The new subsidiary joins those in London, Hong Kong and three branches and four rep. offices overseas under CEO Won’s plan to boost the company’s total international sales to 16 trillion won by 2030
Chairman Won Jong-kyu, 2nd R, is on his June 1 visit to the Zurich office of Korea Reinsurance Switzerland AG in Switzerland. (Photo: Korean Re)
Korean Reinsurance Co. (Korean Re) recently set up a local subsidiary in Switzerland, the second one following a new subsidiary in Britain under the company’s strategy to boost its international sales to 16 trillion won by 2030 from 1.8 trillion won in 2018. The largest reinsurance company also has a local subsidiary in Hong Kong (1995) and London, which was set up in 2015.
Korean Re officials said Switzerland has one of the best insurance infrastructures in the world. It is a global hub for the reinsurance industry, with a superb insurance infrastructure as a base. They will be able to use the new local subsidiary in Switzerland as a beachhead to expand its European market operation by diversifying operationally and boosting its profit.
The subsidiary, called Korean Reinsurance Switzerland AG, is licensed to start reinsurance business from June 1, 2019, the company disclosed. It will be led by Markus A. Eugster, who until January 2019 was CEO and Global Head of Reinsurance at Sompo Canopius Re, based in Zurich.
Europe is second to North America in the world’s reinsurance market with a 30 percent market share. At the center of Europe’s reinsurance industry is Switzerland, which is home to over 59 reinsurers.
Korean Re established the business as a Swiss company with $60 million of capital, and then acquired 100% of its shares, making it a wholly-owned subsidiary.
The reinsurer first announced its plans to set up the Zurich office in January 2018 in an effort to diversify away from its domestic market and boost its premium volume. Korean Re already operates in Europe from a base at Lloyd’s of London, but the new hub could also be a way for the company to ensure continuity for clients after Brexit.
Korean Re has historically been the only reinsurer operating in the South Korean market, but the Financial Supervisory Commission said last year that it had decided to authorize new reinsurers in order to stimulate competition.
Korean Re currently is ranked the top reinsurance firm in Asia in terms of its reinsurance premiums and the 10th in the world.
The company set up its Hong Kong subsidiary in 1995 followed by its London subsidiary in 2015 in the Lloyds of London, in addition to three branches in Singapore, Dubai and Labuan and four rep. offices in New York, London, Tokyo and Beijing.
President Won Jong-kyu since taking over as the CEO in 2013 has been stressing the company’s operation overseas due mainly to the saturation point that the domestic reinsurance market has been faced with. The CEO has been considering the plan for the company to explore the Latin American market now that its Swiss subsidiary is about to be launched soon to boost its European operation.
President Won ultimately plans to expand the share of the overseas operation for the company’s total sales to 50 percent in the days ahead from the current 24 percent.
Korean Re announced plans to establish a subsidiary in Switzerland by June 2019 with the aim of growing its business in the European market. The company expects the volume of its European business to increase from the current $200 million to over $300 million by 2025.
Europe is the second largest insurance market in the world, after North America, with a global market share of around 30 percent.
Switzerland is at the center of the European reinsurance industry, with 59 reinsurers from across the world operating in the country. The new entity in Switzerland will be Korean Re’s second base in Europe following the one established at Lloyd’s of London in the United Kingdom in 2015. The company entered the Lloyd’s market by establishing Korean Re Underwriting.
Given the uncertainty surrounding Brexit and a potential decline of the London insurance market as the international insurance hub, Korean Re will rely on the Swiss entity to continue with its business expansion strategy in Europe and to ensure continuity for its EU business after Brexit. Korean Re has focused on global business expansion to explore new market opportunities.
It recently opened two branches on the Malaysian federal territory of Labuan and in Dubai, the UAE, which started operation in July 2017 and January 2018 respectively.
In China, Korean Re is awaiting license approval for its Shanghai branch from the China Insurance Regulatory Commission.