Korean insurers head overseas as domestic market becomes saturated

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By Yi Whan-woo

Insurance companies in Korea are bolstering efforts to expand their business activities in overseas markets in a bid to nurture growth engines as the domestic market has become saturated, according to industry sources.

The companies include both non-life insurers and life insurers.

They are especially interested in the Southeast Asian market as the region is undergoing rapid economic development and has a large young population which could serve as a potential pool of new customers.

Of the non-life insurers, Dongbu Insurance has been aggressively expanding its business in Vietnam with the acquisition of controlling stakes in three Vietnamese companies beginning in 2015.

The Seoul-headquartered company in June signed an agreement to acquire a 75 percent stake in Saigon-Hanoi Insurance (BSH), which is ranked ninth in the Vietnamese insurance market.

The deal comes after the acquisition of a 37.32 percent stake in PTI in 2015 and then a 75 percent stake in VNI in February this year.

PTI and VNI were ranked fifth and 10th respectively in the Vietnamese insurance industry, when their respective shares were purchased by Dongbu Insurance.

The series of acquisitions allowed Dongbu Insurance to emerge as the third-largest market player in Vietnam.

KB Insurance, a subsidiary of KB Financial Group, is focusing on Indonesia to create more synergy with other business arms of the banking group operating within the Southeast Asian country.

The corporate entity of KB Insurance in Jakarta swung into the black in 2021 after posting a net loss of 3.5 billion won ($2.67 million) in 2020. Additionally, it reported a net profit of 1.16 billion won last year.

Furthermore, KB Life Insurance, another KB Financial Group affiliate, is mulling over whether it should tap into the Southeast Asian market and accordingly launched a global business unit during its corporate restructuring in 2022.

Samsung Life Insurance, Korea's largest insurer by market capitalization, is ratcheting up efforts to generate profit in Thailand. The company first advanced into Thailand in 1997 but only began to turn aprofits in recent years.

Its corporate entity in Bangkok began accepting online subscriptions earlier this year for a retirement pension plan.

Hanwha Life Insurance is targeting Indonesia as its next business destination in Southeast Asia after it became the first Korean life insurer to set foot in Vietnam in 2009, and expanded its presence as a top 10-ranked market player thereafter.

In March, Hanwha Life Insurance acquired a majority 62.6 percent stake in Lippo General Insurance, an affiliate of Lippo Group, Indonesia's sixth-largest conglomerate.

To help Korean insurance businesses accelerate their respective overseas expansions, the Financial Supervisory Service (FSS) said that it will continue to ease its regulations, such as allowing the companies to own banks overseas.