.

The report also took note of an analysis made by the Korea Insurance Research Institute that analysed the new standard’s impact on 22 life insurers and 12 non-life insurers. The results showed overwhelming growth for non-life firms in comparison to their life counterparts. According to the analysis, IFRS17 will boost the non-life insurers’ net income by as much as 51%, from US$3.5 billion to US5.3 billion. Life insurers, on the other hand, will enjoy a small boost of 6% to see US$2.9 billion in net income.

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