2Q26E Preview: Expecting further stabilization in operational trends

研报英文原文证据摘录

2Q26E Preview: Expecting further stabilization in operational trends

Equity Research

1 July 2026 | 7:56PM KST

SOUTH KOREA INSURANCE

Expecting further stabilization in operational trends Sinyoung Park

+82(2)3788-1778 |

Given the focus on quality over quantity, positive seasonality and premium sinyoung.park@gs.com

Goldman Sachs (Asia) L.L.C., Seoul Branch

adjustments, we expect non-lifers’ earnings to remain steady due to improving loss

ratio trends and normalizing investment profits. While top-line trends could remain

sluggish due to premium hikes and tight underwriting standards, we expect to see

continued improvements to persistency. On auto, high fuel prices and Feb27

premium rate hike helped to contain auto loss ratio levels (83.1% in Apr-May26 vs.

85.9% in Jan-Mar26 avg.).

Reform initiatives in 2H26E to fundamentally help improve profitability

We believe the scheduled reform measures (effective from July 2026) will

fundamentally improve insurers’ earnings quality; 1) GA (General Agencies)

commission cap will help rationalize competition and improve insurers’ persistency

trends as well as easing the expense burden, and 2) tight claims control of managed

items such as manual/shock-wave therapies will help curb excessive claims growth

(i.e., fixing the cost, raising the co-payment rate and limiting frequency) will

immediately impact profitability as opposed to reflecting premium adj. over time.

Slow progress on Value-up but peer pressures starting to build

Korean insurers have made limited progress since releasing their primitive Value Up

plans in early 2025. However, with DBI aiming to update its Value Up plan in

mid-August, we believe peer pressure will build on leading insurers like SFM. Given

the revised corporate governance reform measures (i.e., 3% rule on major