Hanwha General Insurance’s CEO-designate Kang Sung-soo is set to carry out a drastic reform of its business structure after he takes office next week amid a deepening sense of crisis after the firm reported a huge loss in 2019.
Mr Kang, 57, has served as the insurer’s vice president since December 2018. Last January, he was nominated as its new CEO in recognition of his expertise in finance and in the expectation that he could turn around the company’s operations, reported The Korea Times.He will replace incumbent CEO Park Yun-sik after an upcoming shareholders’ meeting slated for 19 March. Mr Park has led the company since 2013, but failed to extend his term due to the firm’s dismal earnings report last year.The company reported a net loss of KRW69bn ($57m) in 2019. In contrast, it posted net profits of KRW82bn for 2018. The insurer had maintained consistent profitability since 2014,
Industry sources say that the outlook for the company’s turnaround remains cloudy even if Mr Kang’s financial expertise and leadership can help reduce its loss ratio in 2020.”It still remains to be seen whether Hanwha General Insurance will be able to make a meaningful turnaround this year, but an outstanding earnings rebound appears unlikely amid prolonged economic slowdown and declining interest rates here,” an industry source said.
In a report on Hanwha General Insurance last month, AM Best noted that the insurer’s underwriting performance had deteriorated since 2018 due mainly to inadequate pricing, which consequently led to the company’s inability to catch up with increasing loss costs and expenses in its auto and long-term insurance business lines.
AM Best added, “While its bottom line had been supported by a stable stream of investment income, which helped mitigate underwriting volatility, the company also is expected to report sizeable impairment losses of KRW25bn from its securities holdings for 2019, which has placed further pressure on its bottom line. Hanwha General Insurance is seeking ways to improve its underwriting profitability, including rate increases for its auto and medical indemnity insurance lines, product restructuring and tighter underwriting.”