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| Samsung Fire & Marine Insurance CEO Choi Young-moo holds an online partnership ceremony with Ren Huichuan, an in-house adviser at Tencent, over their plan to establish a joint venture there, at the former's headquarters in Seoul on Thursday. Yonhap |
By Lee Min-hyung
Samsung Fire & Marine Insurance is expanding its footholds in China and Europe to find new revenue sources overseas amid growing saturation in the local insurance industry.
The latest in a series of Samsung Fire's overseas partnerships came last week when the company signed a contract to establish a joint venture in China under partnership with Tencent, the country's largest internet and tech firm.
Korea's top non-life insurer opted to turn its Chinese branch into the joint venture with a view to strengthening the insurer's online sales there. The strategy of signing a partnership with local players is generally deemed more stable than other expansion tactics in terms of potential legal risks, particularly when the other country is China.
The Samsung affiliate will own a 37 percent stake in the joint entity, with Tencent becoming the second-largest shareholder with a 32 percent stake. Other Chinese tech and financial firms will also invest in the joint venture and their combined stake will reach 31 percent.
The joint venture will start its business there with a total capital of around 500 billion won. Samsung Fire plans to take advantage of Tencent's online platforms as the biggest sales channel. Tencent operates China's top mobile messenger app WeChat, which has over 1.1 billion monthly users.
Under the partnership, the Samsung affiliate's Chinese branch will transform into the joint venture co-managed by the two companies following Tencent's investment.
Samsung Fire tapped into the Chinese market by establishing its Beijing branch in 1995, and then opened a Shanghai office in 2001. Samsung Fire's Chinese branch reported a net profit of 12.4 billion won in 2019. This is a steep growth, compared with 1.8 billion won in 2016 there.
The partnership will enable Samsung Fire to strengthen its mobile and online footholds in Asia's largest insurance market. The joint venture is expected to focus its business on launching a series of online insurance products. Samsung Fire has expressed its repeated interest in establishing its own digital non-life insurer in Korea.
The company joined hands with Kakao, the top mobile messenger app operator in Korea, for the establishment of a digital non-life insurer here. But they failed to narrow their differences during key decision-making processes regarding the launch of online car insurance products, and the much-hyped plan came to nothing in the end.
Given Tencent's massive influence in the Chinese market, expectations remain high that Samsung Fire will be able to achieve tangible outcomes this time.
"China is the world's second-largest non-life insurance market whose growth potential remains high," an insurance industry source said. "Samsung Fire's partnership with one of the most influential Chinese tech firms raises hopes for its faster and more stable growth there."
The non-life insurance affiliate of Samsung Group is also expanding investment in the European market. In October, the company made an additional investment of $10 million by taking part in a capital increase of Canopius, a specialty insurer based in the United Kingdom.
Last year, Samsung Fire invested $150 million in Canopius and participates in management as a board member.
