Insurance companies in South Korea saw their assets surge more than 10 percent on-year in the first half of 2016, but life insurers suffered a plunge in earnings due mainly to increased insurance payments, data showed Tuesday.

The combined assets of the country's 25 life and 32 nonlife insurance firms came to 1,002.2 trillion won ($890 billion) as of the end of June, up 10.9 percent from a year earlier, according to the data by the Financial Supervisory Service. It marks the first time for their total assets to breach the 1,000 trillion-won level.

Insurers' total net profit, however, dropped 3.3 percent on-year to 4.3 trillion won in the January-June period mainly because of a tumble in life insurance companies' earnings.

Life insurers saw their combined net income nose-dive 17.9 percent on-year to 2.3 trillion won in the first half as insurance payments grew at a faster rate than premium incomes. Also responsible were worsened investment profits.

In contrast, the combined net profit of casualty-property insurers shot up 21 percent on-year to 2.03 trillion won.

The combined premium income of the life and nonlife insurers rose 4 percent on-year to 94.7 trillion won, with their insurance payments climbing 4.7 percent to 44.9 trillion won.

The return on assets, a key gauge of profitability, sank 0.12 percentage point to 0.89 percent in the first half, while the return on equity, another index measuring profitability, dipped 1.52 percentage points to 8.68 percent.

As of end-June, the net worth of the local insurance industry soared 18.4 percent on-year to 105.8 trillion won on the back of lower interest rates and a gain in the valuation of bond holdings.

An FSS official said local insurance companies need to ramp up efforts to improve profitability and financial health.

"Life insurance companies are under growing pressure from negative interest margins amid a long-running era of low interest rates," the official said. "They should step up efforts to manage the negative margin risk properly, as well as to become more profitable and financially sounder in preparation for the implementation of tougher international accounting standards." (Yonhap)