Hanwha, 1st Korean insurer to earn dividends from overseas unit

Hanwha Life Insurance Co. is set to earn dividends from its Vietnamese subsidiary, reporting a cumulative profit after 15 years, becoming South Korea’s first insurer to collect such a return from its overseas units.

Hanwha Life’s wholly owned unit in Vietnam decided on cash dividends of 100 billion Vietnamese dong ($4 million) at an employees’ general meeting last week, according to industry sources in Seoul on Monday.

It was the first time for a South Korean insurer to collect dividends from overseas subsidiaries, excluding those of equity investments. South Korean life insurers Samsung Life Insurance Co. and Mirae Asset Life Insurance Co. have overseas units in Thailand and Vietnam, respectively, that have posted profits. But they have yet to collect dividends from those subsidiaries.

Hanwha Life’s Vietnamese subsidiary achieved cumulative profit after 15 years in 2023, marking the first overseas unit of a South Korean insurer to record such a surplus. The subsidiary logged a net profit of 47.1 billion won ($34.1 million) last year, about six times the 8 billion won in 2021.

“The unit decided on the dividends as it compensated all investments and losses rather than just making a turnaround,” said a Hanwha Life official in Seoul.

Few South Korean financial companies such as banks and securities have earned dividends from their Vietnamese subsidiaries due to the Southeast Asian country’s tough regulations. Most South Korean financial firms have accumulated profits from their subsidiaries in the nation only as retention or for re-investments.

Korean insurers have been increasingly expanding their overseas businesses as the local market has become saturated due to the country's aging population and record-low fertility rate.

EYES PLACE AMONG TOP FIVE LIFE INSURERS IN VIETNAM

Hanwha Life aims to develop the Vietnamese unit as one of the five largest insurers in the country by 2030.

The subsidiary, the first overseas unit of South Korean insurers, became one of the top 10 life insurers with assets of 981.6 billion won last year. Its premium income surged to 210.5 billion won last year, about 100 times the 23 billion won in 2009, its first business year.

The unit, which had only two offices in Ho Chi Minh and one in Hanoi in 2009, now operates 119 branches in major cities such as Danang.

Hanwha Life aims to expand its business further in the Southeast Asian country, given its strong growth potential.

“Vietnam is a market with strong potential as its insurance subscription rate is low,” said an industry source in Seoul. “The market is rapidly growing as the Vietnamese economy is quickly growing and the awareness of insurance is improving.”

Hanwha Life’s Vietnamese unit has been focusing on localization for the market to expand the business. The subsidiary has only three employees from its headquarters in Seoul, while all other staff are locals who better understand the domestic financial environment.

GLOBAL PUSH

Hanwha Life President and Chief Global Officer Kim Dong-won, the group chairman’s second son, is accelerating its global push.

The company last year acquired Indonesia’s Lippo General Insurance Tbk PT to expand its business in Southeast Asia’s top economy.

This year Hanwha Life is also seeking to recruit foreigners in South Korea for the first time among local insurers as it aims to hire talent who are well aware of the markets and cultures of other countries to develop its global businesses.

Hanwha Life Financial Service Co., its general agent subsidiary, turned to the black with a net profit of 68.9 billion won last year, compared to a loss of 48.2 billion won in 2022. The general agent paid 1.5 billion won in dividends to Korea Investment Private Equity, which has an 11.1% stake in the subsidiary, last month.

“Hopes for its IPO are growing among investors as it proved its growth potential,” said another Hanwha Life official.

Write to Hyeong-Gyo Seo and Mi-Hyun Jo at sogyo@hankyung.com
 
Jongwoo Cheon edited this article.