Korean Reinsurance Co. CEO Won Jong-gyu is unfazed bythe global market downturn as he pushes ahead with plans to put the company onthe international map.
Overseas expansion is crucial for the sole South Korean reinsurer,better known as Korean Re, because its saturated domestic market is becomingmore competitive. While the company's global rivals hunker down to weather asupply glut, Won remains committed to his long-term goal of growing the firminto one of the top three global reinsurers by 2050.
"I think this is the right time to drive our globalexpansion push, despite worries among market experts. When the globalreinsurance market gets softer, like now, it actually gets easier to enter newcountries," Won said in an interview in Seoul.
Since Won took over in 2013, Korean Re's internationalpresence has grown substantially. The year before he became the top executive,the company was the 14th largest worldwide by assured premiums; by 2015, itbroke into the top 10 to seize the ninth spot, according to data from SNLFinancial, an offering of S&P Global Market Intelligence.
Korean Re aims to climb another two levels by 2030 andbecome No. 3 by 2050. It wants to earn 30% of premiums from overseas by 2020,compared to the current 21.4%, and boost that share to 50% by 2030.
The reinsurer, for now, is looking to expand overseasorganically, with a target to set up operations in 44 foreign countries by2050, compared to seven now, Won said.
The firm hopes to open new overseas branches routinely, withthe next planned for Shanghai this year. At the end of 2015, the company hadonly one overseas branch, in Singapore, along with subsidiaries in Hong Kongand the U.K., and five representative offices in other foreign countries.
China is a tough market to crack, often referred to as a "tomb"for foreign reinsurers, Won said. That is because dominates the reinsurance sector there, just like Korean Re does in SouthKorea. Regardless, with abundant growth potential, China is an essential pieceof Won's overseas vision.
Operating a special purpose syndicate for Lloyd's, with helpfrom Beazley, Korean Re is trying to learn underwriting skills from itspartner. Building on that experience, the South Korean company plans to form asyndicate on its own in 2018, Won said.
While Korean Re's global footprint expands, its clout athome is under threat, as global companies, including , and , vie to take away business.
Korean Re's domestic share in its main nonlife market, interms of gross premiums, shrank to 61.2% at the end of 2015 from 67.3% fouryears earlier. Expansion in the reinsurance industry as a whole, on the otherhand, is slowing in the mature economy of South Korea, with annual growth inproperty and casualty gross premiums slowing to 8.0% in 2015 from 12.5% fouryears earlier.
Competition may further intensify, as ,a unit of Singapore-based ACRCapital Holdings Pte. Ltd., and Pacific Life Re Ltd., a U.K. business of U.S. companyPacific Mutual Holding Co.,join the crowded group of foreign rivals to Korean Re.
Losing share in a slowing market can be a problem, but Wonis not too concerned. He touts long-term customer relationships as Korean Re'sbiggest asset in its home market. To illustrate the strength, Won noted thatKorean Re has not faced any legal issues with clients in its more thanhalf-a-century history.
Publicly traded Korean Re was established as a governmentagency for P&C reinsurance in 1963 and was privatized in 1978. Won's familyand an affiliate held a combined stake of about 22.81% at the end of 2015.
"At home, our dominance will likely remain for a whilebecause our competitiveness is much stronger," Won said. "Thereinsurance business requires companies to not only have good underwritingskills but also to build and maintain strong trust with clients.
"Price doesn't represent everything in the domesticreinsurance market."