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| Photo: Lotte Insurance |
[Alpha Biz= Paul Lee] According to data released by South Korea’s Financial Supervisory Service (FSS) on January 5, Lotte Insurance’s delinquent loans related to the real estate and leasing sector stood at KRW 44.9 billion as of the end of the third quarter of last year, unchanged from the level recorded at the end of December 2024. The figure surged sharply from KRW 16 billion in 2023, highlighting a rapid deterioration in asset quality.
The delinquency ratio for Lotte Insurance’s real estate–backed loans jumped to the mid-16% range as of the third quarter of 2023 and has since remained at a similar level. By contrast, the delinquency ratio for the insurer’s overall loan portfolio declined to 2.29% at the end of the third quarter of last year, down from 6.38% a year earlier.
Of the delinquent real estate-related loans, KRW 16 billion stemmed from a problematic project financing (PF) loan. The loan was extended in 2021 for a commercial building project in Yongin, Gyeonggi Province, based on a lease agreement claiming that Nonghyup Hanaro Mart would become a key tenant. However, it was later revealed that the agreement had been signed without proper authorization from Hanaro Distribution, and the supermarket never moved in. Lotte Insurance has yet to recover the loan principal. The remaining delinquent amount involves loans extended to individual and corporate leasing businesses.
In November last year, Lotte Insurance received an early corrective action order from the Financial Services Commission (FSC) after being assessed as having insufficient capital adequacy and sustainability. In response, the company submitted a management improvement plan to financial authorities on January 2, outlining measures such as cost reductions, disposal of non-performing assets, and improvements in workforce and organizational management. Once approved by the FSC, Lotte Insurance will be required to implement the proposed measures.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
