South Korea’s insurance industry recorded a combined first-quarter (Q1 2026) net profit of 4.4817 trillion won in 2026, climbing 9.5% – or 389.6 billion won – from the same period the previous year, according to figures the Financial Supervisory Service (FSS) published May 27, cited by The Asia Business Daily. The data covered 52 domestic insurers, comprising 22 life insurance companies and 30 non-life insurance companies. Beneath the sector-wide growth, however, the two segments moved in opposite directions. Life insurers benefited from asset disposal gains and stronger investment income, while non-life insurers absorbed losses tied to bond valuation declines triggered by rising interest rates.
Life insurers earned a combined 2.3761 trillion won in the first quarter, 40.6% more than a year earlier. The primary driver was a 457.7 billion won increase in investment profit, underpinned by interest and dividend income alongside one-time gains realized through the sale of assets. On the underwriting side, the picture was less favourable. Insurance profit fell 86.8 billion won during the quarter, the FSS said, as negative spread losses – arising when insurance finance costs exceed the returns earned on the corresponding liabilities – continued to weigh on the segment.
Non-life insurers reported net profit of 2.1056 trillion won for the quarter, a 12.3% drop from the year-earlier figure. The FSS linked the decline to a 229.4 billion won contraction in investment profit, which it attributed to bond valuation losses caused by the interest rate environment. Underwriting results were largely unchanged, with insurance profit edging up just 5 billion won.
Aggregate premium income for the first quarter reached 66.4884 trillion won, a 6% rise from the same period in 2025. Life insurers collected 33.2632 trillion won, up 6.9% year-on-year, while non-life insurers posted 33.2252 trillion won, a 5.1% gain. Within life insurance, protection-type products led growth at 11.3%, followed by retirement pensions at 5.7% and savings-type products at 5.3%. Variable insurance ran counter to the trend, falling 7.2%. For non-life insurers, general insurance expanded the most at 9.8%, while long-term insurance rose 6.2% and automobile insurance added 3.0%. Non-life retirement pension premiums contracted 1.5%.
The sector’s return on assets (ROA) came in at 1.33% for the quarter, gaining 0.06 percentage points from the prior year. Return on equity (ROE), however, slipped 1.89 percentage points to 10.03%. Total assets across the sector stood at 1,353.9 trillion won at quarter-end, up 0.7% from year-end 2025. Total liabilities declined 0.8% over the same period to 1,164.9 trillion won.
The FSS tempered the reading of the quarterly data, noting that stripping out non-recurring items would reveal a slower trajectory. “Net profit for insurance companies increased due to some improvements in investment profit, but if one-off gains are excluded, the growth trend has slowed. Due to negative spread losses caused by an increase in loss ratios, insurance profit continues to be sluggish, making it necessary to manage profits and losses through reasonable actuarial assumptions,” an FSS official said, as reported by The Asia Business Daily. The official also pointed to external variables that could create headwinds. “As uncertainties such as interest rates, stock prices, and exchange rates may increase going forward, it is important for insurance companies to maintain stable financial soundness,” the official said.
The first-quarter data follows a year in which the sector’s earnings fell sharply. According to an FSS preliminary report published March 30, 2026, cited by The Asia Business Daily, domestic insurers collectively earned 12.2172 trillion won in net profit for full-year 2025 – a decline of 2.0673 trillion won, or 14.5%, from 2024. Life insurers ended 2025 with net profit of 4.968 trillion won, down 664.7 billion won (11.8%) from the prior year. A rise in loss-making contracts and higher-than-expected claims payouts reduced underwriting profit by 352.7 billion won, while insurance finance costs pushed investment profit down a further 125.5 billion won.
Non-life insurers posted 7.2492 trillion won in net profit for 2025, 1.4026 trillion won (16.2%) less than in 2024. Deteriorating loss ratios in the long-term and automobile insurance lines drove underwriting profit down 2.6741 trillion won. Increased interest and dividend income lifted investment profit by 1.1672 trillion won, softening – but not reversing – the overall decline. The sector’s total earned premiums for 2025 reached 266.6595 trillion won, up 11.1% from the previous year, suggesting that volume growth alone did not translate into improved profitability. Full-year ROA fell 0.21 percentage points to 0.94%, and ROE declined 1.35 percentage points to 7.86%.
In the context of the 2025 full-year results, the FSS pointed to structural concerns around how insurers are managing the mismatch between their assets and long-duration liabilities, as well as exposures to alternative investments. “Net profit has declined as underwriting profit worsened due to an increase in loss-making contracts and the expansion of risk margin losses. Given the recent situation in the Middle East and the potential for increased volatility in interest rates and exchange rates, it is necessary to further strengthen ALM management and risk management for alternative investments,” an FSS official said. Asset-liability management (ALM) has become a central concern for Korean insurers as the industry navigates a sustained higher interest rate environment alongside the ongoing transition to the IFRS 17 insurance accounting standard, which altered how liabilities and profits are measured and reported.
