The under review status follows HGI’s public disclosure on Jan. 31, 2020, of a consolidated net loss of KRW 69 billion (USD 59 million) for its preliminary fiscal-year 2019 results.
HGI has maintained consistent profitability since 2014, although a deterioration in results was observed from 2018. As per its disclosure, the company is expected to record a net loss of KRW 69 billion (USD 59 million) on a consolidated basis for fiscal-year 2019. This marks a decrease of KRW 151 billion (USD 129 million) compared with fiscal-year 2018, during which HGI posted net profits of KRW 82 billion (USD 70 million).
The deterioration in HGI’s underwriting performance since 2018 was due mainly to inadequate pricing, which consequently led to the company’s inability to catch up with increasing loss costs and expenses in its auto and long-term insurance business lines. While its bottom line had been supported by a stable stream of investment income, which helped mitigate underwriting volatility, the company also is expected to report sizeable impairment losses of KRW 25 billion (USD 21 million) from its securities holdings for 2019, which has placed further pressure on its bottom line. HGI is seeking ways to improve its underwriting profitability, including rate increases for its auto and medical indemnity insurance lines, product restructuring and tighter underwriting.
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