Boston, MA -- (SBWIRE) -- 01/19/2013 -- Key Insights And Key Risks

The South Korea Insurance Report considers the prospects for life and non-life insurers in the country. BMI remains of the view that the market is an attractive opportunity to large multinational companies in both segments.

In the life segment, demand for annuities is being boosted by the ageing of the population and by success on the part of particular insurers in lifting the productivity of some distribution channels. The non-life companies are achieving double-digit growth in premiums - but thanks mainly to rising demand for longterm products. The long-term products would in most other countries be offered by companies in the life segment. Moreover, recent legal changes have lifted demand for particular non-life lines (such as compulsory liability insurance for managers of public facilities).

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Nevertheless, there are challenges. The environment of low economic growth and low interest rates means that it has become harder for the leading life companies to offer annuities that are both attractive to the customers and profitable for them. Several of the leading regional life insurance companies, such as Allianz, Prudential plc and AIA, have emphasised how they are shunning unprofitable business in South Korea in the reports that they published in H112. This is at a time that the regulator is increasing its requirements in relation to capital.

For the foreseeable future, both segments will continue to be dominated by the offshoots of the chaebol corporate groups that dominate South Korea's economy, even if some of these insurers are listed companies. Nevertheless, a wildcard, and a positive one, is the change of shareholding in Kyobo Life. New private equity/institutional shareholders will probably guide South Korea's third largest life company towards a stock market listing. As of November 2012, it remains to be seen who is the ultimate buyer of the South Korean operations of ING, which has completed the sale of its insurance operations in Hong Kong, Malaysia, Macau and Thailand.

Over the last quarter, BMI has made the following changes:

- The company profiles have been comprehensively rewritten and, in many cases, include comments published in late 2012 in relation to periods ending in September.
- The latest forecasts and projections for South Korea's economy, along with key aspects such as healthcare spending, have been incorporated.

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