Korea Life Making Forays Into Vietnam, China
By Cho Jin-seo
Staff Reporter
The skyline of the Han River is dominated by the sleek golden tower of 63 City, the headquarters of Korea Life. It was the tallest building outside North America back when it was constructed in 1985 in the financial center of Yeouido.
It is natural, then, for the management of Korea Life to have a bird's-eye view on the insurance industry, with greater ambitions than its peers.
The 64-year-old life insurer wants to become a trend setter in two aspects this year. The first is to become the first major insurer here to offer its shares to the public. The second is to become the first to have a global retail network.
The first mission is already on its due course. On Mar. 17, shares of Korea Life will be floating on the KOSPI stock market, two months ahead of the initial public offering (IPO) of its rival Samsung Life. By offering 210 million of old and new shares, the firm plans to raise 1.72 trillion won from the IPO.
This will add a little more than 1 trillion won to the firm's account. And the IPO will a symbolic meaning for Korea Life as well as to the insurance industry. So far, this has been one of the most conservative financial sectors, often run like an emergency cash reserve for the business groups they belong to.
The IPO will make the insurance firms more transparent and more reliable for financial investors. It is an essential step for Korea Life and Samsung Life, who want to become global players.
The stock market debut will also improve the brand recognition among the potential insurance customers in and out of Korea, as it has already drawn great attention from domestic and foreign investors.
So far, Tong Yang is the only life insurer in Korea to be listed, but its size is nowhere close to that of the "Big 3" ― Samsung, Korea and Kyobo.
The IPO is carefully designed not to affect the corporate governance structure. Currently, about 67 percent of shares are held by Hanwha Group, with the remaining 33 percent held by state-run Korea Deposit Insurance Corp.
Some of those old shares were put on the IPO table as well, but they are mostly from the latter, who is not interested in managing the firm anyway. Hanwha's determination to make Korea Life a global player remains as strong as it has been since 2002, and the cash flow from the IPO will enable investment in building a retail network in Asia.
Global Dream
Korea Life's history precedes that of the Republic of Korea by two years. Founded in 1946, the firm represents the insurance industry's history by itself. More than six decades later, it is now tapping into foreign insurance markets.
The company entered the Vietnam market last April, becoming the first Korean insurer to have a fully-owned subsidiary on foreign soil. It has also signed a memorandum of understating with a Chinese partner firm, preparing to start business in the world's largest market later this year.
In Vietnam, the company has established a sales force of some 2,000 agents. Initial premium payments from policies those local agents have sold have reached $2 million. This accounts for only a small portion to the firm's total premium income, but still it is a good start for a non-Vietnamese firm that was established there only nine months ago.
It is hardly an empty market up for grabs. Prudential of the United Kingdom, Bao Vietnam and Manulife of Canada are three big players there with a combined market share of 85 percent. But Korea Life is confident ― it took only two and a half years to set up a branch office, acquire a license and launch a subsidiary.
Localization has been a key factor behind such agility. There are some 60 employees in five offices ― two in Hanoi, two in Ho Chi Minh City and one in Dak Lak ― but only 2 of them are Koreans. The company has also invited local government officials to introductory trips to Korea, building personal relationships with them.
"The insurance industry in Vietnam is growing at an annual average of 10 percent. And 60 percent of the population is under 30, so the potential for growth is very large," a company official said. "Just as we have led the life insurance industry in South Korea for the past 64 years, we will continue to write the history of the 'Great Challenge' in Vietnam by offering the best products and customer services and helping the local insurance industry grow."
'Great Challenge 2011' is the motto of Hanwha Group. Pronounced by its chairman Kim Seung-yeon during the financial crisis, Hanwha and its subsidiaries are going to spend 2010 preparing to assert themselves as global players by 2011.
After Vietnam, the next destination of the company was China. In December, it signed a memorandum of understanding with a Zhejiang-based firm to invest some 45 billion won in forming a 50-50 joint venture. To be headquartered in the historical lake city of Hangzhou, near Shanghai, the Chinese venture will soon submit its application for a license.
cjs@koreatimes.co.kr