Korea’s six non-life insurance companies saw their earnings in overseas markets drop by 52.2 percent on a year-on-year basis, due mainly to natural disasters and lax risk management.
Overseas operations of three companies have led the fall in net profit. They were Samsung Fire & Marine, Korea Re and LIG Insurance, according to the Financial Supervisory Service.
Samsung Fire & Marine’s overseas unit reported a net profit of $5.43 million during the April and September period, a drop of $3.91 million from $9.34 million over the same period in 2010.
Korean Re, which recorded a profit of $6.03 million between April and September last year, posted a net loss of $1.8 million during the same period of 2011.
LIG Insurance also reported a loss of $1.62 million this year, compared to $220,000 in profit a year earlier.
Their sharp drop in earnings was attributable to floods in Australia and an earthquake in New Zealand, the FSS said.
But regulator officials said it is necessary for the non-life insurance firms to continue making inroads into foreign markets, citing the saturated domestic market.
“Earnings of overseas units of Korea’s non-life insurance companies account for only 0.5 percent,” an FSS official said. “Further, relatively weak risk management in foreign markets caused the heavy drop in earnings.”
In coordination with the International Association of Insurance Supervisors, the FSS is providing the local companies with detailed information on overseas markets.
As an example, Samsung Fire, which holds about 30 percent of the Korean non-life insurance market, has been active in tapping the Chinese market over the past few years.
The advancement into China is part of the insurer’s globalization strategy.
The initiative was taken by CEO Chi Dae-sup, who took office in 2008 armed with a determination to make inroads into overseas markets.
He said at his inauguration that non-life insurance businesses cannot survive by focusing only on the domestic market.
The insurer’s initial strategy was to target Korean residents and resident employees working in cities such as Beijing, Shanghai and Tianjin.
As the business aimed at Koreans residing there proved to be successful, the insurer is considering marketing more generally.
Samsung Fire’s first overseas office was set up in 1978 in London, the world’s capital of the insurance industry. Seven years later the company opened an office in New York, followed by others in Tokyo, Ho Chi Minh City, Beijing and Jakarta.
By Kim Yon-se (
kys@heraldcorp.com)
