By Yoon Ja-young
Staff Reporter
Foreign life insurers' market share surpassed 20 percent for the first time last year, thanks to the variable universal insurance boom and increasing insurance sales through banks.
While mid-tier firms also pulled up their share to above 20 percent, the top three players ― Samsung Life Insurance, Korea and Kyobo ― are seeing their share continuing to drop.
According to the Financial Supervisory Service (FSS), foreign life insurers had a 21.4 percent market share in the 2007 fiscal year ending in March, up 2.3 percentage points from the previous year. It is remarkable growth compared with 1997 when they took only 1 percent of the market. Mid-tier local insurers also saw their market share grow by 3.2 percentage points to 21.8 percent.
While foreign life insurers and small and medium-sized firms are increasing their market share, Samsung, Korea and Kyobo Life Insurance had their combined market share fall to 56.8 percent last year. Their share has been falling each year from 67.4 percent in 2004 to 65.8 percent in 2005 and to 62.3 percent in 2006.
The regulator said foreign insurers and small players expanded their market share as more people subscribed to variable universal insurance products on the booming stock market last year. Life insurers raised 20.4 trillion won in premiums from variable products, up 44.4 percent from the previous year. The expansion of bancassurance sales channels, on which they depend more heavily compared with the big three focusing on insurance salespeople, also helped them increase their slice of the pie.
Foreign life insurers, however, are seeing profitability worsening. PCA Life, New York Life, MetLife Insurance, and Hana HSBC Life recorded deficits last year as they saw expenditures soar, while trying to aggressively expand their market share.
Samsung Life Insurance, meanwhile, recorded 718.4 billion won in profits, and Kyobo had 443.4 billion won.
Non-life insurers recorded 1.6 trillion won in net profit last year, surging 54 percent from a year ago. The FSS attributed the historical net profit to a rise in car insurance premiums, falling loss ratios and the booming stock market which helped their assets grow.
Auto insurance companies raised insurance premiums by 4 to 7 percent early last year on rising loss ratios. The hike helped them pull down the ratio of insurance money paid out to insurance premiums, to 72.7 percent from 78.7 percent.