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Determined to Rank one of World’s Top Five Reinsurers
Korean Re, which was virtually in bankruptcy at the time of the Asian financial crisis in 1998, has now emerged as the 10th largest reinsurer in the world, and number one in Asia
Determined to Rank one of World’s Top Five Reinsurers
  • By matthew
  • February 7, 2013, 17:43
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Behind the brilliant success of Korean Re, there has been a strategic leader who accentuated the importance of corporate culture and human resources. He is CEO Park Jong-won who retired from the former Ministry of Finance and joined the company following the Asian financial crisis. He created constructive tension in the organization and nurtured the “wild nature” of employees. BusinessKorea sat down with him to hear about the secret of his success.

Is there any special knowhow or strategy that has made Korean Re such a success in the world financial market?

Thriving companies and collapsing companies have different corporate cultures. Korean Re has been reborn as the Asian number one and world number ten, largely because it has changed its corporate culture. If a company wants to make a big dream come true, it should change its corporate culture and atmosphere.

When I joined Korean Re in 1998, it was nearly bankrupt with net losses of 280 billion won. However, the more serious problem was the atmosphere of defeatism prevailing within the company. The workers were too relaxed, which is somewhat typical in public enterprises, and lacked the will to recover. They were like flowers that had been taken out of a greenhouse and suddenly exposed to a heavy rainstorm.

I thought the workers needed to become accustomed to such rainstorms. Therefore, I tried hard to change the corporate culture. The workforce was reduced by about 30%, and this created tensions and a kind of competitive structure among workers. Every worker completed a south-to-north hike through the Korean peninsula, from Mt. Jiri to Mt. Seorak, over a six year period beginning in 2004. Furthermore, in 2010 workers began a north-to-south bound hike from Mt. Seorak. This is not a light-hearted stroll. Workers walked for three days and two nights with a 10-kg backpack on their back. In addition, officers were not excluded. At the beginning, workers complained, saying, “Why do we have hardship on purpose?” However, they slowly changed. Now they are unafraid of challenges and in fact enjoy them.

In April last year, 14 workers and executives including myself went to the Mt. Everest area of the Himalayas. We all succeeded in climbing Kala Patthar, which is 5,550 meters above sea level, overcoming altitude sickness and our own physical limitations in the process. Accomplishing difficult goals makes people change, which in turn helps to change the culture. Some ask me why mountains. Yet mountains are simply a tool for new corporate culture. Strong camaraderie and physical strength are an extra bonus.

Please introduce your strategy for survival in the global market and vision for the future of Korean Re.

Korean Re aims to be the world’s top-tier reinsurer. When we established “Vision 2020” in 2007, we set the goal of becoming the world’s number five by 2020. To accomplish this goal, we have to compete with global leading companies.

Korean Re has been active in exploring overseas markets since 1998, and now more than 20% of sales come from overseas. It was not easy. When we first knocked on the door of foreign markets we were shunned away. However, we didn’t give up and tapped into the Asian market, which had a relatively small amount of insurance underwriting, and proceeded with economic development at a fast pace. One of our targets was the shipbuilding market, an area that Korea dominates.

Credit rating is important for insurance underwriting. Korean Re received a BBB- from S&P in 2002. Our executives and I flew to S&P’s headquarters in New York and convinced about Korean Re’s capacity. We returned home with A- rating. Following this our performance in overseas markets gained momentum. We were able to make such a fresh start simply because we didn’t give up. Since then, Korean Re has maintained S&P’s A- rating for seven consecutive years.

Korean Re aims to boost the proportion of overseas business to 50% of gross premiums by 2020. We will constantly explore new markets such as China, East Europe and Latin America, and expand base stations for overseas businesses by transforming liaison offices into branch offices.

Korean Re employs overseas job training programs in order to cultivate employee expertise. At any one time, approximately 5% of employees are participating in overseas training, such as Master’s degree programs, or job training in foreign reinsurers or our overseas offices (London, Singapore and Hong Kong).

As the CEO of Korean Re, you have probably experienced many joys and sorrows with workers. What was the hardest thing and what are you most proud of?

I joined Korean Re when the company was about to go bankrupt after the nation’s 1997 financial crisis. I had to let a certain number of workers go from the company. It was the hardest thing for me, but it was also only choice at the crossroads of the company’s life and death.

I am sometimes nicknamed “Spiteful Jong-won” which I take both as a misunderstanding a compliment.

I myself don’t think I am such a strong person. When I chat with employees, I enjoy listening to gossip about popular issues, just like employees do. However, when it comes to working in the fields, I tend to be severe and merciless. People and organizations become more capable and stronger when they go to the limi.

About something proud of… Well, maybe I contributed to changing a weak and tender organization into a tough one that can endure harsh environments. Even as the world’s number 10, we are still dreaming of a higher position. I am proud of this.

What advice would you give employees based on your managerial philosophy? And, what has led to success in your professional and personal life?

I always emphasize “wild nature” when I talk to employees. What has made who I am is nothing but “wild nature,” I believe. I lived as a government official in the financial sector for 25 years. I could have chosen to remain in the Ministry of Finance, but I actually chose a company on the ragged edge even though I knew I would have to buffet big waves. That was because I strongly felt like stepping forth towards a new challenge. Before I quit the Ministry of Finance, I asked myself if I wanted to remain where I was. The answer was no. I was thirsty for challenges then.

When I say “wild nature,” it doesn’t mean “being uncivilized, uncultured or rough”. It is more like being self-confident and rigidly adhering to a goal even in an extreme situation. And just like you need quick response to the environment in order to survive in the wilderness, we need expertise and ability to do our jobs.

Korean Re takes a job applicant’s wild nature into consideration when hiring. Educational background is important, but more important than knowledge is his or her personality. To look into what is behind the appearance, we have created a special hiring process. We require job applicants to submit hand-written resumes and to participate in outdoor test activities such as an all-day-long football game or mountain climbing. This allows interviewers to a closer look at the interviewees. To join Korean Re, you have to show your wild nature.

Please tell us about your resolution and management strategy for 2013.

Korean Re becomes 50 years old this year. While experiencing ups and downs over the last 50 years, the company has learned how to cope with crises. Korean Re has become the world’s 10th largest reinsurer, sharpened its competitive edge in technology and knowhow, and created a strong corporate culture.

Now is the time for Korea Re to design the upcoming 50 years based on its past 50 years. Korean Re should jump into the rough, deep ocean once again, and keep moving. The company will lay a cornerstone for a global top 5 position this year. It will employ various kinds of security functions so as not to be swung by unexpected risks, and concentrate on developing a growth engine for the upcoming half century.