Hanwha Life Financial Services Poised to Achieve 100 Billion KRW in Net Profit

Hanwha Life Financial Services, an insurance sales subsidiary established by Hanwha Life three years ago, has recently demonstrated remarkable performance. 

Hanwha Life Financial Services, an insurance sales subsidiary established by Hanwha Life three years ago, has recently demonstrated remarkable performance. By separating insurance sales from product development, the company has maximized operational efficiency, and is expected to achieve 100 billion KRW in net profit this year. This blog post explores the success factors behind Hanwha Life Financial Services and its future outlook.

A Bold Move by Hanwha Life: Establishing an Insurance Sales Subsidiary

Three years ago, Hanwha Life became the first major insurance company to establish a subsidiary dedicated solely to insurance sales. At the time, this decision was met with considerable skepticism, as the size of a company’s captive sales force was a key indicator of market competitiveness in the domestic insurance sector. Operating a general agency (GA) as a subsidiary was considered unorthodox, as most companies did not see a reason to set up a GA that sells not only their own products but also those of competitors.

However, Hanwha Life took the plunge, believing that separating the sales organization would improve management efficiency and allow the parent company to focus on product development. This strategic move led to the creation of Hanwha Life Financial Services through a physical split in 2021.

Impressive Performance and Growth Trajectory

Hanwha Life Financial Services achieved a net profit of 54.4 billion KRW in the first half of this year, surpassing or coming close to the net profits of other mid-sized domestic life insurance companies. After recording a net profit of 68.9 billion KRW last year, marking its first-ever profit since its inception, the company is now on track to achieve a net profit of 100 billion KRW this year. Its revenue for the first half also reached an impressive 962.7 billion KRW, reflecting strong growth momentum.

The company has also shown steady growth in its sales force, which is a core competitive factor in the domestic insurance market. As of June this year, Hanwha Life Financial Services had 22,900 agents, a 30% increase from its initial count of 18,500 when the company was launched. Despite handling products from other companies, around 90% of its revenue still comes from the sale of Hanwha Life's own products. Moreover, the first-year premium for Hanwha Life's protection-type insurance sold through the GA increased by 34.8% year-on-year, underscoring the effectiveness of separating product development and sales activities.

Credit Rating Upgrade and IPO Plans

Hanwha Life Financial Services recently became the first GA to receive an "A+ (Stable)" credit rating from NICE Investors Service and Korea Investors Service. In September last year, Korea Investment Holdings invested 100 billion KRW, becoming the second-largest shareholder after Hanwha Life. With these accomplishments, industry experts anticipate that Hanwha Life Financial Services may pursue an initial public offering (IPO) as early as next year.

Aggressive M&A Strategy

Beyond subsidiary growth, Hanwha Life is also expanding its GA business through mergers and acquisitions (M&A). Last year, the company acquired PeopleLife, the 6th largest GA in the domestic market, which posted 186.6 billion KRW in revenue and 6.3 billion KRW in profit in the first half of this year. Another GA subsidiary, Hanwha Life Lab, achieved a net profit of 3.9 billion KRW during the same period. Hanwha Life's senior officials have stated that they are open to additional M&A opportunities if they can generate further synergy within the current structure.

Hanwha Life Financial Services’ impressive performance proves the effectiveness of its strategy to separate sales from product development. The company is further strengthening its competitiveness in the domestic insurance market through continuous growth, an upgraded credit rating, and planned IPO initiatives. We look forward to seeing how Hanwha Life Financial Services will continue to evolve and grow in the future.