Meritz Fire & Marine Insurance. February 2007

Transcription

1 Meritz Fire & Marine Insurance February

2 Disclaimer Meritz Fire & Marine Insurance has been prepared based on internally audited figures and final figures may change due to the results of independent auditors audit without notice. This presentation includes forward looking statements regarding the company s outlook for 4Q FY06 and beyond, including projected premium and net income. These forecasts are subject to unknown risks and uncertainties that may cause actual figures to differ from those stated or implied by such statements. We have no obligation or responsibility to investment made based on such forward looking statements. 2

3 Agenda 01 Introduction to Meritz 02 Business Mix & Outlook 03 Vision & Strategy 04 Share Information 05 Financial Supplements (as of 3Q FY06) 3

4 01 What Makes Us Stand Out We are the 5 th largest insurer with market share of 8% and has changed its corporate identity from Oriental to Meritz Insurance in Oct. 05 Emphasizing Profitbased management as a core strategy with the launch of newstart campaign (2 nd foundation announcement) Myung Soo Wohn s appointment as CEO: June 05 Adaptation and implementation of profitbased management philosophy Sole insurer in the industry to record decrease in auto loss ratio during FY05 High growth in the LT (longterm) line business (FY05 growth rate 28.1%, top 4 players: 15.9%) Recorded highest LT line G/R in the industry for 2 consecutive years (FY04, FY05) Rapid growth in new contracts sales of protectiontype LT policies and high persistency rate Recorded increase in net income despite unfavorable market conditions (FY05 net profit increased KRW 5.3B while top 4 recorded decrease of KRW 10.2B on average) Stock price outperformed both KOSPI and the insurance sector since the newstart campaign Adjusted net income trend Adjusted ROE trend Market share trend (KRW billion) % 11.4% Meritz 11.7% 12.9% 11.0% 12.0% Top 4 players' avg 13.2% 7.1% LT M/S 1.6%p Total M/S LT line M/S FY03 FY04 FY05 up to FY06 3Q Net income Inc. in Cat reserve *Adjusted ROE : annualized figures FY03 FY04 FY05 Up to FY06 3Q FY03 FY04 FY05 up to FY06 3Q 4

5 01 Reference: Industry Net Income for FY05 Reference: Top 4 players net income comparison Top 4 players net income has dropped 8.1% on average yoy, while we recorded KRW 26.4 billion which is 25.1% increase yoy. (KRW billion %) Meritz Samsung Hyundai LIG Dongbu Top 4 Average Industry Average FY Net Income FY04 % Adj. Net Income FY05 FY04 % Auto Loss Ratio FY05 %p LT G/R FY05 %p

6 01 Stock Price Trend Stock price has increased by 264.2% since March 2004 KOSPI and nonlife insurance sector increased by 60.5% and 148.2% respectively for the same period Current price: KRW 6,300 (Feb. 2, 07), Market cap: KRW 540.5billion ($576.3 million) Relative Price Trend ( ~ ) Announcement of 2 nd foundation & corporate identity change Meritz Insurance KOSPI Mar04 Sep04 Mar05 Sep05 Mar06 Sep06 Meritz KOSPI Insurance Sector 6

7 Agenda 목차 01 Introduction to Meritz 02 Business Mix & Outlook 03 Vision & Strategy 04 Share Information 05 Financial Supplements (1H FY06) 7

8 02 Up to 3Q FY06 Key Financials : Comps (KRW Billion, %, %p) Meritz Samsung Hyundai LIG Dongbu Top 4 Average Direct Premium Written Up to FY06 3Q % 1, , , , , , Loss Ratio Up to FY06 3Q %p Expense Ratio Up to FY06 3Q %p Combined Ratio Up to FY06 3Q % Net Inv. Yield Up to FY06 3Q %p Net Income Up to FY06 3Q % n.a Adj. Net Income Up to FY06 3Q % Solvency Margin Ratio Up to FY06 3Q %p

9 02 Premium By Line Acceleration of growth supported by longterm line sales Total direct premium grew by 16.3% yoy in Dec FY06 Posting longterm line growth rate of 25.1% in Dec FY06 Proportion of LT line has increased by 14.3%p from 40.9% (FY03) to 55.2%(Dec FY06) Premium breakdown trend Total Premium Growth 9.8% 10.7% 16.3% 40.9% 45.2% LT line Premium growth 21.2% 52.3% 55.2% LT premium growth 28.1% LT premium growth 25.1% 39.9% 38.9% 33.1% 31.8% 19.2% 15.8% 14.6% 13.0% FY03 FY04 FY05 up to FY06 3Q commercial auto longterm 9

10 02 Longterm Line Outperformance Continuously posting high growth in LT line Achieving highest growth in both FY04, 05 within the industry (21.2%, 28.1%) Posting highest growth rate among top 4 players; G/R 25.1% in Dec FY06 Recording rapid growth in protectiontype policies within LT line Posting 36.9% growth in new contract sales for protectiontype policies (Top 4 players avg: 25.9%) 21.2% LT line growth rate trend 28.1% 15.9% 25.1% 18.9% What is our Strength? Utilizing differentiated distribution channel Solid performance from specified solicitors such as FC (Financial Consultant) 12.5% Meritz Top 4 players' avg. FY04 FY05 Up to FY06 3Q Number (Proportion) Premium contribution for protectiontype New contract sales growth for protectiontype policies 3,139 ( 27.6%) 36.4% 36.9% *as of 1H FY06 Successful implementation of TC (Total Consultant), which is a brandnew and unique channel in the industry (Current # of TC: 1,754) High proportion of newly licensed solicitors agents in the industry FY03 7.4% FY04 9.2% as of 3Q FY06 9.0% (cf. LT line total M/S 8.5%) Setting up Agency Management Department to further strengthen relationships with agencies 30.6% 22.3% 28.7% 25.9% 15.5% Meritz Top 4 players' avg. FY04 FY05 Up to FY06 3Q 10

11 02 Longterm Line Growth Twodigit growth rate sustained by sales of protectiontype policies Increasing importance of risk management for the elderly as the population is rapidly aging Demand for hybridtype of financial plans including investment and insurance are expected to boost, especially from the age group of 40 s and 50 s <Aging population trend ( %)> Age group ~14 years old ~64 years old years & over New contract sales premium breakdown trend (%) New protectiontype premium New savings premium 25.5% 17.2% 14.2% 11.3%p Compared to FY % 82.8% 85.8% FY04 FY05 up to 3Q FY06 11

12 02 Longterm Line Loss Ratio Improvement LT line loss ratio trend of Meritz Continuous sales of protection policies Strengthening underwriting guideline Complete implementation of image U/W system & centralized U/W process (Unit: %) 4.6%p () Consistent improvement of risk & net premium earned basis loss ratio for LT line Risk loss ratio Total LT loss ratio 7.1%p () FY03 FY04 FY05 as of 3Q FY06 25 th month persistency ratio ranked highest among top 5 players Meritz Samsung Hyundai Dongbu LIG Persistency Ratio (as of 1H FY06) Loss ratio* (up to 3Q FY06) *Loss ratio calculation based on net premium earned (Unit: %) Top 4 players average

13 02 Auto Insurance Our Stance Demarketed low profitable policies and was the sole insurer to realized decrease in auto loss ratio in FY05 Market share 7.8%(FY04) 7.1%(FY05) 7.2% (as of 3Q FY06) Increase in accident rate have deteriorated auto loss ratio for the whole industry till 3Q FY06 Due to unexpected unfavorable auto insurance environment, we have changed our strategy to strengthening u/w guidelines for the 2 nd half of FY06 4Q FY06 Auto Ins. Outlook Auto L/R trend Meritz Top 4 avg. Industry avg. (Unit:%) FY03 FY04 FY05 Up to FY06 3Q <Auto premium hike time table> Downturn of the auto loss ratio in 4Q FY06 Premium hike effect (4 times since Nov. 05) : total of 16.9% premium increase Rationalizing price calculation mechanism Improving surplus/discount program (Extending the full discount reaching time frame from 7 yrs to 12 yrs) & differentiating price among different vehicle types Date Nov. 05 Apr. 06 Oct. 06 Nov. 06 Jan. 07 Feb. 07 Apr. 07(e) Premium Change 3.6% 3.6% 0.6% 2.5% Implementing surplus/discount program 6.6% Details Hike in repair wages FY05 annual adjustment Special surplus FY06 annual adjustment Readjustment Price differentiation by vehicle models 13

14 02 FY06 Profit Guideline (Unit: KRW billion, %, %p) FY05 Up to FY06 3Q FY06(e) Direct Premium 1, , , Loss ratio Expense ratio Combined ratio U/W income n.a n.a. Inv. Income Net inv. Yield Net income Adj. Net income Adj. ROE

15 Agenda 목차 01 Introduction to Meritz 02 Business Mix & Outlook 03 Vision & Strategy 04 Share Information 05 Financial Supplements (as of 3Q FY06) 15

16 03 Management Philosophy Reinforcing internal control process Customer Satisfaction Dedicated to optimizing customer satisfaction Employee Satisfaction Transparency Profitbased Enhancing sense of pride and loyalty among employees Placing priority on profitability over growth to further enhance efficiency and productivity Offer steady stream of innovations towards policyholders Transparent management Sustainable and profitable growth Corporate Social Responsibility 나눔경영 Practice corporate social responsibility as an exemplary corporate citizen 16

17 03 FY06 Management Goals Ensuring the best practice of profitable growth through execution of strategic management Maximize Maximize efficiencies efficiencies through through prudent prudent allocation allocation of of management management resources resources Nonprofitable Nonprofitable points points withdrawal withdrawal and and demarketing demarketing plan plan Profitable Profitable points points Concentrating Concentrating of of resources resources Allocating Allocating resources resources in in view view of of longterm longterm value value creation creation Realize Realize customerdriven customerdriven management management by by satisfying satisfying the the various various needs needs of of customers customers Upgrade Upgrade our our competitive competitive edge edge through through adoption adoption of of an an innovative innovative corporate corporate culture culture 17

18 03 Meritz Financial Group Meritz Securities share acquisition completed on Nov. 24, 2005 Realizing the Meritz Financial Group plan via participation of Korean French Banking Corp. share acquisition Shares acquisition in Nov. 27, % (9.6M shares), KRW 36.1B Acquisition price: KRW 4,250 BPS: KRW 6,962 Meritz Insurance Financial Group 13% (7.8M shares), KRW 8.6B Acquisition price: KRW 1,101 BPS: KRW 1,682 Securi ties 57.2% (34.3M shares), KRW 37.6B Acquisition: KRW 1,101 BPS: KRW 1,682 Korean French 18

19 03 Longterm Plan P&L (KRW billion, %, %p) FY06(e) FY07 FY08 FY09 Direct premium 2, , , , Combined ratio Underwriting income n.a n.a n.a n.a. Inv. Income Net inv. Yield Net income Adj. Net income Adj. ROE

20 Agenda 목차 01 Introduction to Meritz 02 Business Mix & Outlook 03 Vision & Strategy 04 Share Information 05 Financial Supplements (as of 3Q FY06) 20

21 04 Current Shareholders Outstanding shares: 85,800,000 shares Major shareholder: JungHo Cho (Chairman) 22.43% Treasury shares: 7.60% Major foreign shareholder: BlackRock Inv. Managers (formerly Merrill Lynch Inv. Managers ) Shareholders (as of Sep 30, 06) JungHo Cho, 22.43% Domestic, 44.23% Treasury Shares, 7.60% Other foreigners, 14.75% Hunter Hall, 4.99% ESOP, 0.79% BlackRock, 5.21% 21

22 04 Dividend Policy Recent 5 years average payout ratio is 29.08% Dividend related ratio comps for FY05 Recorded highest payout & dividend ratio among top 5 players in FY03, 04 Recorded dividend yield of 2.4% which is the highest among top 5 players 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 2.4% 29.6% 27.4% 1.2% 40.6% 2.2% 1.9% 21.9% 38.2% 1.9% 3.0% 2.5% 2.0% 1.5% 1.0% Stock included in Korea Dividend Stock Price Index (KODI) since year % 5.0% 0.5% 0.0% 0.0% Management is committed to boost up shareholders value Meritz A B C D Payout ratio (left) Dividend yield (right) Dividend amount Net income Dividend ratio Payout ratio FY2001 KRW 100 KRW 43.7B 5.4% 17.7% FY2002 KRW 100 KRW 34.0B 8.6% 22.7% FY2003 KRW 100 KRW 20.0B 5.5% 38.7% FY2004 KRW 100 KRW 21.1B 4.9% 36.7% FY2005 KRW 100 KRW 26.4B 2.4% 29.6% 22

23 Agenda 01 Introduction to Meritz 02 Business Mix & Outlook 03 Vision & Strategy 04 Share Information 05 Financial Supplements (as of 3Q FY06) 23

24 05 Key Financials (KRW billion, %, %p) Up to FY06 3Q UP to FY05 3Q FY05 FY04 DPW 1, , , , Net premium earned 1, , , , U/W income n.a n.a. Loss ratio Commercial Auto Longterm Expense ratio Inv. Income Net income Adj. Net income Solvency margin ratio *DPW: direct premium written, up to 3Q: April ~ December cumulative figures

25 05 Premium Sales Portfolio Mix and Premium Sales Up to 3Q FY05 Up to 3Q FY06 (KRW Billion, %, %p) Amount Proportion Amount Proportion % Proportion Commercial Auto Longterm New contact Total 1, , Market Share (e) (%, %p) Premium Mix Up to 3Q FY05 Up to 3Q FY06 Chng 51.4 Longterm 55.2 Commercial Auto Longterm Auto 31.8 Total 7.9 *Excluding onetime payment LT line market share : 8.1%(as of 3Q FY05 ) 8.5%(as of 3Q FY06) Commercial 13.0 up to 3Q FY05 up to 3Q FY06 25

26 05 Change in LT Portfolio Mix Total LTline Composition 장기보험상품(Including 구성비 personal 변화annuities) Protection Savings (Banca) (NonBanca) Onetime payment Total Up to 3Q FY05 Amount Proportion Up to 3Q FY06 Amount Proportion (KRW Billion, %, %p) % Proportion New contracts Composition for LT line (Including personal annuities, excluding onetime payment) Up to 3Q FY05 Up to 3Q FY06 Amount Proportion Amount Proportion % Proportion Protection Savings (Banca) (NonBanca) Total

27 05 Longterm line Portfolio Mix (KRW billion, %, %p) Up to 3Q FY05 Up to 3Q FY06 New contract Total New contract Total % Proportion Proportion Proportion Proportion Proportion New contact Total New contact Total Accident Drivers Property Disease Savings Bundle Policies Annuities Corporate pension Total ,

28 05 LT Breakdown by Coverage 장기보험상품구성비변화 (KRW Billion, %, %p) Up to 3Q FY05 Up to 3Q FY06 Proportion Loss Ratio Proportion Loss Ratio Proportion Loss Ratio Death Coverage Sum payable at death Medical treatment Daily allowance Life benefit Disease Property Driver Other Accident Total Risk Loss Ratio basis 28

29 05 Loss Ratio Loss ratio by line (KRW Billion %, %p) Up to 3Q FY05 Up to 3Q FY06 Losses Commercial Earned Premium Loss Ratio Losses Auto Earned Premium Loss Ratio Losses Longterm Earned Premium Loss Ratio Losses , Total L/R Earned Premium 1, , Loss Ratio

30 05 Expense Ratio Breakdown of Expenses Up to 3Q FY05 Total Expenses Expenses spent Wages & benefits 80.7 Administrative 81.3 Sales related Others 11.4 Expenses recovered 41.7 Expense Ratio 23.2 Up to 3Q FY (KRW Billion, %, %p) Amount % Direct Premium 1, , Earned Premium 1, , Written Premium 1, , *Sales related expenses: acquisition cost/collecting fees, commission paid out to agencies, acquisition cost amortization, deferred acquisition cost, etc. *Other expenses: loss adjustment expenses, coinsurance paid, reinsurance commission paid etc. 30

31 05 Invested Assets Up to 3Q FY05 Up to 3Q FY06 (KRW billion,%, %p) Cash & Deposits Stocks Bond Beneficiary Certificates Amount Proportion Amount 1, Proportion Trading Availableforsale Equitymethod applied stocks % Proportion Structured Sec Overseas Securities Other Securities Loans Real Estates Total Invested Asset 2, ,

32 05 Loan Breakdown (KRW Billion, %, %p) Up to 3Q FY05 Up to 3Q FY06 Amount Proportion Amount Proportion % Retail Loan Proportion 11.5 Credit Collateralized Policy Corporate Loan Credit Collateralized Total Loan , Total loan excludes loan loss provision Retail credit loans are given out to internal employees only 32

33 05 Summary P/L (KRW Billion, %) Up to 3Q FY05 Up to 3Q FY06 Amount % Direct premium 1, , Earned premium 1, , Incurred losses LT savings Refund Net expenses Increase in LT savings premium reserve Increase in policyholder Dividend reserve n.a. Increase in Cat. Reserve U/W income n.a. Investment income Total operating income Nonoperating income n.a. Ordinary income Income tax Net income Adjusted net income

34 05 Summary B/S Asset Liabilities Invested asset Cash/deposits Trading Sec. Availableforsale Heldtomaturity Equity method applied stocks Loans Real estates Noninvested assets Total assets Adjusted ROE Up to 3Q FY05 2, , Up to 3Q FY06 2, , Amount % Insurance reserve Policy reserve Cat. Reserve Other liabilities Total liabilities Capital stocks Capital surplus Retained earnings Capital adjustments Total S.E. Solvency Margin Ratio Up to 3Q FY05 2, , , Up to 3Q FY06 2, , , (KRW billion, %, %p) Amount %

35 Thank you! Investor Relations Contacts: JaeHyoung Kim (General Manager) , SeungHee Han (Assistant Manager) , 35