Samsung Fire's Hot Plan

New CEO considers aggressive overseas M&As to compete with rival firms

Samsung Fire and Marine Insurance Co. is going all-out to take over insurance firms overseas this year in line with its strategy to search for new growth motors, Chi Dae-sup, president of the company said on June 9 after being sworn in as the insurance company's new CEO.
The Samsung affiliate has decided to get away from its overseas operations centered around branches or wholly-owned subsidiaries and directly engage in overseas non-life insurance markets through the takeover of foreign non-life insurance firms through M&As, the new CEO said.
The company has already announced the changes in its operational strategies during an investor relations session, which is drawing a lot of attention in the non-life insurance community. The community feels that the Samsung affiliate is not satisfied with its top position at home, deciding that it would not guarantee its sustainable growth in the future. The non-life insurance industry has no more room for growth due to the
intensified competition with a market already crowded with the entry of a number of large competitors from overseas such as AIG and ING.
Samsung Fire's strategy shift is also in line with many of its rivals, who decided to look overseas to sustain their continued growth momentum. CEO Chi feels that the non-life insurance industry has little room for growth in the country, therefore the company should strengthen its overseas operations enough to compete with world-class non-life insurance firms.
The company plans to expand its overseas investment from 300 billion won now to more than 1 trillion won by 2010 to secure around 10 percent of its total revenues from overseas.
The company is engaged in drawing up a master plan to sustain its growth in both short and long-term perspectives. The plan is to be ready by the end of the year, Chi said, as the company ought to have a detailed and well-developed plan to compete with global rivals overseas with globally trained professional manpower and competitive systems.
Included in the plan would be to set up a captive reinsurance company, a paper company, to manage its insurance assets, which excludes reinsured insurance assets.
President Chi said the company just wants to set up a reinsurance firm to manage its insurance assets in terms of risks, not with an intention to enter the reinsurance industry. The captive reinsurance company will deal only with the mother company's insured assets, he said.
Chi said the company will focus on the stability of risk management and take advantage of advanced management techniques to make its overseas operations more sound.
Samsung Fire will take over local non-life insurance firms in China and Vietnam as bridgeheads for its overseas operations to achieve its target of being a leading global non-life insurance firm.
In the meantime, Samsung Life has a plan based on its long-term strategy to rank it among the 15 largest life insurance firms in the world in terms of assets.
Industry sources believe that the two insurance affiliates of Samsung Group are taking steps to become a financial group in global terms in time for Samsung Life's listing on the stock exchange and with the enforcement of the new Capital Market Consolidation Law from next year, which will allow for the establishment of an insurance holding company.

Samsung Fire's Operation Status:
Capital: 26.5 billion won
Own Capital: 3.416 trillion won
Premium Receipts: 9.161 trillion won
Profit: 476.5 billion won
ROE: 14.4 %
ROA: 2.3 %
Overseas Presence:
Subsidiaries: China, Indonesia, Vietnam
Branches: U.S., Beijing, Shenszen
Offices: Tokyo, London, Beijing and Qingdao nw

(from left photo) Samsung Fire's new CEO Chi Dae-sup. CEO Chi speaks during an inauguration ceremony at the company's head office on June 9.