By Lee Kyung-min
An increasing number of local insurers are seeking to expand their business to overseas markets as the local market appears to have reached saturation point with growth stagnating, market watchers said Sunday.
Chief among the growth strategies are alternative investments in commercial real estate, mergers and acquisitions and establishing a corporate entity.
Hanwha Life established a real estate investment entity in Japan in June last year, as reaffirmed by the firm’s CEO Yeo Seung-joo, who in May of that year said that the acquisition of overseas real estate would “lead to good opportunities” amid the low interest rates.
Similarly, Shinhan Life launched the Financial Consultant channel last month, a sales organization of Shinhan Life Vietnam, its corporate entity in Vietnam.
The Vietnamese subsidiary will run the channel, a professional face-to-face sales organization distinguished by the members’ extensive understanding of the local financial market.
Shinhan Life expects that its service of providing customer-tailored insurance solutions will contribute to Southeast Asia’s social and economic development.
DB Insurance became the largest shareholder of Vietnam National Aviation Insurance and Saigon-Hanoi Insurance on Feb. 27.
The development followed a contract that DB signed with both the 10th and the ninth largest market players in Vietnam by market share in February and June of last year, respectively.
DB plans to rise through the ranks against its global peers not only in Vietnam but the broader Indo-China regions, propelled by the acquisition of the two businesses, which possess deep industry knowledge, experience and technological infrastructure.
The overseas expansion drive will be aided by the Korea Insurance Development Institute, which said it would support local insurers to advance in overseas markets.
The institute said that the drive is a timely and appropriate move to better tap into Southeast Asian markets, regions known for great economic growth potential and a vibrancy defined by large populations.
“Our business portfolio is not limited to the overseas insurance market. It will include commercial real estate investment, among other alternative investment vehicles. More local players will make inroads in the months to come with a variety of expansion strategies.”
DB Insurance registered a net profit of 1.53 trillion won ($1.2 billion) last year, down 21.1 percent from a year earlier.
Car insurance profit posted a surplus of 321.1 billion won, powered by reduced losses in the medical expenses system.
The decline in net profit was due to one-off factors. But it maintains a robust standing, as measured by the contract service margin of 12 trillion won.
Hanwha Life’s net income came to 826 billion won last year, up 1.2 percent from the year before.
The solid profit came despite the new accounting standard, the International Financial Reporting Standard, issued by the International Accounting Standards Board in May 2017.
Its annual premium equivalent registered 3.26 trillion won, up 52 percent from a year earlier, led by an increase in sales.