Fitch: Profits fall for South Korea life insurers

Fitch Ratings said that the South Korean life insurance industry faces a challenging period with profitability dragged down by lackluster premium growth, which resulted from the economic slowdown, intense market competition and pressure on investment income.

In 2008, the South Korean life industry's profitability was significantly lower, reaching KRW 617 billion of preliminary net income compared to KRW 2 trillion in the previous financial year, the agency said.

The decline in profitability was reflective of a combination of factors, including intense market competition, an increase in the number of cancelled or voided insurance policies due to defaults in premium payments and a drop in investment performance, Fitch said.

The current poor investment environment calls for renewed concerns over the weight of the negative spread burden on insurers' profitability, the agency said.

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