Korean Re, a Reinsurance Firm Poised to Rank Among Global Top 10 by 2020
Korean Re is aiming to become one of the world's top 10 reinsurers by 2020 by bolstering international business and introducing advanced insurance services, according to a top manager of the reinsurance company.
In an interview with the Korea IT Times, Park Jong-won, chairman & president of Korean Re, said, "Right after successfully overcoming the 1997-1998 Asian financial crisis, Korean Re established the "Vision 2020," a mid and long-term strategy to enter ranks of the top 10 global reinsurers by that year."
The strategy, among other things, calls for strengthening of the international business, expansion of capital volume, introduction of advanced insurance services and becoming more information and knowledge- oriented.
"As a result of pursuing corporate reform based on the strategy, Korean Re has achieved an annual average growth of 13.6% for the past seven years (1998~2004) and is currently ranked as the world's 16th largest reinsurer," said the 62- year-old professional manager.
In January 2006, Korean Re set up the "Vision 2010," a mid-way plan to attain the Vision 2020. Vision 2010 is an execution plan to achieve the Vision 2020 ahead of schedule.
"Under the mid-way plan, total assets and gross written premiums are expected to reach 5 trillion won ($5.17 billion), making Korean Re the 12th reinsurer in the world by 2010," said Park.
Asked about the 2006 managerial strategy, Chairman Park said, "The current reinsurance business environment is extremely difficult as the Korean reinsurance market, the 8th largest in the world, has already become saturated with growth showing signs of stagnation.
"Commercial lines such as fire and engineering insurance, which reap high returns, are losing their ground as domestic manufacturing firms are moving to countries that provide 'cheap labor', and most of the major global reinsurers have all made a presence in the domestic reinsurance market, resulting in fierce competition, said Park.
Noting that the year 2006 will be a very important turning point for Korean Re, which has posted high growth for the past seven years, he said, "As a result, we set the construction of a core ability to become a top-notch company as the 2006 managerial target."
Along with this, Korean Re will expand its growth base by exploring new domestic and overseas markets and actively creating demand for new products. In order to achieve the "Vision 2010," the company will also actively pursue a business strategy seeking an annual average growth of 12% persistently, he said.
In line with broadening the growth base, Korean Re will consistently pursue high profits through reasonable price policy and early risk management.
At the same time, Korean Re will renovate its educational program as well as the IT system to improve its technical capabilities of reinsurance and ultimately, maximize productivity, said the chairman.
On its business globalization plan to bolster competitiveness, Park said, "In terms of capital volume, Korean Re has remarkably strengthened its financial base by achieving a high annual average growth of 13% and handsome net profits."
In particular, by consistently reserving 50-60 billion won ($51.7-60.2 million) in net profit every year without capital increase, the company's security ability, comprising total capital and reserve fund for emergent risk, are likely to have reached 700 billion won ($724 million) in the fiscal year 2006, a 2.6-fold rise from 1998.
By expanding the in-house reserve continuously through development of new products, bolstering of the business in the overseas markets and maintenance of net profits, it plans to expand the security ability to 1.5 trillion won ($1.5 billion) in 2010.
"Korean Re has placed the focus of its overseas market strategy on reinforcing its leader position in the Asian market, and eventually leaping to become a leading global reinsurer," he said, adding that it will expand the portion of gross written premium from overseas business from 10% of the entire premium income and to 20% in 2010, and further to 50% in 2020.
"As China has completely abolished the protection barriers for its reinsurance company China Re in 2006, I think, Korean Re is able to seek new ways for growth in the giant potential market in Asia through active local marketing activities," he said.
By strengthening relations with major local reinsurers and actively attacking accident, motor, and liability insurance markets in China, Korean Re aims at expanding its sales by more than 30% every year, he said. Along with this, Korean Re plans to advance into the Asian engineering and EAR (erection-all-risks) markets by utilizing its accumulated experience and knowhow from the domestic CAR (constructionall- risks) market.
In the European marine insurance and aviation markets it has enjoyed remarkable results, Korean Re will continue strengthening its position as a leader by providing various insurance services based on its knowledge and know-how from its 40-year domestic business operations, and eventually expand into the Latin American and the East European markets.
|The following are excerpts from an interview with Park Jong-won, chairman & president of Korean Re:
Q: Korean Re has enjoyed sustainable growth in capital volume and security ability, while securing the No. 1 position in the domestic reinsurance market. How about the credit rating of Korean Re appraised by global credit rating agencies
A: A.M. Best, one of the world's top credit rating agencies, has given Korean Re an "A- (excellent)" rating, citing the Korean reinsurer's excellent business results, its leading role in the local market, ability to provide timely reinsurance products satisfying market needs, stable investment portfolio and effective distribution of risk.
As Korean Re gained the "A-" rating for the fourth consecutive year from A.M. Best for its outstanding managerial ability, it has firmed up its leadership position in the local and overseas markets.
Meanwhile, as foreign investors' confidence in Korean Re has been also rising steadily, it is expected to have a superior position in its business relations with foreign reinsurers. In the domestic market, the market value of Korean Re has been going up gradually owing to its stable credit rating and robust growth in capital volume and aggressive overseas business strategy.
Accordingly, the total market value of Korean Re amounted to 1 trillion won ($1.03 billion) as of February 2006, the second biggest in the domestic insurance industry, and the foreign equity ratio in Korean Re expanded to 42%.
Q: Would you introduce your company's win-win strategy, which ensures mutual profits between primary insurance and reinsurance companies
A: By developing new products such as D&O and CI (critical illness) insurance suitable for changing needs of the insurance market and providing them to local primary insurance companies, Korean Re is revitalizing the dormant primary insurance market and creating new reinsurance demands, offering more opportunities for growth to local insurers.
Moreover, despite the hardening conditions of the global reinsurance market in the wake of the Sept. 11 terrorists' attacks on the United States, Korean Re has supported the stability of the Korean primary insurance companies by supplying sufficient reinsurance coverage.
Q: Would you comment on your managerial philosophy
A: First of all, I place the emphasis on transparent management based on principle. Secondly, I think responsible management is very important. The CEO should take the initiative in advancing the company.
Thirdly, reformative management is the only way for a company to survive fierce competition in a rapidly changing insurance market.|
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