Dongbu, Korea Non-Life Insurers Jump on Moves to Cut Car Protection Losses
Dongbu Insurance Co. led South Korean non-life insurers higher in Seoul trading after the government announced measures to help stem losses at their auto insurance businesses.
Dongbu Insurance jumped 6.8 percent to 45,000 won at the close on the Korea Exchange, the highest since Jan. 21, 2008, while the benchmark Kospi stock index added 0.4 percent. The 13- member Korea Insurance Index added 2.3 percent.
The measures unveiled by the Financial Services Commission yesterday include holding policyholders responsible for about 20 percent of the cost of damages from a car accident, subject to certain ceilings in cases of large losses. The government will also limit companies’ spending for sales activities.
“Regulators’ measures seem pretty much favorable to companies, and shares are responding,” said Lee Jin Woo, a fund manager at KTB Asset Management in Seoul, which manages $9.6 billion in assets. “Auto insurance has been a headache for many companies, and the measures show the government’s will to help them.”
The government’s measures should help to improve auto loss ratios, Goldman Sachs Group Inc. analysts led by Stan Lee wrote in a note dated yesterday.
To contact the editor responsible for this story: Richard Frost at firstname.lastname@example.org