FY2010 Earnings & EV Results

Transcription

1 FY2010 Earnings & EV Results May 12, 2011 This document is intellectual property of Samsung Life. Therefore, it is strictly prohibited to copy or send to outside of your organization without formal permission from Samsung Life.

2 Disclaimers The financial information contained herein has not been completely reviewed by our external auditor. Therefore, no assurance is provided that our financial statements are fully accurate, and thus our final reviewed statements may differ from the figures provided in this presentation. This presentation may include forward-looking statements that reflect prevailing conditions and the views of management as of the date hereof, all of which are subject to change. Forwardlooking statements are based on a number of estimates and current assumptions which are subject to business, economic and competitive uncertainties and contingencies as well as various risks and these may change over time and in many cases are beyond the control of the Company. No assurance can be given that future events will occur, that the forward-looking statements will be achieved, or that the Company's assumptions are correct. Accordingly, actual results may differ materially from those contemplated by the forward-looking statements. Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 2p

3 Contents I. FY2010 Financial Performance II. FY2010 EV Results III. Growth Strategy & Targets Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 3p

4 I. FY2010 Financial Performance Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 4p

5 FY2010 Financial Highlights Largest Net Profit, Strong Growth in Assets, Capital, and EV (KRW billion) FY2010 FY2009 YoY I/S Summary Premium Income (excluding Corporate Pension) 18,787 17, % A P E 3,526 3, % Net Profit 1, % Total Assets 146, , % B/S Summary Invested Assets (1) 118, , % Shareholders Equity 15,390 12, % RBC Ratio 332% 280% 52%p EV Summary Embedded Value 21,325 17, % Value of New Business 1,021 1, % New Business Margin 29.0% 29.2% -0.2%p 1) General Account Assets only. Excludes Separate Account Assets(21.5 trn) and Unamortized Deferred Acquisition Expense (3.8 trn). Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 5p

6 Annual Premium Equivalent (APE) 4Q APE, Up 23% Over 1~3Q Average APE (1) 4Q APE Over 1~3Q Average 3,659 (KRW billion) Annuity Savings - 3.6% Protection 23.2% 3,526 1,027 (KRW billion) FY2009 FY2010 FY10 1Q~3Q(Avg.) FY10 4Q 1) APE (Annualized Premium Equivalent): annualized premium from recurring premium policies plus 10% of premium for single premium policies Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 6p

7 Average Monthly APE by Quarter Turnaround in APE from January 2011 to Present (KRW billion) Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 7p

8 Net Profit Net Profit Up 112% due to Stable Insurance Profit and One-offs Net Profit ROE 1,925 (KRW billion) ROE Operating ROE (1) 23.2% % % 15.3% 14.0% 1,021 FY2009 FY2010 FY2009 FY2010 1) Operating ROE calculated by adjusting the equity by the amount of unrealized gains on affiliate holdings and the net income by dividends received on such affiliate holdings Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 8p

9 Expense & Loss Ratio Continued Improvement in Expense and Claims Management Operating Expense Ratio (1) Loss Ratio (2) 15.3% 15.2% 85.3% 84.3% FY2009 FY2010 FY2009 FY2010 1)Operating Expense Ratio = Operating Expense / Total Premiums (FY2010 Expense Ratio excludes one-off expense related to organizational restructuring) 2) Loss Ratio = Claims Paid / Risk Premiums Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 9p

10 Persistency Continued Persistency Improvement through Emphasis on Sales Efficiency Annual Persistency Rate (1) FY10 Persistency Rate by Quarter (2) 77.8% 60.8% 81.8% 62.5% 81.3% 81.4% 60.8% 61.2% 81.9% 63.4% 82.4% 64.8% 13th 25th 13th 25th FY2009 FY2010 1Q10 2Q10 3Q10 4Q10 1) Annually weighted average of monthly persistency rates 2) Quarterly weighted average of monthly persistency rates Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 10p

11 Total Assets & RBC Ratio Continued Growth in Invested Assets & Capital Position Total Assets & Invested Assets (1) RBC Ratio Total Assets Invested Assets 146 (KRW billion) 332% % 107 FY2009 FY2010 FY2009 FY2010 1) Invested Assets exclude Separate Account Assets (21.5 trn) and Unamortized Deferred Acquisition Expense (3.8 trn). Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 11p

12 Investment Portfolio & Yield Continued Asset Liability Matching Strategy; Improved Investment Yield Investment Portfolio Composition Investment Yield Investment Properties 4% Beneficiary Certificates 3% Cash and Deposits 4% Stocks 13% Investment Yield Adjusted Investment Yield (1) 7.4% 6.4% 6.2% Loans 20% 5.5% Bonds 56% FY2009 FY2010 1) Adjusted Investment Yield: excluding net valuation gains and losses on AFS securities Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 12p

13 Asset Quality Highest Level of Asset Quality among All Korean Financial Institutions Loan Portfolio Composition (1) NPL Ratio (2) Corporate Loans 19% (4%) 3.18% Household Credit Loans 5% (1%) Real-estate Mortgage Loans 25% (5%) Policy Loans 51% (11%) FY % FY2010 1) Number in parenthesis is its share as a % of the entire investment asset portfolio 2) Loans classified as substandard and below under FSS guideline Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 13p

14 II. FY2010 EV Results Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 14p

15 FY2010 Embedded Value Summary March 2011 EV is 21.3 trn won, Up by 3.7 trn won YoY Embedded Value VoNB RoEV (1) (KRW billion) (KRW billion) 17,599 21,325 VIF 23.4% VIF 1,074 1, % +8.3% p ANW ANW FY2009 FY2010 FY2009 FY2010 FY2009 FY2010 1) RoEV based on EV before payout of equity shareholders dividends Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 15p

16 EV Breakdown ANW Up by 2.6 trn (19.0% ), VIF Up by 1.13 trn (28.8% ) YoY FY2010 ( KRW billion ) FY2009 Change Adjusted Net Worth (A) 16,284 13,685 2,599 Value of In-force Business (B) 5,041 3,914 1,127 Present Value of Future Profits ( + ) 6,385 5, Cost of Capital ( - ) 1,344 1, Value of 1 Year New Business 1,021 1, Present Value of Future Profits ( + ) 1,086 1, Cost of Capital ( - ) Embedded Value (A+B) 21,325 17,599 3,726 Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 16p

17 Value of New Business (KRW billion) FY2010 FY2009 Change Value of 1 Year New Business 1,021 1, New Business Margin in terms of APE New Business Margin in terms of PVNBP* 29.0% 29.2% - 0.2% p 7.4% 7.7% - 0.3% p * PVNBP: Present Value of New Business Premium NBM Trend NBM in terns of APE NBM in terms of PVNBP 48.4% (as of Mar. 2011) (as of Mar. 2011) 29.2% 29.0% - 0.2% p 29.0% 13.9% 10.0% 7.4% 11.7% 3.7% 3.3% FY2009 FY2010 Average Protection Annuity Savings Average Protection Annuity Savings Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 17p

18 Movement Analysis (KRW billion) ,517 21, ,325 1,021 1,400 Finance Operation Finance - 1 Operation ANW Adjustments Shareholder Dividend 17,599 VoNB Unwind Variance 668 Change in Assumptions FY09 EV FY10 EV Before Shareholder Dividend FY10 EV After Shareholder Dividend Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 18p

19 Key Assumptions Discount Rate 10.5% NIER 5.2% Net Investment Earnings Rate ( NIER ) Lapse & Surrender Rates Based on 6 year historical experience data Loss (Claims) Ratio Based on 6 year historical experience studies by benefit type Cost of Capital 150% of Korea s FSS RBC requirement, in line with other domestic life insurers Others Maintenance Expense assumed to rise at the rate of inflation : 3% Operating Expense: used FY2010 Operating Expense Corporate tax rate applied to pre-tax income: 24.2% (2011), 22% thereafter (from 2012) Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 19p

20 III. Growth Strategy & Targets Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 20p

21 Life Insurance Industry Outlook Industry Premium Income Growth of Financial Assets (KRW trillion) 77.0 (Source: KLIA, BoK) Insurance Assets Household Financial Assets Nominal GDP Korea s GDP Growth Forecast (Source: IMF) FY04 FY05 FY06 FY07 FY08 FY09 (Source: Korea Life Insurance Association, Bank of Korea) 8.5% 4.5% 7.2% 7.2% 6.9% 7.1% Nominal GDP 3.0% 3.0% 3.0% 3.0% CPI 4.5% 4.2% 4.2% 4.0% 4.0% Real GDP Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 21p

22 APE Growth Target APE Growth Target FY10 APE by Quarter (KRW billion) Annuity Savings Protection 1,027 Annuity: 23% % Annuity Savings Protection 3~4% Protection: 10% 436 FY2010 FY2015 FY10 1~3Q Average FY10.4Q Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 22p

23 Retirement Market Demographic Change Retirement Market Growth Outlook Population (mil) 16 mil Korean baby boomers born between 1955~ Age Individual Annuity Reserves Corporate Pension Reserves (KRW billion) 680 Income Replacement Rate Income Replacement Rate by Country 79% (National Pension + Corporate Pension) 68% 62% 42% Korea Japan US OECD Average (Source: Samsung Life Retirement Research Center) (E) 2020(E) (Source: Samsung Life internal estimates) Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 23p

24 Individual Annuity Single Premium Annuity (monthly average) Immediate Annuity (monthly average) (KRW billion) (KRW billion) Annuity Savings Protection Annuity 76% Jan~March Jan~March Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 24p

25 Corporate Pension Corporate Pension Market Outlook Reinforcing Market Leadership DB DC IRA (KRW trillion) 104 (KRW trillion) (E) (M/S 15.6%) (E) (Source: Samsung Life internal estimates) Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 25p

26 High Net Worth Market Growth of HNW Market Asset Structure of HNWs (thousand) (KRW trillion) Real Estate 80% Financial Assets 20% Insurance 11% Fund 12% Equity & Bonds 23% Cash & Deposits 55% (E) Financial asset size of HNWIs 금융자산규모 No. of HNWIs with more than 1 billion KRW worth of financial assets 금융자산 10 억원이상부유층고객수 (Source: Samsung Life internal research data) (Source: Samsung Life internal research data) Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 26p

27 HNW Customer Base Customers with Monthly Premium over KRW 2M per month Customers with Single Premium over KRW 100M (No. of customers) (No. of customers) 85,652 2,601 9,269 85,864 2,736 9,510 90,418 3,095 10,411 19, ,477 20, ,651 21,443 1,004 1,829 73,782 73,618 76,912 17,080 17,484 18, ~5M won 5~10M won M won or more 2~500M won 500M~1B won 1B won or more Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 27p

28 Retirement & HNW Market Strategy Samsung Life Retirement Research Center Korea s premier think tank for developing a new generation of retirement planning models for Koreans Provide individualized retirement solutions Product Strategy Develop specialized products for the affluent & increase the launching of single premium & investment-linked products Launch tailored variable annuity products & increase utility of variable whole life as tool for retirement planning Establish corporate pension system and service platform differentiated from competitors Distribution Channel Strategy Exclusive Agents: Capitalize on pent-up demand for annuity and meet inheritance planning needs of the affluent using whole life Alternative channels: Focus on expanding new customer base through annuity and savings products Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 28p

29 Exclusive Distribution Channel Strategy Number of Exclusive Agents Number of Exclusive Agents Number of Highly Productive Agents Increase number of exclusive agents Make FC a respected and rewarding profession Establish new training system that matches target markets, customers and trainees Increase branch capacity to 50 FCs per branch 29,800 Increase number of Highly Productive agents to 10 thousand Transform our top tier FCs to be trusted private client advisors of choice Run membership system for top tier FCs Offer total wealth management service to HNWs in conjunction with FP Centers Introduce strategically located and targeted branches Mar.2011 Dec Dec.2015(E) Strategically locate branches in growth markets to grow market presence Strengthen competitiveness of specialty branch networks such as TC and Univ Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 29p

30 Alternative Distribution Channel Strategy Improving Alternative Channel Bancassurance: Increase market presence through annuity sales 23.9% 16.7% 18.4% 14.6% Maintain #1 market share in Bancassurance annuity sales Increase Single Premium Annuity sales including Immediate Annuity Activate new distribution relationships with securities brokerages General Agencies: Strengthen partnerships and increase exclusive distribution agreements Bancassurance Annuity M/S GA M/S (E) Strengthen annuity sales through large-scale Independent GAs Increase exclusive distribution agreements with small & medium IGAs Step up sales & productivity of exclusive GAs Market share based on first month premiums Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 30p

31 Overseas Business Presence in 8 Countries : 2 Insurance Operations, 3 Investment Management Operations and 7 Representative Offices Insurance Operations Investment Operations China (since 2005) Thailand (since 1997) UK (since 1991) Air China Samsung Insurance JV Partner: Air China (50:50) Profile - Rank 48 th among 61 players - Rank 23 rd among 28 foreign players - Premium Income: 63.6 bn won (FY2010) Siam Samsung Life Insurance JV Partner - Saha Group (37.5%), - Siam City Bank (25%) Profile - Rank 19 th among 24 players - Premium Income: 44 bn won (FY2010) US (since 1993) Hong Kong (1996) Total AUM: 3.5 trn won - In-house: 3.3 trn won - Third party: 0.2 trn won Representative Offices: US (2), UK, Japan, China, India and Vietnam Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 31p

32 Overseas Business Strategy China Increase Banca sales Activate new partnerships with large size banks Geographical expansion Expand into new provinces and cities (Currently in 3 provinces 8 by 2015) Insurance Business Thailand New Markets Seek long-term stable Bancassurance relationship Build distribution channel infrastructure Explore entry into markets with large population & high growth potential Support Infra Reenergize overseas support infrastructure Build talent pool through outside recruitment & in-house training Accelerate construction of systems infra to enable scale expansion Investment Management Develop overseas investment business linked with overseas insurance operations Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 32p

33 Resilient Asset Growth Total Assets 200 trillion (KRW ( 단위 trillion) : 조원 ) trillion FY2010 FY2015(E) FY2010 FY2015(E) Separate Account Assets Cash and Deposits etc Investment Properties Stocks Loans Bonds Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 33p

34 Closing Negative Spread Reserves Composition Duration Gap Liability duration Asset duration % 35% 36% 39% 41% 50% FY06 FY07 FY08 FY09 FY10 FY12 FY15 Closing Negative Spread 69% 65% 64% 61% 59% 50% Average Reserve Interest Rate 6.4% 6.4% 6.3% Yield on Interest-earning Assets FY06 FY07 FY08 FY09 FY10 FY15(E) Floating Rate Reserves Fixed Rate Reserves 6.2% 6.0% 6.2% 6.1% 6.0% 5.9% 5.7% FY06 FY07 FY08 FY09 FY10 FY12 FY15 Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 34p

35 Improving Expense, Loss, & Persistency Ratios Expense Ratio (1) Persistency Rate (3) 15.4% 85.0% 13.0% 81.8% FY2010 FY % Loss Ratio (2) 62.5% 84.3% 83.0% 13th 25th FY2010 FY2015 FY2010 FY2015 1) Expense Ratio = Operating Expense / Total Premiums 2) Loss Ratio = Claims Paid / Risk Premiums 3) Persistency calculation based on insurance benefit amount Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 35p

36 Net Profit & RBC Ratio Outlook Net Profit RBC Ratio (KRW billion) 1, % 332% 906 1,021 FY2009 FY2010 FY2015(E) FY2009 FY2010 FY2015(E) Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 36p

37 EV Growth Target 21.3 trn 17.6 trn VIF NBV VIF ANW ANW ANW ANW FY2009 FY2010 FY2015 Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 37p

38 FY2011 Guidance APE growth Net Income growth 10% 10% 7~8% 11~13% Asset growth ROEV Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 38

39 Appendix 1: Adjusted Net Worth ANW Up by 2.6 trillion won (19.0% ) YoY (KRW billion) FY2010 FY2009 Change Shareholders Equity from Balance Sheet 15,390 12,133 3,257 Capital Stock & Retained Earnings 7,915 6,184 1,731 Other Comprehensive Income 7,475 5,949 1,526 Adjustments Made to Net Worth 1,294 1, Valuation Losses on Derivatives Real Estate Appraisal Gains 1, Write-back of Seoul Guarantee ABS Loan Loss Provisions Others (1) Corporate Tax Expense ( - ) Cash Dividend Paid to Equity Shareholders( - ) Adjusted Net Worth 16,284 13,685 2,599 1) Others include Unrealized Gains or Losses on Held to Maturity Securities, Valuation Gains or Losses on Equity Method Investments, Write-back of Loan Loss Provisions, Decrease in Amortization of Intangible Assets Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 39p

40 Appendix 2 : Detailed Movement Analysis Adjusted Net Worth (KRW billion) 1, ,073 16, ,284 13, VoNB 350 Free Surplus Earning Expected Profit Financial Operation Experience Variance Financial Operation Change in Assumptions ANW Adjustments Shareholder Dividend Unwind 1, FY09 ANW FY10 ANW before Dividend FY10 ANW before Dividend Value of In-force (KRW billion) 1,050-1,111 1, , , ,914 VoNB Discount Unwind Unwind -61 Expected Profits Financial Operation Experience Variance Financial Operation Change in Assumptions ANW Adjustments Shareholder Dividend FY09 VIF FY10 VIF before Dividend FY10 VIF before Dividend Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 40p

41 Appendix 3: Sensitivity Analysis March 2011 VIF Sensitivities (KRW bn) Mid-point: 5,041 bn VoNB Sensitivities (KRW bn) Mid-Point: 1,021 bn 1 Discount Rate +/-1% NIER +/-25bps NIER -20bps with lower RBC RBC Required Capital (+/-50%p) -1,317 1, Lapse & Surrender Rates (+10%/-10%) Claims Ratio (+10%/-10%) -1,738 1, Maintenance Expense (+10%/-10%) AFS Affiliates Stake 1) (+10%/-10%) ) Sensitivity of EV Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 41p

42 Appendix 4 : EV review opinion Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved. 42p

43 Copyright c2011 SAMSUNG Life Insurance Co.,Ltd. All Rights Reserved.