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Life insurers' stock prices hit by low interest rate


By Kim Bo-eun

Life insurers have become troubled by falling stock prices amid the persisting low interest rate. None of the five listed life insurers here saw their stock prices rise compared to January this year.

Data from Korea Exchange shows the share price of Samsung, Hanwha, Mirae Asset, Tongyang and Orange of Oct. 29 dipped significantly from the prices of Jan. 2.

Among them Hanwha Life saw the biggest fall in stock price, from 6,850 won per share to 2,340 won as of Monday.

The price is less than a quarter of what it was in 2010. Hanwha Life's price per share stood at 9,840 won on April 30, 2010.

Hanwha Life's management has sought to purchase the insurer's shares to counter the fall. Former Vice Chairman Cha Nam-gyu and CEO Yeo Seung-joo bought 50,000 shares and 30,000 shares, respectively, in July. In March, Cha and Yeo each purchased 44,000 shares and 20,000 shares. Other executives also pitched in, to little avail.

Hanwha's share price stood at 2,625 won on July 31, when Cha and Yeo's purchase of shares were made public, but only fell further since then.

Tongyang's share per price also tumbled by percent, to 3,960 won, Monday, from 7,540 won on Jan. 2.

Orange Life's share price dived to 28,350 won from 52,100 won.

Samsung Life's share price peaked at 93,900 won on Jan. 30 but dipped to 72,500 won, Friday.

Mirae Asset Life's price share fell from a 5,400 won peak on March 16 to 4,210 won.

The fall in share prices is attributed to the prolonged low interest rate.

The average yield of 10-year treasury bonds fell from 2.626 percent in January 2018 to 1.991 percent this year.

This is weighing in on life insurers as they need to pay high yields on policies that were sold in the 1990s. The majority of policies sold at the time had high yield rates and fixed yields.

The persisting low interest rate is lowering profits for insurers' investments, which are needed to pay the high yields.

This can be seen the plunge in net profit of major insurers.

Collectively, their net profit for the third quarter came down to 479.6 billion won, a 9.1 percent fall from the same period a year earlier.

Samsung's net profit fell 21.6 percent year-on-year, and Hanwha and Orange each saw their net profits dive 56.6 percent, and 20.9 percent, respectively.

"It appears difficult for life insurers' share prices to rise significantly," Meritz Securities analyst Kim Go-eun said.

"Regulations for the insurers have been eased but still exist, and for share prices to rise, there would need to be a reverse in the course of low interest rates."



By Kim Bo-eun

Life insurers have become troubled by falling stock prices amid the persisting low interest rate. None of the five listed life insurers here saw their stock prices rise compared to January this year.

Data from Korea Exchange shows the share price of Samsung, Hanwha, Mirae Asset, Tongyang and Orange of Oct. 29 dipped significantly from the prices of Jan. 2.

Among them Hanwha Life saw the biggest fall in stock price, from 6,850 won per share to 2,340 won as of Monday.

The price is less than a quarter of what it was in 2010. Hanwha Life's price per share stood at 9,840 won on April 30, 2010.

Hanwha Life's management has sought to purchase the insurer's shares to counter the fall. Former Vice Chairman Cha Nam-gyu and CEO Yeo Seung-joo bought 50,000 shares and 30,000 shares, respectively, in July. In March, Cha and Yeo each purchased 44,000 shares and 20,000 shares. Other executives also pitched in, to little avail.

Hanwha's share price stood at 2,625 won on July 31, when Cha and Yeo's purchase of shares were made public, but only fell further since then.

Tongyang's share per price also tumbled by percent, to 3,960 won, Monday, from 7,540 won on Jan. 2.

Orange Life's share price dived to 28,350 won from 52,100 won.

Samsung Life's share price peaked at 93,900 won on Jan. 30 but dipped to 72,500 won, Friday.

Mirae Asset Life's price share fell from a 5,400 won peak on March 16 to 4,210 won.

The fall in share prices is attributed to the prolonged low interest rate.

The average yield of 10-year treasury bonds fell from 2.626 percent in January 2018 to 1.991 percent this year.

This is weighing in on life insurers as they need to pay high yields on policies that were sold in the 1990s. The majority of policies sold at the time had high yield rates and fixed yields.

The persisting low interest rate is lowering profits for insurers' investments, which are needed to pay the high yields.

This can be seen the plunge in net profit of major insurers.

Collectively, their net profit for the third quarter came down to 479.6 billion won, a 9.1 percent fall from the same period a year earlier.

Samsung's net profit fell 21.6 percent year-on-year, and Hanwha and Orange each saw their net profits dive 56.6 percent, and 20.9 percent, respectively.

"It appears difficult for life insurers' share prices to rise significantly," Meritz Securities analyst Kim Go-eun said.

"Regulations for the insurers have been eased but still exist, and for share prices to rise, there would need to be a reverse in the course of low interest rates."


Kim Bo-eun bkim@koreatimes.co.kr


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