[1mm Finance Talk] Four Major Financial Groups Launch Full-Scale "Elder Care Business" Competition Led by Life Insurers

Hana Life Establishes Subsidiary "Hana The Next Lifecare"
Woori Financial Studies Japanese Care Business After Acquiring Tongyang and ABL Life
Early Movers KB and Shinhan Expand Investments

The four major financial groups?KB, Shinhan, Hana, and Woori?are entering into a full-scale competition in the elder care business, led by their life insurance subsidiaries. With Hana and Woori recently ramping up their efforts following the early moves by KB and Shinhan, competition is expected to intensify going forward.

According to the financial industry on June 19, Hana Life applied for corporate registration of its new subsidiary, Hana The Next Lifecare, on June 16. This company plans to operate businesses encompassing the entire spectrum of senior welfare, with a focus on care facilities. The inaugural CEO will be Hwang Hyogu, former head of the Global Group at Hana Bank. Hwang, who started his career at Korea Exchange Bank, has extensive experience in the global business division within Hana Financial Group.

Elderly people are engaging in crafting activities at a daycare center located in Seongbuk-gu, Seoul.

Hana Life has already completed the purchase of land in Jichuk-dong, Deogyang-gu, Goyang, Gyeonggi Province, for the establishment of a care facility. The area offers views of Bukhansan Mountain and is adjacent to the Changneungcheon stream. The group plans to leverage its experience operating the Hana Care Center through the Hana Financial Public Interest Foundation to enhance service quality.

Woori Financial Group, which acquired Tongyang Life and ABL Life, is also seeking to enter the elder care business. Currently, Woori Financial Management Research Institute, the group’s think tank, is studying the Japanese care business model and developing a blueprint. Park Junghoon, head of Woori Financial Management Research Institute, said at a book publication event titled "Japan's Great Economic Transformation" held the previous day, "Since acquiring the insurance companies, there has been active discussion at the group level regarding senior strategies. We are formulating business strategies by visiting Japanese care facilities, listening to their stories, and sharing insights internally."

Woori Financial Group is currently building an integrated service for seniors, including financial products tailored to senior customers and exclusive content development. The strategy is to create synergy by linking this expertise with the elder care business that will be operated by its life insurance subsidiary.

Among financial groups, KB Financial Group currently leads the elder care business. In October 2023, KB Life incorporated KB Golden Life Care, formerly a subsidiary of KB Insurance, as its own subsidiary and expanded investment in the elder care sector. KB Life now operates seven care facilities, including Wirye, Seocho, and Eunpyeong Villages, Pyeongchang County, and daycare centers in Gangdong, Wirye, and Eunpyeong. In the second half of this year, the group plans to open Gwanggyo Village and Gangdong Village. On June 2, KB Life Insurance carried out a capital increase of 50 billion KRW for KB Golden Life Care to further expand its elder care business.

Shinhan Financial Group is closely following KB. In January last year, Shinhan Life launched Shinhan Life Care as a subsidiary by taking over the elder care business from Shinhan Financial Plus. In November of the same year, it opened its first Bundang Daycare Center in Seongnam, Gyeonggi Province. In the second half of this year, it plans to open an additional care facility in Misa, Hanam. In 2027, it plans to build a silver town (senior welfare housing) in Eunpyeong-gu, Seoul.

The reason why major domestic financial groups are successively entering the elder care business is because it is seen as a key growth engine in the era of low birth rates and a super-aged society. The size of the domestic elder care industry grew from 8 trillion KRW in 2018 to 14.4 trillion KRW as of 2022, with an average annual growth rate of 15.6%.

All financial groups have placed their life insurance subsidiaries at the center of these businesses because leveraging the expertise and human networks accumulated through handling products such as whole life insurance, health insurance, and long-term care insurance?products related to the human life cycle?is the most efficient way to connect with the elder care business. In Japan, where the elder care industry is more advanced than in Korea, Nippon Life, the country’s largest life insurer, expanded into the elder care business by acquiring Nichii Holdings, the leading care company, in November 2023.