PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩0 per share · Prices as of the 2026-10-02 close
Lotte Non-Life Insurance returned to quarterly profit in the second quarter of 2026 and improved its capital metrics, but this comes alongside a cumulative first-half loss and a public sale process being pushed by majority owner JKL Partners.
Second-quarter 2026 operating profit of KRW 3.1 billion and net profit of KRW 1.3 billion marked a turn to profit from the prior quarter's loss
Majority owner JKL Partners is shifting to a public sale process after negotiations with Shinhan Financial Group broke down, with an announcement expected by late September
The core capital K-ICS ratio improved from -21.4% to -5.4% but remains in negative territory
The contractual service margin (CSM) declined quarter-on-quarter following the application of enhanced actuarial assumption standards
The company is executing a capital-raising and cost-reduction plan under a management-improvement order issued by the Financial Services Commission
Lotte Non-Life Insurance is a KOSPI-listed general insurer whose core businesses are auto insurance, general insurance, and long-term protection-type insurance.
Since CEO Eun-ho Lee took office in 2022, the company has been reducing exposure to loss-ratio-sensitive auto and indemnity health insurance lines in favor of higher-margin long-term protection products.
Private equity firm JKL Partners, which acquired control from Lotte Group in 2019, is the majority shareholder holding a 77.04% stake through a special purpose vehicle.
In the general insurance market, large players such as Samsung Fire & Marine, DB Insurance, Hyundai Marine & Fire, and Meritz Fire & Marine occupy the top tier, positioning Lotte Non-Life as a mid-tier player.
Direct premiums for long-term protection products reached KRW 638.6 billion in the second quarter of 2026, up modestly from KRW 628.5 billion a year earlier.
Distribution runs through insurance planners, general agencies (GA), and bancassurance channels, and the company has recently partnered with Toss Insurance to strengthen full-disclosure sales practices and internal controls.
On the regulatory front, the company remains under a management-improvement order from the Financial Services Commission requiring it to execute a plan involving asset disposals, cost cuts, and capital increases.
The contractual service margin (CSM), a forward-looking profitability indicator, stood at KRW 2.2431 trillion at the end of the second quarter of 2026, down from the prior quarter due to the application of enhanced actuarial assumption standards.
| Quarter | Revenue | Operating profit | Op. margin |
|---|---|---|---|
| 2025Q2 | ₩522.5B | ₩48.3B | 9.2% |
| 2025Q3 | ₩532B | ₩68B | 12.8% |
| 2025Q4 | ₩558.8B | -₩64.6B | −11.6% |
| 2026Q1 | ₩551.6B | -₩28.5B | −5.2% |
| 2026Q2 | ₩553.5B | ₩3.1B | 0.6% |
| Year | Revenue | Operating profit | Net income (parent) | Op. margin | ROE | Debt-to-equity |
|---|---|---|---|---|---|---|
| 2022 | ₩1.5T | -₩125.1B | -₩99.2B | — | −5.5% | 829.8% |
| 2023 | ₩1.6T | ₩396.3B | ₩301.6B | — | 24.0% | 1081.5% |
| 2024 | ₩2T | ₩31.1B | ₩24.2B | — | 3.0% | 1856.8% |
| 2025 | ₩2.1T | ₩64.7B | ₩51.3B | — | 8.4% | 2248.9% |
Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04
On an annual basis, 2022 revenue was KRW 1.4857 trillion with an operating loss of KRW 125.1 billion and a net loss of KRW 99.2 billion, before a sharp recovery in 2023 to revenue of KRW 1.6484 trillion, operating profit of KRW 396.3 billion, and net profit of KRW 301.6 billion.
In 2024, revenue rose to KRW 1.9772 trillion, but operating profit narrowed to KRW 31.1 billion and net profit to KRW 24.2 billion, before profits expanded again in 2025 to revenue of KRW 2.1296 trillion, operating profit of KRW 64.7 billion, and net profit of KRW 51.3 billion.
The quarterly pattern has been volatile: the third quarter of 2025 delivered the strongest result in the recent window, with revenue of KRW 532.0 billion, operating profit of KRW 68.0 billion, and net profit of KRW 51.5 billion, before deteriorating sharply in the fourth quarter of 2025 to an operating loss of KRW 64.6 billion and a net loss of KRW 47.7 billion despite revenue of KRW 558.8 billion.
This weakness carried into the first quarter of 2026 with an operating loss of KRW 28.5 billion and a net loss of KRW 19.8 billion, before the company swung back to quarterly profit in the second quarter of 2026 with revenue of KRW 553.5 billion, operating profit of KRW 3.1 billion, and net profit of KRW 1.3 billion.
According to the company, second-quarter insurance operating profit of KRW 26.5 billion was similar to the prior quarter's KRW 27.2 billion, while investment results posted a loss of KRW 23.5 billion amid an unfavorable environment as the 20-year Korean Treasury bond yield rose to around 4.3% by the end of June.
On a cumulative first-half basis, insurance revenue reached KRW 1.1341 trillion and insurance profit was KRW 53.7 billion, but an investment loss of KRW 79.2 billion left the first half with a net loss of KRW 18.5 billion.
The combined attributable net profit over the most recent four quarters (Q3 2025 through Q2 2026) stands at roughly negative KRW 14.6 billion, a markedly different picture from the full-year 2025 profit trend.
South Korea's general insurance industry continues to grapple with controversy over the conservatism and comparability of actuarial assumptions as the IFRS17 and K-ICS regimes mature.
In January 2026, the Financial Services Commission announced an 'Enhanced Actuarial Supervision Framework' setting guidelines for loss-ratio and expense assumptions, to be applied from the second-quarter 2026 financial closing onward—a structural change affecting CSM and insurance-profit calculations across the industry, including Lotte Non-Life.
At the same time, a fifth-generation indemnity health insurance product with significantly lower premiums launched in May 2026, introducing a new variable into insurers' health insurance economics, while a contract-conversion discount scheme is scheduled to take effect in November 2026.
The upper tier of the industry is dominated by well-capitalized large insurers such as Samsung Fire & Marine, DB Insurance, Hyundai Marine & Fire, and Meritz Fire & Marine, which are focused on expanding long-term protection premiums and managing capital soundness.
Lotte Non-Life sits as a mid-tier player in this competitive landscape, with capital replenishment through an ownership change seen as key to its future competitiveness.
The industry is also in an active M&A cycle, with other insurers such as KDB Life and Yebyul Non-Life Insurance (formerly MG Non-Life) also on the block, competing for a limited pool of potential acquirers and narrowing the field of candidates for Lotte Non-Life.
The company's path forward is likely to be shaped more by the sale process than by operating performance alone.
After negotiations between majority owner JKL Partners and Shinhan Financial Group collapsed, JKL and sale advisor Samjong KPMG shifted to a public sale, with industry reports pointing to a possible announcement as early as late September 2026, letter-of-intent submissions by late October, followed by due diligence and preferred-bidder selection, with a share purchase agreement targeted for early next year.
JKL Partners has reportedly sought a valuation in the range of roughly KRW 1 trillion to as much as KRW 1.5 trillion, while Shinhan had offered around KRW 700 billion, leaving the price gap as the central variable for a deal.
In an August 2026 report, Hana Securities noted that JKL's acquisition financing matures next year and that there are few competing bidders, suggesting room for renewed negotiations with Shinhan.
On its own, the company points to the long-term protection-focused portfolio realignment and expense reduction pursued under CEO Eun-ho Lee as the basis for defending its valuation.
In parallel, under the management-improvement plan approved by the Financial Services Commission, the company must execute and report quarterly progress on asset disposals, cost cuts, and organizational changes over an 18-month period.
In the indemnity health insurance segment, a contract-conversion discount (buy-back) scheme is scheduled to take effect from November 2026, which is expected to alter the related profit and loss structure.
Lotte Non-Life's share price trades at a substantial discount to its net asset value, which can be read as reflecting both capital-adequacy concerns and uncertainty around the ongoing sale process.
Because the trailing four quarters have shown a loss, conventional earnings-based valuation metrics are not meaningful in this window, a factor that pushes market assessments toward the terms of a potential sale and the pace of capital improvement rather than standard profitability multiples.
Dividends have not been paid recently, making dividend-based metrics difficult to apply.
On an annual basis, the company moved from a loss in 2022 to a sharp profit recovery in 2023, followed by a more moderate profit recovery trend through 2024 and 2025, but 2026 has shown an unstable pattern alternating between a first-quarter loss and a modest second-quarter profit.
With this earnings volatility overlapping the majority owner's public sale process, the market price may be more sensitive to the outcome and terms of a potential transaction than to conventional industry- or earnings-based valuation.
PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04
Second-quarter 2026 operating profit of KRW 3.1 billion and net profit of KRW 1.3 billion marked an exit from the prior quarter's loss. Over the same period, the core capital K-ICS ratio improved from -21.4% to -5.4%, and core capital rose from negative KRW 350.9 billion to negative KRW 91.0 billion. Net assets also increased from KRW 704.7 billion to KRW 993.5 billion, easing some capital-adequacy concerns.
JKL Partners has lowered its target sale price from the KRW 2 trillion range to around KRW 1 trillion, and after talks with Shinhan Financial Group it has pivoted to a public sale process to attract multiple bidders.
Hana Securities projected room for renewed talks with Shinhan, citing JKL's approaching acquisition-financing maturity and limited competing deals. A successful sale could bring capital infusion through integration into a larger financial group.
Since CEO Eun-ho Lee took office, the portfolio has been realigned toward long-term protection products, lifting direct premiums. Second-quarter 2026 direct premiums for long-term protection products reached KRW 638.6 billion, up from a year earlier. The CSM balance has remained in the low-KRW 2 trillion range, underpinning a base for future earnings.
Although the core capital K-ICS ratio improved to -5.4%, it remains negative, indicating a continued need for capital replenishment. This is the backdrop for the management-improvement order from the Financial Services Commission and could translate into additional capital-injection burdens for any acquirer.
JKL Partners had sought a valuation in the range of roughly KRW 1 trillion to KRW 1.5 trillion, while Shinhan Financial Group reportedly offered around KRW 700 billion, leading to a breakdown in talks.
Even after shifting to a public sale, the pool of buyers has narrowed as Korea Investment Financial Group, a leading candidate, is focused on acquiring KDB Life.
The CSM declined by KRW 265.9 billion quarter-on-quarter following the application of enhanced actuarial assumption standards, and further adjustments to insurance-liability valuation and earnings are possible as implementation standards continue to be applied.
The launch of fifth-generation indemnity health insurance and the introduction of a contract-conversion discount scheme add further variables to the indemnity health insurance profit structure.
Under the management-improvement order from the Financial Services Commission, the company must execute and report quarterly on a plan involving asset disposals, cost cuts, and capital increases over an 18-month period. Inadequate execution could lead to further supervisory action.
There is precedent for a breakdown in exclusive negotiations, this time with Shinhan Financial Group, and even after the shift to a public sale, the pool of potential buyers is seen as limited.
A prolonged or renewed failure of the sale process could extend uncertainty over ownership structure alongside a delayed exit for the private-equity majority shareholder.
As the 20-year Korean Treasury bond yield rose to around 4.3% by the end of June, valuation losses emerged on interest-bearing and certain foreign-currency assets.
The company maintains these are temporary book losses that will reverse if assets are held to maturity, but continued interest-rate and currency volatility could sustain swings in quarterly investment results.
Check whether JKL Partners and Samjong KPMG proceed with the announced public sale of Lotte Non-Life as planned, and review the specific deal structure, including the mix of existing and new shares.
Watch the letter-of-intent submission deadline and the list of participating bidders to assess whether a genuine competitive auction takes shape.
Review the tentative third-quarter 2026 results to see whether the second-quarter return to profit continues and whether the core capital K-ICS ratio shows further improvement.
The contract-conversion discount (buy-back) scheme for indemnity health insurance is scheduled to take effect; monitor the scale of contract transfers and the resulting earnings impact.
Check whether a preferred bidder is selected and a deal is finalized around the share purchase agreement timing referenced by industry sources.
Lotte Non-Life Insurance carries both positive signals—a return to quarterly profit and improved capital metrics in the second quarter of 2026—and burdens, including a cumulative first-half loss and a core capital K-ICS ratio that remains negative.
Layered on top of this is majority owner JKL Partners' pursuit of a public sale, meaning the company's path forward may hinge more on the pricing and outcome of sale negotiations than on a conventional earnings cycle.
Industry-wide regulatory shifts, including enhanced actuarial assumption standards and the launch of fifth-generation indemnity health insurance, remain ongoing sources of adjustment to CSM and insurance profit structure.
A completed sale could bring capital support through integration into a larger financial group, but the valuation gap and a narrowing pool of bidders remain unresolved variables.
Investors should track quarterly earnings trends alongside each stage of the sale process, including the public sale announcement, letter-of-intent submissions, and preferred-bidder selection.
Report written 2026-09-05 · Data as of 2026-09-04
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