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Major financial groups set for fierce competition in nursing care business
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By Jun Ji-hye
The four major financial groups — KB, Shinhan, Hana and Woori — are rapidly expanding into the elder care business through their life insurance subsidiaries amid the nation's accelerating population aging, industry officials said Thursday.
Although the sector has yet to turn a profit due to high initial investment costs, the groups are placing a strong focus on it as a future growth engine.
According to the Financial Supervisory Service's electronic disclosure system, KB Golden Life Care, a subsidiary of KB Life Insurance, posted a net loss of 2.5 billion won ($1.8 million) in the first quarter of this year.
Shinhan Life Care, a subsidiary of Shinhan Life Insurance, also recorded a net loss of 600 million won.
Despite continued losses, competition in the elder care market is expected to intensify as Hana and Woori have recently joined the race, following early movers KB and Shinhan.
Hana Life Insurance has recently launched a new subsidiary, HANA THE NEXT Life Care, to spearhead its entry into the elder care industry. The company aims to provide comprehensive senior welfare services, centering on long-term care facilities.
To this end, Hana Life has already secured land in Goyang, Gyeonggi Province, for the development of a care center.
Woori Financial Group, which took over Tongyang Life Insurance and ABL Life Insurance, is also preparing to enter the elder care market.
Currently, its think tank, Woori Finance Research Institute, is analyzing Japan's elder care system as part of its groundwork for future business planning.
Japan, the quickest country in the world to enter a super-aged society, where those aged 65 and older make up more than 20 percent of the population, had already grown its elder care market to about 100 trillion won by 2022.
Japanese insurers that expanded into the sector early are now enjoying strong profitability.
Data from the Korea Life Insurance Association shows that the average return on equity of Japan's top nine life insurers rose to 19.4 percent in 2023, nearly doubling from 11.4 percent in 2017.
"We are developing senior-focused financial products and services to address low birthrates and aging," a Woori Financial Group official said. "Our recent acquisition of Tongyang Life and ABL Life will strengthen our role as a comprehensive financial group responding to demographic changes."
KB Golden Life Care’s elderly care facility located in Seocho District in Seoul / Courtesy of KB Life Insurance
KB Financial Group, currently the leader in the elder care business among financial groups, continues to expand its operations through active infrastructure investment.
In October 2023, KB Life Insurance expanded its elder care investments by bringing KB Golden Life Care under its umbrella. Earlier this month, KB Life completed a paid-in capital increase of 50 billion won to support the expansion of KB Golden Life Care's operations.
Since opening a care center in Seoul's Gangdong District in 2017, the subsidiary now operates seven elder care facilities and plans to open two more in the second half of the year.
Shinhan Financial Group is rapidly catching up to KB.
In January last year, Shinhan Life took over the elder care business from Shinhan Financial Plus and established Shinhan Life Care as its subsidiary. It opened its first care center in Seongnam, Gyeonggi Province, in November.
This year, the company plans to open another care facility in Hanam, Gyeonggi Province, and aims to build a senior welfare housing complex in Seoul's Eunpyeong District by 2027.
"Senior care and housing are considered areas with growing demand in a super-aged society," said an official from the life insurance industry. "Given the wide range of potential opportunities, holding companies and large conglomerates are more actively pursuing this market than individual insurance companies."