Kyobo Life Insurance has been in the process of decreasing its overseas investments and it will continue to rebalance its portfolio this year.
Chung Eunsoo, head of the investment management division of Kyobo Life Insurance, says that it has switched its main investment allocation in US credit securities to more diversified areas such as alternatives investments. Those include high-yield securities, distressed debt securities, and both local and overseas private-equity funds.
One of the three largest Korean life insurance companies, along with Samsung Life and Korea Life, Kyobo Life's current AUM stands around $47 billion, of which $17 billion and $12 billion are invested in domestic fixed-income securities and loans to its clients, respectively.
In contrast, its domestic stock and real-estate investments are relatively small -- around $1.1 billion and $2.2 billion each.
Kyobo Life's total overseas investment is about $3 billion as of April 2010. And a large portion of this is invested in fixed-income assets, including US investment-grade corporate bonds at $1.9 billion. Kyobo has also invested around $1 billion in Korean-issued paper, commercial mortgage-backed securities, high-yield securities, and some hedge funds.
Overseas equity investments account for only $148 million, and are largely oriented towards developed markets. Kyobo is now thinking about reweighting this allocation more towards emerging markets, says Chung.
Kyobo Life's target return on investment for 2010 is 5.5-6.0% and Chung expects its AUM will grow by $2.5 billion this year.
He also says that the global investment environment of 2010 has changed significantly from last year, notably in the form of low interest rates. Although asset allocation is always important, so is market timing while maintaining good risk management.
To that end, the insurer will continue to diversify its assets and pursue currency hedges by asset class.
Kyobo Life was founded in 1958 and has more than 5 million customers. Its major financial subsidiaries include Kyobo Securities and Kyobo-Axa Investment Managers Company.
Chung has working experience with many notable companies. He started his career with Daewoo Securities in 1987 and has since worked with Allianz Life, Hana-Allianz ITMC, and Kyobo ITMC. He joined Kyobo Life in 2008.