'Reappointment' Choi Young-moo's Confidence... Samsung Fire & Marine Insurance Turns Performance Around with New Business

Net Profit Last Year Down 42.4% YoY to 609.2 Billion KRW
New Business Initiatives This Year Including Establishing Digital Insurance Company with Kakao

[Asia Economy Reporter Ki Ha-young] In the Samsung Financial Group's president appointments, which chose change through generational replacement, Choi Young-moo, CEO of Samsung Fire & Marine Insurance who was retained, will fully commit to sustainable profit-centered management this year. While advancing to secure future markets through establishing a digital non-life insurance company in partnership with Kakao, the plan also focuses on improving loss ratios by strengthening underwriting of indemnity health insurance and automobile insurance, which have continued to incur losses.

According to the insurance industry on the 20th, Samsung Fire & Marine Insurance is promoting the establishment of a digital non-life insurer in the form of a joint venture with Kakao. It is expected that after completing the preliminary approval application next month, the main approval and business commencement will be possible within the year. The main target is the 20s and 30s generation who are reluctant to subscribe to insurance. Samsung Fire & Marine Insurance is expected to focus on the lifestyle-oriented mini insurance market through the Kakao platform.

Jeong Gil-won, a researcher at Mirae Asset Daewoo Securities, said, "This year marks the first year of accelerated financial industry entry by platform big tech companies such as Naver and Kakao," and assessed, "Samsung Fire & Marine Insurance's establishment of a digital non-life insurer is a positive change in terms of increasing the turnover of idle capital and securing channels."

Samsung Fire & Marine Insurance also completed its equity investment in the UK’s Lloyd’s Canopius last year and has begun discussions to jointly pursue business in the Asian and U.S. markets. From this year, it is expected that an additional 7 to 10 billion KRW in equity method income will be generated from the Canopius investment. Canopius is currently pursuing the acquisition of the U.S. AmTrust Lloyd’s division. If the acquisition is successful, the market position is expected to improve from 10th to within the top 5 in the industry, further increasing profits.

Baek Tae-young, Chief Financial Officer (CFO) of Samsung Fire & Marine Insurance, said, "We are creating a sustainable growth model through investment and management structure innovation such as establishing a digital non-life insurer jointly with Kakao and jointly managing the U.S. and Asian markets with UK’s Canopius," adding, "Samsung Fire & Marine Insurance has both a telescope to see the future and a microscope to carefully examine the current situation, so please watch closely."

This year, profitability is planned to improve through strengthening loss ratio management of indemnity health insurance and automobile insurance. In the case of indemnity health insurance, the policy is to manage loss ratios by strengthening underwriting. Automobile insurance is also expected to see a rebound in performance from the second half of this year due to improved loss ratios from a decrease in automobile accidents and institutional improvements such as raising the burden for drunk driving accidents.

In fact, Samsung Fire & Marine Insurance received a disappointing report card last year. The net profit for last year announced yesterday was 609.2 billion KRW, down 42.4% from the previous year. During the same period, the gross written premium (sales) increased by 3.3% from the previous year to 18.8393 trillion KRW, but profits fell as the loss ratio and combined ratio (loss ratio + expense ratio), which are the ratios of insurance claims paid to premiums received, increased. The combined ratio, which measures insurance business efficiency, rose by 2.5 percentage points from the previous year to 106%.

Future market outlooks are mixed. Kim Jin-sang, a researcher at Hyundai Motor Securities, said, "Although the loss ratio worsened, it is still lower than the industry average," and judged, "From this year onward, the loss ratio is expected to enter an improvement cycle, led by automobile insurance." On the other hand, Lee Nam-seok, a researcher at KB Investment & Securities, predicted, "Despite the base effect of last year's underperformance and the effect of premium increases, the profit growth outlook for this year remains unchanged, but the improvement in return on equity (ROE) is still not large enough to drive stock price recovery."

This content was produced with the assistance of AI translation services.