Samsung Fire and Marine Insurance Co., the top firm in the non-life insurance industry sector in Korea, is likely to be the first to reach 1 trillion won in net profit. Fn Guide, a financial information company, said its survey of major non-insurance firms’ performance this year showed that Samsung Fire is projected to log 1.524 trillion won in net profit for this year for the first time in its operation, up 25 percent YoY, far more than the 93 billion won in net profit projected early in the year.
Industry sources said the company would not have much trouble logging that much in net profit, although 200 billion won represents the proceeds from the sale of its building in Eulziro, Seoul, according to the the booming non-life insurance industry’s operation so far this year.
Financial authorities said Samsung Fire already posted 708.2 billion won in net profit from the January to May period, logging around 70 percent of the annual net profit projected for the year, while Dongbu Fire, one of the big three non-life insurance firms, posted 582.3 billion won in net profit in the same period. That represents about 57 percent of the projected net profit for the year.
An industry source said the non-life insurer already boosted its projection for net profit for the year encouraged by the better-than-expected performance in the first five months of 2017.
Other non-life insurers such as Hyundai Fire and Meritz Fire also did well enough to boost their net profit projections for the year, with net profits rising 40 to 50 percent YoY.
The rise in the auto insurance sector has been singled out for kick-starting the non-life insurance firm’s operations. Samsung Fire’s auto insurance total combined loss and costs ratio came to 5 won out of every 100 won meaning the company spent 95 won and kept 5 won for its earnings in the January to May period this year.
An analyst with Korea Investment Securities said the non-life insurance community should note that business conditions have been showing an improvement, although insurance premiums by Samsung Fire rose only 2.7 percent, giving stability in the auto insurance sector operations a boost.
When interest rates rise, that will give the non-life insurance firms a further boost.
Samsung Fire is likely to see its profit rise by 400 billion won this year, with the one-time paymentys such as those for death by suicide insurance policies (170 billion won) disappearing.
Samsung Fire & Marine acquired a 20-percent stake in Vietnam's property and casualty insurance company PJICO as part of its effort to make a bigger presence in the Vietnamese market. In Hanoi on May 5, Ahn Min-soo, president of Samsung Fire & Marine, signed a deal with his counterpart at PJICO, a casualty insurance company set up by Vietnam's state-run Petrolimex. Among Vietnam's 30 property and casualty insurance companies, PJICO ranks fifth with a market share of about 7 percent.
This is the first time one of Korea's insurance companies has acquired a stake in a Vietnamese insurance company. With this investment, Samsung Fire & Marine has become PJICO's second largest shareholder behind Petrolimex.
A company official said, "We decided to acquire the stake in PJICO as part of our effort to gain a foothold in the Vietnamese market." Samsung Fire & Marine set up a local unit in Vietnam back in 2002 and focused its sales activities primarily on Korean companies operating there. The latest investment would clear the way for Samsung to expand the scope of its sales activities toward local companies.