"'Ugly Duckling' NongHyup Life Insurance and NongHyup Property & Casualty Insurance Take Flight with Structural Improvement (Comprehensive)"

NongHyup Life Insurance's Net Profit Up 160%
NongHyup Property & Casualty Insurance Also 10 Times Last Year
CEO Hong Jae-eun's Third Term Draws Attention

[Asia Economy Reporter Oh Hyung-gil] There are talks that the expressions of employees at insurance affiliates within NH Nonghyup Financial Group have brightened. This is due to the expectation that the long-standing sluggish performance can be completely wiped out as two insurance companies, which were treated as the 'ugly ducklings' among the affiliates, have both recorded strong results.

As the company-wide restructuring efforts have received passing marks, attention is focused on whether a precedent will be set with the first-ever CEO in the group to serve a third consecutive term.

According to the insurance industry on the 25th, Nonghyup Life Insurance and Nonghyup Property & Casualty Insurance, which had struggled with poor performance in recent years, are showing changed appearances this year.

Nonghyup Life recorded a net profit of 157.3 billion KRW in 2015, then decreased to 154.5 billion KRW in 2016, 85.5 billion KRW in 2017, and posted a loss of 118.3 billion KRW in 2018.

After successfully returning to profitability with 40 billion KRW last year, it recorded a net profit of 64.3 billion KRW up to September this year, a sharp increase of 160.3% compared to the same period last year.

Through a sales expansion strategy focusing on protection-type insurance via the agricultural cooperative sales channels, it recorded a higher growth rate compared to the life insurance industry. Market share also increased from 6.4% at the end of last year to 8.3% in the second half of this year based on premium income.

A Nonghyup Life official said, "Due to the COVID-19 pandemic, insurance claims decreased, and company-wide cost reductions improved performance," adding, "Although sales of protection-type insurance declined compared to the previous year, the company's long-term strength is improving."

Performance Improvement Continues with Portfolio Changes Based on Stable Sales Network

Nonghyup Property & Casualty Insurance also saw its net profit soar more than tenfold to 49.2 billion KRW up to the third quarter this year, compared to 4 billion KRW last year. Nonghyup P&C's net profit fell from 56.1 billion KRW in 2013 to 34 billion KRW in 2014, 35.8 billion KRW in 2015, 35.3 billion KRW in 2016, 26.5 billion KRW in 2017, and 2 billion KRW in 2018.

Unlike other property insurers, it does not sell automobile insurance but handles crop disaster insurance, making it highly affected by weather. Despite abnormal weather such as heavy rains this year, the loss ratio in the third quarter was stably maintained at 84.5%, compared to 86.2% at the end of last year.

Since last year, the restructuring efforts directly led by CEOs have been shining. Kim Kwang-soo, Chairman of Nonghyup Financial Group, led the 'Insurance Management Innovation Committee' with insurance company CEOs, raising competitiveness through synergies with financial affiliates and preparing support measures at the holding company level.

Hong Jae-eun, CEO of Nonghyup Life and an asset management expert, has led profitability expansion through asset management since taking office, and successfully completed a 200 billion KRW capital increase in August. The solvency margin ratio (RBC), which was 192.4% at the end of last year, rose to 314.9% in the third quarter.

Choi Chang-soo, who has been leading Nonghyup P&C since this year and comes from a planning background, is transforming everything from the business portfolio to corporate culture. Recently, he declared the '2025 Vision,' aiming to become a mid-sized property insurer with 4.8 trillion KRW in gross written premiums and 100 billion KRW in net profit by 2025.

In particular, CEO Hong is facing the expiration of his term next month. Attention is also focused on whether Nonghyup's personnel practice, where after one reappointment the CEO steps down for a successor, will be maintained. With Chairman Kim Kwang-soo selected as the sole candidate for the next chairman of the Korea Federation of Banks, variables have emerged in personnel matters within Nonghyup's subsidiaries.

A Nonghyup Life official said, "The subsidiary executive candidate recommendation committee (Nomination Committee) is proceeding with the appointment process as scheduled," but added, "It is difficult to predict what decision the Nomination Committee will make given that the holding company chairman position will soon be vacant."

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