Korean non-life insurers’ overseas profits 0.5% of total

South Korean non-life insurers generate less than 1 percent of their total profits from their overseas businesses, while their Japanese counterparts, who turned their attention overseas early on, earn 60 percent of their profits from international operations, reports showed on Sunday.

According to a report released by the Korea Insurance Research Institute on Sunday, Japan’s three major insurers, Tokio Marine, MS&AD, and Sompo Japan, generated more than 60 percent of their total profits from their overseas operations in the first half of the fiscal year 2023 (April-September). Tokio Marine earned 202 billion yen ($1.39 billion), or 73.3 percent, of its total profit of 275.5 billion yen, from its overseas operations during the first half of the fiscal year, while Sompo Japan and MS&AD generated 61.4 percent and 40.4 percent of their total profit from overseas operations respectively during the same period.

But Korean insurers predominantly keep their focus on their domestic businesses. According to a report by the Korea Institute of Finance (KIF), the proportion of net profit from overseas operations for Korean non-life insurers was a mere 0.52 percent at the end of 2022, with the share of their overseas business assets totaling a mere 1.68 percent.

Japanese non-life insurers have been expanding their scale via mergers and acquisitions (M&A) overseas, backed by their strong financial resources. Tokio Marine acquired HCC Insurance Holdings, Inc. in the United States for $7.5 billion in 2015 and has since closed over 60 M&A deals in countries including the United States, the United Kingdom, and Australia.

“France’s AXA S.A. once had a CEO tenure of up to 25 years, and Germany’s Allianz SE has appointed only nine CEOs in its 125 years, creating a stable and consistent management environment,” Lee Seok-ho, a KIF research fellow, said. “It is necessary to establish practices that ensure and maintain a sufficient tenure for top executives and to use inorganic growth strategies such as M&A more actively.”