Insurers' AGMs Begin Amid Surrender Reserve Burden... 'Governance and Shareholder Returns' Put to the Test

Changed Stance of the National Pension Service, Proactive Exercise of Voting Rights
Activist Fund Offensives Intensify
Increase in Surrender Value Reserves... A Key Variable Limiting Dividend Capacity

This year, the key themes for the annual general meetings (AGMs) of major domestic insurance companies are expected to be "governance restructuring" and "shareholder returns." As discussions on amendments to the Commercial Act have brought the expansion of shareholder rights to the forefront, the National Pension Service is taking a more proactive approach to exercising its voting rights, increasing the pressure on company management. In addition, the growing burden of surrender value reserves across the industry has emerged as a critical variable limiting dividend capacity, drawing heightened market attention to the outcomes of the AGMs.

Changed Stance of the National Pension Service, Activist Fund Offensives... Heightened Pressure on Management

According to the insurance industry on March 25, Samsung Life Insurance kicked off the AGM season on March 19, followed by Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, and KB Insurance, all of which completed their AGMs on March 20. Dongyang Life Insurance and Hanwha Life Insurance, taking the baton, concluded their AGMs between March 23 and 24. Mirae Asset Life Insurance, Shinhan Life, Kyobo Life Insurance, and Heungkuk Life Insurance are scheduled to hold their AGMs sequentially through the end of the month, with Meritz Fire & Marine Insurance being the only major non-life insurer yet to hold its AGM.

During this AGM season, most management teams retained their positions, while the appointment of outside directors emerged as a key agenda item. Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, and KB Insurance welcomed new outside directors through their AGMs. Kyobo Life Insurance plans to appoint Ahn Chulkyung, former head of the Korea Insurance Research Institute, as both Audit Committee member and outside director at its regular AGM on March 27. On the same day, Heungkuk Life Insurance has placed on the agenda the appointment of Kim Hyeongpyo, head of management planning, as the new CEO.

The issue of governance changes stemming from discussions on amending the Commercial Act has influenced AGMs across the insurance sector. While the National Pension Service is actively voicing opinions in the name of protecting shareholder rights, activist funds and global proxy advisory firms have intensified their offensives. Align Partners Capital Management, an activist fund, directly nominated a candidate for outside director at DB Insurance, citing issues with the company’s shareholder return policy. As a result, both the company and shareholders nominated their own candidates, and the AGM concluded with a compromise in which each side’s nominee secured a seat. For Mirae Asset Life Insurance, where the reappointment of management is on the agenda, the National Pension Service’s process of vetting management for any history of undermining corporate value is expected to be a key variable influencing the AGM outcome.

Additionally, the National Pension Service opposed Hyundai Marine & Fire Insurance’s plan to use part of its treasury stock (3%) for employee incentives, arguing that repurchased shares acquired for stock price stabilization should not be used as compensation resources. The National Pension Service also expressed opposition to Hanwha Life Insurance’s agenda item to approve the cap on compensation for outside directors.

Surrender Value Reserves Emerge as a 'Key Variable' in Dividend Policy... Attention on Dividend Strategies

As the regular AGM season in the insurance industry enters its final phase, the financial indicators and dividend policies of major life and non-life insurers are coming into clearer view. Recently, the most prominent issue in the industry has been surrender value reserves. These are statutory reserves accumulated to prepare for the payment of refunds to customers who terminate their insurance contracts early.

The problem is that these reserves are directly linked to the resources available for dividends. Even if an insurance company records profits, it is required to accumulate a certain level of reserves, meaning that the actual capacity for shareholder dividends remains limited despite improved performance. An executive at a life insurance company explained, "If sales of protection-type insurance increase, future profits (CSM) will expand, but at the same time, the burden of surrender value for early cancellations will also grow. As a result, increased reserve accumulation erodes the resources available for dividends."

This AGM season, as the final financial results for the previous year are confirmed, each company’s reserve levels and capital strength are expected to become more concrete. Accordingly, for listed insurers, changes in dividend size and policy, linked to reserve levels, are attracting particular attention. Some insurers have already shifted toward reducing or taking a more conservative approach to dividends. For example, Shinhan Life achieved record-high earnings as of the third quarter of 2025 but did not pay an interim dividend. This was due to surrender value reserves exceeding 4.5 trillion won during the same period, up more than 20 percent year-on-year, which reduced the capacity for increased dividends. Hanwha Life Insurance is also finding it difficult to pay dividends because of the reserve burden. Despite improved performance following the incorporation of its subsidiary, Hanwha Life Insurance has not paid dividends for two years since March 2024.

Meanwhile, Meritz Fire & Marine Insurance, the last among non-life insurers to hold its AGM, has put the agenda item of reappointing CEO Kim Junghyun forward. The industry expects his reappointment to proceed without difficulty.

This content was produced with the assistance of AI translation services.