How Lina beats bigger players in Korea

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How Lina beats bigger players in Korea

US life insurer ranks third in profits despite tiny size

By Kim Bo-eun

The domestic life insurance market has become increasingly tough, with 11 out of 18 major life insurers' profits falling in 2018.

Lina Life Korea was the only among major foreign life insurers that saw an increase in net profit in 2018, from a year earlier. Lina is a life insurance affiliate of the U.S.-based Cigna Group.

Lina is one of the smallest insurers in terms of total assets, but ranks third in terms of net profits posted in 2018. The top two are the country's largest life insurers _ Samsung and Kyobo Life Insurance.

Samsung Life's total assets came to 262.23 trillion won in 2018, and Kyobo Life 101.49 trillion won. This compares with Lina's total assets, which amounted to 4.46 trillion won in 2018.

Samsung's net profit in 2018 stood at 1.8 trillion won and Kyobo's 506.63 billion won. Lina recorded 370.1 billion won in net profit the same year.

Lina's return on equity (ROE) ratio was 26.61 percent and return on assets (ROA) ratio 8.43 percent in 2018, both showing improvement from a year earlier. They are well above the industry average of 5.54 percent and 0.48 percent, respectively.

Lina Life Korea CEO Benjamin Hong

There are three key factors behind Lina's outstanding performance ― the CEO's localization philosophy, focus on insurance business and strength in customer complaint management.

Since he took office in 2010, Lina Korea CEO Benjamin Hong has stuck to localization strategy not only in sales but also in marketing and communication. Other foreign life insurers are required to comply with head offices' guidelines in key areas.

The U.S. life insurer's sustainable performance is also driven by its focus on protective-type insurance.

Since Lina entered the Korean market in 1987 as the first foreign insurer, it has focused on protective-type insurance. Other insurers have increasingly turned to savings-type insurance, as premiums are significantly higher, which allows the companies to invest larger amounts of capital.

However, as insurers face the introduction of the International Financial Reporting Standard (IFRS) 17 in 2022, they have been rushing to abandon savings-type policies and turn to protective-types.

This is because according to new standards, savings-type contracts will be counted as liabilities, which will affect their ratio of risk-based-capital (RBC).

"It has been Cigna Group's stance that insurers focus on selling insurance," a Lina official said.

"This enabled the company to build internal stability without being swayed too much by external factors such as interest rates."

Lina, which conducts all of its sales operations through telemarketing, also has its strength in complaint management.

Telemarketing methods are prone to result in mis-selling, but Lina had the lowest level of complaints among life and general insurers last year, according to data from the Financial Supervisory Service.

Lina has ranked as the insurer with the least or second-least number of complaints per 100,000 contracts for the past eight years.

The company attributes this to its task force on eliminating complaints. Members of the task force are comprised of employees of 11 divisions, ranging from sales and consumer protection to operation.

Lina has an "early warning system" that detects the potential development of complaints and helps prevent them from occurring.

"We respond to incoming inquiries as fast as we can, which reduces the number of complaints," the Lina official said.


US life insurer ranks third in profits despite tiny size

By Kim Bo-eun

The domestic life insurance market has become increasingly tough, with 11 out of 18 major life insurers' profits falling in 2018.

Lina Life Korea was the only among major foreign life insurers that saw an increase in net profit in 2018, from a year earlier. Lina is a life insurance affiliate of the U.S.-based Cigna Group.

Lina is one of the smallest insurers in terms of total assets, but ranks third in terms of net profits posted in 2018. The top two are the country's largest life insurers _ Samsung and Kyobo Life Insurance.

Samsung Life's total assets came to 262.23 trillion won in 2018, and Kyobo Life 101.49 trillion won. This compares with Lina's total assets, which amounted to 4.46 trillion won in 2018.

Samsung's net profit in 2018 stood at 1.8 trillion won and Kyobo's 506.63 billion won. Lina recorded 370.1 billion won in net profit the same year.

Lina's return on equity (ROE) ratio was 26.61 percent and return on assets (ROA) ratio 8.43 percent in 2018, both showing improvement from a year earlier. They are well above the industry average of 5.54 percent and 0.48 percent, respectively.

Lina Life Korea CEO Benjamin Hong

There are three key factors behind Lina's outstanding performance ― the CEO's localization philosophy, focus on insurance business and strength in customer complaint management.

Since he took office in 2010, Lina Korea CEO Benjamin Hong has stuck to localization strategy not only in sales but also in marketing and communication. Other foreign life insurers are required to comply with head offices' guidelines in key areas.

The U.S. life insurer's sustainable performance is also driven by its focus on protective-type insurance.

Since Lina entered the Korean market in 1987 as the first foreign insurer, it has focused on protective-type insurance. Other insurers have increasingly turned to savings-type insurance, as premiums are significantly higher, which allows the companies to invest larger amounts of capital.

However, as insurers face the introduction of the International Financial Reporting Standard (IFRS) 17 in 2022, they have been rushing to abandon savings-type policies and turn to protective-types.

This is because according to new standards, savings-type contracts will be counted as liabilities, which will affect their ratio of risk-based-capital (RBC).

"It has been Cigna Group's stance that insurers focus on selling insurance," a Lina official said.

"This enabled the company to build internal stability without being swayed too much by external factors such as interest rates."

Lina, which conducts all of its sales operations through telemarketing, also has its strength in complaint management.

Telemarketing methods are prone to result in mis-selling, but Lina had the lowest level of complaints among life and general insurers last year, according to data from the Financial Supervisory Service.

Lina has ranked as the insurer with the least or second-least number of complaints per 100,000 contracts for the past eight years.

The company attributes this to its task force on eliminating complaints. Members of the task force are comprised of employees of 11 divisions, ranging from sales and consumer protection to operation.

Lina has an "early warning system" that detects the potential development of complaints and helps prevent them from occurring.

"We respond to incoming inquiries as fast as we can, which reduces the number of complaints," the Lina official said.


Kim Bo-eun bkim@koreatimes.co.kr


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