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South Korea Insurance Report Q2 2009Published by: Business Monitor International Published: May. 21, 2009 - 105 Pages Table of Contents
AbstractWe are forecasting the South Korean economy to contract by 3.3% in 2009 as exports of keymanufacturing goods such as autos and electronics suffer on the back of the global recession, anddomestic consumption and investment continue to slump. We expect the brunt of the contraction to beexperienced in H109, with the second half of the year recording slightly positive growth. With the globaleconomy still in the doldrums in 2010, we are expecting South Korea to post a relatively mild recovery,with GDP growth clocking 1.8%.As we suggested in February, the Bank of Korea (BoK) has now become more cautious in its rate-settingpolicy after having cut the benchmark Korea Base rate by 325bps since late October, keeping it on hold at2.00% on March 12. We are expecting the BoK to cut rates twice to 1.50% by the end of the year, andstill see the purchase of treasury bonds as a possible option for the central bank to inject liquidity into themarket and bolster the economy. We expect South Korea to post a current account surplus of US$4.6bn in 2009 on the back of animproved trade account - as imports contract more sharply than exports - and a narrowing services deficit.However, a continued deleveraging of foreign debt will keep the financial account in the red, with theBoK continuing to supply US dollars to the market to avoid too sharp a decline in the won. The forthcoming announcement of the EU-South Korea FTA will put pressure on the US Congress tomove forward with ratifying the stalled KORUS free trade agreement. However, with concerns about thedomestic economy dominating the agenda in Washington, we do not foresee the deal being ratified in2009. Indeed, further concessions on the South Korean side will most likely be needed to appease criticsof the deal in the US Congress. In the Asia Pacific, we profile 23 companies. These are AEGON, AIG, Allianz, Aviva, AXA, Cardif,Fortis, Generali, Groupama, HDI-Gerling, HSBC Insurance, ING Group, Liberty Mutual,Manulife, MetLife, Prudential Financial, Prudential plc, QBE, RSA, Sun Life Financial, TheHartford, Principal Financial Group and Zurich Financial Services. We also look at various local firms that are active in the region: some of these companies rank, in termsof the premiums that they write, among the largest in the world. We estimate that, over the course of 2008, total premiums in South Korea rose by 13% toKRW119,329,644mn. Non-life premiums rose by 15% to KRW42,004,008mn, while life premiums roseby 12% to KRW77,325,637mn. Between now and the end of the forecast period, we expect that annual non-life premiums will grow byKRW19,392,592mn, while annual life premiums should increase by KRW16,798,493mn. Growth in nonlifepremiums should be driven by the general growth in nominal GDP from 4.34% to 5.35%. Growth inlife premiums should be driven by the change in the overall population and a rise in life density fromUS$1,658.60 to US$1,800.00 per capita. BMI’s Insurance Business Environment Rating is 72.3. Get Full Details About This Report >> |
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