Lotte Insurance reported a net loss of 19.8 billion won and an operating loss of 28.5 billion won for the first quarter of this year, reflecting the impact of interest rate hikes on the valuation of interest-bearing assets.
The company recorded an investment operating loss of 55.7 billion won in Q1. Officials noted that this loss is primarily a temporary valuation loss on safe assets that guarantee principal at maturity. They expect that as market volatility decreases with the end of the war and normalization of conditions, these losses could be recovered. They also indicated that most of the temporary losses on certain foreign assets could be recouped, excluding hedge costs.
In contrast, the core insurance business showed improvement. Lotte Insurance's operating profit for Q1 reached 27.2 billion won, a turnaround from a loss of 11.2 billion won in the same period last year. The improvement was attributed to growth in premiums from long-term protection insurance and enhanced operational efficiency.
The future profit base, known as the Contractual Service Margin (CSM), also increased. At the end of Q1, the CSM stood at 2.509 trillion won, up 250.9 billion won, or 11.1%, from the previous year. The CSM amortization amount was 58.7 billion won, an increase of 6.4 billion won, or 12.3%, compared to Q1 last year.
The key long-term protection insurance premiums continued to grow, reaching 641 billion won. Lotte Insurance is strengthening its profit base by improving cost efficiency in long-term insurance indirect costs and reducing expenses in auto and general insurance.
Capital soundness also exceeded regulatory recommendations. As of the end of Q1 2026, the preliminary solvency ratio (K-ICS) was 164.4%. Lotte Insurance aims to manage its capital soundness stably based on the growth of operating profit and improvements in asset structure.
* This article has been translated by AI.
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