Kyobo Aims to Boost Profits to W1 Tril. by 2015
By Lee Hyo-sik
Staff Reporter
Banks, securities firms, insurers and other financial services companies here have successfully overcome the collapse of Lehman Brothers and the subsequent international financial turmoil over the past one and a half years. One life insurance firm stands out among the pack, with its second-to-none risk management and marketing strategies.
Kyobo Life Insurance has emerged unscarred from the global crisis and turned it into a golden opportunity to become one of the world's leading life insurers, aiming to achieve 100 trillion won assets under management and one trillion won net profit by 2015.
In November last year, the life insurer was selected as the Life Insurance Company of the Year at the 2009 Asia Insurance Industry Awards held at the 10th Singapore International Reinsurance Conference, becoming the first Korean firm to be given the award.
The panel of judges said among other considerations, they highly regarded Kyobo's customer-oriented management, ability to generate stable profits, preemptive risk management and corporate social responsibility.
Despite the global financial crisis, the firm has made a notable achievement, outrivaling its competitors, including Korea's largest Samsung Life Insurance, in profitability and financial soundness.
The company posted a 291.6 billion won profit from April 2008 through March 2009, the largest among domestic life insurers. Its net profit accounted for 51.1 percent of the combined net earnings of 570.2 billion won by 22 insurers operating here.
From October last year through December, Kyobo posted a 383.5 billion won net profit, with its total assets increasing 9.5 percent to 53.2 trillion won from the previous year. The company's solvency margin ratio, a gauge of insurers' financial health, stood at 243.3 percent as of the December, higher than the global standard of 200 percent.
Kyobo's return on equity (ROE), the measure of profitability, has averaged around 20 percent, the highest among the nation's top three industry players for the past five years.
Thanks to its better-than-expected performance, Kyobo has been able to keep its ``A2'' rating, the highest among domestic financial companies, from global credit rating agency Moody's Investors Service, while the majority of financial services firms have been rated downward in the aftermath of the global financial crisis.
In July 2008, Moody's assigned A2 insurance financial strength (IFS) rating to Kyobo, citing its long operating history and its top position in the Korean market. It also said the company's profile, which includes whole life, annuity, health/disability, savings, investment-linked, protection and retirement products, is well diversified.
A Kyobo Life Insurance spokesman said Moody's maintaining of A2 ratings shows that the company successfully weathered the international financial market debacle on its own, as it did in the aftermath of the 1997-98 Asian financial crisis, through effective risk management.
The currency crisis that drove many Korean businesses into bankruptcy was a critical moment for Kyobo. It lost more than two trillion won as conglomerates doing business with Kyobo collapsed one by one.
Despite having a deficit of 254 billion won in 2000, the company eventually overcame its crisis without state assistance. It focused on changes and innovation instead of competition to increase bulk.
``In the end, risk management paid off. The insurer learned that the key for survival is risk management. Kyobo has successfully overcome the recent crisis without any government support,'' the spokesperson said.
Kyobo Life Insurance stopped overseas investments ahead of the collapse of Lehman Brothers in September 2008. The thorough risk management enabled it to minimize losses while others faltered.
The insurer set up committees to examine investment and asset management, excluding investment in risky assets from its portfolio. It stuck to its conservative investment principle confined to safe assets that it knew well.
It also focused on non-savings type insurances, which paid off with a good performance. Under the slogan that ``Insurance is love for family,'' the insurer increased sales of whole-life insurance and annuity insurance products.
``Kyobo Life aims at making good growth of a virtuous circle, in which customer satisfaction leads to increases in sales and profits, and eventually benefiting customers as well as all Kyobo workers and shareholders,'' the spokesman said.
Additionally, to emerge as a global enterprise, Kyobo is currently searching for a local partner to penetrate into the Chinese market, while its affiliated Kyobo Investment Trust Management was restructured into a joint firm by selling a 50-percent stake to the French insurance group, AXA.