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By Lee Min-hyung
The so-called big three life insurers here ― Samsung Life Insurance, Hanwha Life Insurance and Kyobo Life Insurance ― are speeding up their overseas drives to find new revenue sources amid saturation in the local insurance market.
Their global expansion has yet to generate tangible outcomes, but the move is inevitable in that the local insurance market is nearing saturation and competition keeps intensifying with the rise of emerging players such as internet-only insurers and tech-driven platform operators.
For now, the insurers' main targets are countries in Southeast Asia with huge demographic potential, rather than developed markets in Europe or the United States.
The latest in a series of such moves was announced by Kyobo Life which plans to establish a joint venture company in Myanmar with a local partner there. The company will start its life insurance business there sometime in the latter half of next year.
"Kyobo will also make gradual inroads into other markets such as India and the Association of Southeast Asian Nations where we can secure a huge number of potential customers," an official from Kyobo said. "The country's life insurance market is expected to keep reporting double-digit growth for the next few years, driven by the local government's policy to develop financial businesses there."
Samsung Life Insurance, the nation's largest insurer by market capitalization, is also active in Thailand. The company tapped into the country in 1997, but it has been only three years since the firm started generating profits there.
Thai Samsung Life Insurance is on track to normalize its business there by posting a surplus for the fourth consecutive year.
To generate more solid and stable earnings performance, Thai Samsung Life Insurance plans to continue investing in other Southeast Asian markets ― such as Vietnam and Indonesia. Last year, the company made an equity investment in Rabbit Finance, the largest online financial products broker in Thailand.
Yoo Ho-seok, chief financial officer at Samsung Life, also said in a second-quarter regulatory filing that the company will aggressively push for mergers and acquisitions and equity investment in Southeast Asia for the next decade to diversify revenue streams in non-Korean markets.
Hanwha Life Insurance is also seeking to find new profit centers in the emerging Asian markets. In 2008, the firm established its Vietnamese branch and has since expanded its foothold there by increasing the number of its sales offices to more than 140 in the country's major cities ― such as Hanoi and Da Nang.
The number of subscribers to Hanwha Life Insurance products surpassed 100,000 there in 2019. This is cited as one of the most successful overseas outcomes of a major insurer here. Last year, the company reported a net profit of 19.9 billion won in the Vietnamese market.
The firm also established its Chinese and Indonesian branches, respectively in 2012 and 2013. Hanwha's Indonesian business also reaped a net profit of 1.9 billion won for the first time in 2019 after suffering years of losses.
Insurance industry officials said expanding into the Asian market is necessary at a time when the local insurance market is faced with a structural slowdown due to the prolonged low interest rate and low birthrate.
"Outlook for the Korean life insurance market remains cloudy, as fewer and fewer people will sign insurance products due to the declining birthrate," an official from a major life insurer said.
"To make matters worse, insurance firms cannot reap as much profit as they used to, as they can no longer invest customers' insurance premiums amid the near-zero-interest-rate era."
Even if the insurers have yet to report any meaningful earnings there, they need to keep investing and finding business models in Southeast Asia in a preemptive manner before competition gets tougher there, according to the official.
"The Southeast Asian market comes with strategic importance in that the economies there grow at a rapid pace," he said. "It will not take much time for the insurers to generate tangible revenue there."
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