"'Ugly Duckling' Nonghyup Insurance Subsidiary, Taking Flight Through Structural Reform"

NongHyup Life Insurance, Net Profit Up 160%
NongHyup General Insurance Also 10 Times Higher Than 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 two insurance companies, which were once treated as the 'ugly ducklings' among the affiliates, have both recorded strong performances, completely wiping away the long-standing sluggishness.

As the company-wide restructuring efforts receive passing marks, attention is focused on whether this will set a precedent for the first time within the group for a CEO to serve three consecutive terms.

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 Insurance recorded a net profit of 157.3 billion KRW in 2015, which decreased to 154.5 billion KRW in 2016 and 85.5 billion KRW in 2017, then 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.

It achieved a higher growth rate compared to the life insurance industry through a sales expansion strategy centered on protection-type insurance via the agricultural cooperative sales channels. Its 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.

Nonghyup Property & Casualty Insurance also saw its net profit soar more than tenfold to 49.2 billion KRW by the third quarter this year, up from 4 billion KRW last year. Its net profit had declined 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 conditions. Despite this, even with abnormal weather events such as heavy rains this year, its loss ratio for the third quarter remained stable at 84.5%, compared to 86.2% at the end of last year.

The restructuring efforts directly led by the CEOs since last year are being praised. Kim Kwang-soo, Chairman of Nonghyup Financial Group, led the 'Insurance Management Innovation Committee' with the insurance company CEOs, enhancing competitiveness through synergy with financial affiliates and preparing support measures at the holding company level.

Hong Jae-eun, CEO of Nonghyup Life Insurance 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 Property & Casualty Insurance since this year, is transforming everything from the business portfolio to corporate culture, true to his 'planning' background. 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. There is also interest in whether Nonghyup's personnel practice, where one term is served and then the CEO steps down for a junior, will be maintained. With Kim Kwang-soo being selected as the sole candidate for the next chairman of the Korea Federation of Banks, variables have emerged in the personnel affairs of Nonghyup's subsidiaries.

A Nonghyup Life Insurance 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."