Financial Performance EV Results Strategic Priorities

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Calvin Reeves
5 years ago
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2 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. Forward-looking 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.

3 Financial Performance EV Results Strategic Priorities

5 (KRW billion) VoNB (Value of New Business) APE (Annualized Premium Equivalent) NBM (New Business Margin) 1,180 1, % 3,564 3, % 33.2% 37.8% +4.6%p Total Premiums 1 22,929 22, % Net Profit 2 1,211 2, % Total Assets 230, , % Invested Assets 183, , % Shareholder s Equity 2 23,646 26, % Embedded Value 25,298 29, % (RoEV +19.0% 3 ) 1. Excludes corporate pension and retirement insurance 2. Excludes separate account assets and deferred acquisition costs 3. RoEV prior to dividends and share repurchase - 5 -

6 VoNB up +2.7%, driven by value-focused sales strategy NBM up +4.6%p from favorable product mix and improved assumptions Value of New Business New Business Margin (KRW billion) +2.7% +4.6%p 1, , %p 37.8% +1.0%p +2.3%p 33.2% -117 FY15 Change in new business volume Change in new business margin FY15 Change in product P/F & mix Changes in actuarial assumptions Changes in economic assumptions - 6 -

7 VoNB attributable to Protection grew from 85% 91% of total VoNB New Business Margin of Protection increased from 46% 53% VoNB Breakdown by Product NBM by Product Protection Annuity Savings 2.2% 1.6% 13.1% 7.2% Protection 46% 53% Annuity 16% 16% 84.6% +6.6%p 91.2% Savings 7% 4% FY15 FY15-7 -

8 Protection APE fell -4.9%, but high margin Health APE grew +33.8% Annuity sales was weak from low interest rates, short-term savings grew by absorbing market liquidity APE by Product Protection APE (monthly average, KRW billion) Protection Annuity Savings (monthly average, KRW billion) Whole life CI Health % % % FY15 FY15-8 -

9 Healthy channel mix made up of Exclusive Agents (63%), GA (20%), Bancassurance (16%) Protection as a % of total sales increased for both exclusive agent and GA channel APE by Distribution Channel (monthly average, KRW billion) Exclusive Agent GA Bancassurance Others APE Breakdown by Distribution Channel Protection Annuity Savings (monthly average, KRW billion) (16%) 5 (2%) (20%) (63%) 140 (83%) (62%) Exclusive Agent GA Bancassurance - 9 -

10 First player to surpass 20 trillion in Corporate Pension reserves Continue to strengthen DB market competitiveness while expanding presence in DC/IRP Corporate Pension Reserves DB DC IRP (KRW, trillion) +9.7% % Corporate Pension Market Share 9.5% 8.5% 7.1% 7.1% Samsung Life A B C D * FSS Corporate Pension Statistics (Dec 2016) DC/IRP Participant Trend % (participant, thousands) Dec 2015 Dec 2016 IRP DC Dec 2015 Dec

11 Consolidated Invested Assets up +17.4% due to additional Samsung Card stake acquisition Maintain stable investment yield despite prolonged low interest rates Cash & Equivalents Bonds Loans Beneficiary Certificates Equity Real Estate Invested Assets (Consolidated) % 61.5% 18.2% +17.4% 52.7% 27.0% 2.3% 1.9% 11.2% 11.4% 5.0% 4.2% Dec 2015 Dec 2016 (KRW trillion) % 79.7% Cash & Equivalents Bonds Loans Beneficiary Certificates Equity Real Estate Invested Assets (Non-consolidated) % 62.2% +7.8% 58.1% 20.0% 18.6% 2.8% 3.0% 11.2% 14.1% 3.6% 3.0% Dec 2015 Dec 2016 (KRW trillion) % 78.1% Investment yield 3.7% 4.1% Investment yield 3.7% 3.3% * Samsung Card Invested Assets (21tn) = Cash (0.9), Loans(19.1), Equity(0.5), Properties (0.6)

Continue investment focus on interest-earning assets Bond Portfolio Loan Portfolio Government & Public bonds (27.4%) 53.2 112.8 (58.1%) 42.3 (KRW trillion) Government agency bonds (21.8%) 11.9 38.

12 Continue investment focus on interest-earning assets Bond Portfolio Loan Portfolio Government & Public bonds (27.4%) (58.1%) 42.3 (KRW trillion) Government agency bonds (21.8%) (20.0%) Residential Mortgage 1 (6.2%) 1.3 (KRW trillion) Household Credit (0.7%) Foreign Currency Bonds(4.8%) Korean Paper (41%) Overseas Bonds (59%) Corporate Bonds(4.1%) AA (53%) A (5%) AAA (42%) Policy (7.5%) Corporate(5.6%) Others(11%) SOC (21%) Commercial Mortgage (49%) Project Financing (19%) * Parentheses denote share of total investment portfolio * Based on non-consolidated financial statements 1. LTV for residential mortgage loans is 54% * Based on non-consolidated financial statements

13 New Interest-earning Asset Investments Defended New Investment Yield against falling market rates Increased investment in higher-yield overseas bonds and loans 51.5% 54.0% 55.8% 56.6% New Investment Yield New Investment Breakdown 3.3 (%) New investment yield 10-yr KTB -0.1%p Loans Foreign currency bonds Domestic bonds 51.1 (%) %p Q FY15 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY15 * Based on non-consolidated financial statements * Based on non-consolidated financial statements

14 Share of floating-rate reserves reach 57.2% Stabilization of negative spread in 4Q and continue growth of non-interest income Reserve Composition Reserve Coverage (KRW trillion) 5.31% 4.77% % 4.52% -61 Average reserve interest rate Yield on interest-earning assets 4.75% 4.57% 4.53% bp 4.13% 3.89% 3.84% Floating -rate reserves Fixed -rate reserves 51.5% 54.0% 48.5% 46.0% 55.8% 44.2% 57.2% 42.8% 2.9% 6.6% 1 1 Dec '13 Dec '14 Dec '15 Sep '16 Dec '16 Non-interest Investment Income (excluding Bonds, Loans, Disposal Gains) Rental income Dividend income Fee income ,123 1,141 (KRW billion) 2 Dec '13 Dec '14 Dec '15 Dec '16 1. Average reserve interest rate by type Variable product fees, Samsung Asset Management fee income, etc

15 Expense / Loss / Persistency Rates Continued expense rate improvement through cost cutting Loss rate subsides to 76.9% in 2H after reaching 80.1% in 1H due to MERS impact Expense Rate 1 Persistency Rate (%) 13th month 25th month (%) FY13 FY14 FY15 Loss Rate (%) 1H: H: FY13 FY14 FY15 FY13 FY14 FY15 1. Expense rate = maintenance expense / adjusted total premiums (ATP)* 3. Based on premiums * ATP excludes corp. pension & retirement insurance and reflects 1/10 of single premiums 2. Loss Rate = (net amount at risk* + waiver of premium + reinsurance expense) / risk premium * net amount at risk = claims paid reserve at time of payment

16 Net profit jumped +75.8% due to large one-off gains Insurance Profit up +0.5% due to enhanced expense margin and normalization of loss rate in 4Q Net Profit Insurance Profit 3 (KRW billion) (KRW billion) +75.8% 2, % 1,615 1,623 1,211 1,192 One-off gains from Samsung Card and Samsung Securities share purchase Q ,293 1,204 1~3Q FY15 FY15 * Excludes non-controlling interests 1. One-off gains from share purchase: Samsung Card(W821bn) + Samsung Securities(W372bn) 2. Tax refund(w135bn) + distribution from Samsung Motors lawsuit (W90bn) 3. Pre-tax

17 Shareholder s equity up +13% from retained earnings and higher unrealized gains on AFS securities 304% RBC ratio despite increase in required capital caused by regulatory strengthening Shareholder s Equity RBC Ratio +13.0% (KRW trillion) 337% 304% Available capital (KRW trillion) Required capital(100%) Dec 2015 Net Profit Other comprehensive income Dividend & Share repurchase Dec 2016 Dec 2015 Dec 2016 * Excludes non-controlling interests

19 EV at the end of 2016 was KRW 29.3 trillion and RoEV was +19.0% 1 VIF recorded KRW 3.5 trillion, driven by VoNB growth and efficiency gains Embedded Value ANW VIF 29,349 (KRW billion) NIER (Net Investment Earnings Rate) 3.6%(FY15) 3.5%() 25,298 1,490 3,497 Discount Rate 9.0%(FY15) 8.5%() 23,808 25,852 Lapse & Surrender Rate 6-year historical experience data Loss Rate 6-year historical experience data Dec 2015 Dec 2016 RoEV +4.9% +19.0% Expense Rate Actual operating expense incurred during past three years Inflation rate: 2% per annum 1. RoEV prior to dividends and share repurchase (Dividend and share repurchase of KRW 757 billion in 2016)

20 EV Movement RoEV % (KRW billion) 25,298 1,212 1,230 1,979 29,719 1,603-1,216 30, ,349 EV Operating Profit 4,421 FY15 VoNB Unwind Operating Variance & changes in actuarial assumptions Nonoperating Variance Changes in economic assumptions Dividend & share repurchase

21 VIF Movement 1,800 4,713 (KRW billion) 1,490 1, , ,497 Operating Profit 3,223 FY15 VoNB Unwind Expected profits Operating variance & changes in actuarial assumptions Nonoperating Variance Changes in economic assumptions Dividend & share repurchase ANW Movement (KRW billion) 23, ,006 1, ,852 Operating Profit 1,198 FY15 VoNB Unwind Expected profits Operating Variance Nonoperating Variance Changes in economic assumptions Dividend & share repurchase

22 (at Dec 2016 end, KRW billion) EV Sensitivity Mid-point : 29,349 VoNB Sensitivity Mid-point : 1,212 1 Discount rate +/ 0.5%p -1.4% 1.5% -5.3% 5.7% 2 Interest rate /+ 0.5%p -6.5% 5.7% -7.3% 7.1% 3 Lapse & Surrender +/ 10% -1.1% 1.0% -7.2% 7.6% 4 Claims paid +/ 10% -5.5% 5.4% -4.3% 4.0% 5 Maintenance expense +/ 10% -0.8% 0.9% -1.6% 1.6% 6 SEC share price -/+ 10% -4.7% 4.7% 7 Required Capital +/- 10% -2.7% 2.6% -0.5% 0.4%

Maximizing Corporate Value through Quality Growth Embedded Value (KRW trillion) Focused on Protection sales Protection APE (monthly average, KRW bn) +17% 150 176 28 NBM(%) +10%p 38 29.

24 Maximizing Corporate Value through Quality Growth Embedded Value (KRW trillion) Focused on Protection sales Protection APE (monthly average, KRW bn) +17% NBM(%) +10%p FY13 FY13 +20% Enhanced channel competency 24.5 Improved exclusive agent productivity Introduced multi-purpose branches Established GA subsidiary Expanded online/mobile sales platform Strengthened earnings foundation Insurance Profit (KRW trillion) +50% FY CY

25 Enhance health/ critical illness product competitiveness - Reinforce existing line-up Expand coverage by developing new riders Secure price advantage through new features such as zero-surrender value - Develop products with high market demand Tap new markets (Dental, LTC, etc) - Step up marketing efforts linked to healthcare services Secure profitability through improved sales attributes - Promote longer-term payments, expand variable product sales, increase rider attachments Continue to improve exclusive agent productivity & efficiency - Recruit talented candidates, reduce proportion of under-performing agents - Expand differentiated branches with high-performing FCs - Reinforce success of multi-purpose branches Strengthen competitiveness of non-exclusive sales channels - Increase protection sales from non-exclusive GAs - Cement No. 1 market share in online channel ( 2H market share : 27%)

26 Risk Premium, Loss Rate Mortality Margin - Grow sales of health & critical illness - Enhance policy persistency & on-time premium payment - Tighten claims review process Prevent overtreatment and fraudulent claims Innovate cost structure Expense Margin - Continue mid-to-long term cost innovation - Strengthen cost discipline Expand overseas bond investments - Raise investment limit while managing risk profile Maintain regional and industry diversity Diversify alternative investment projects - Leverage overseas partners for indirect investment opportunities, diversify investment across high quality real estate properties Gradually increase retail loan portfolio - Focus on high quality loans, minimizing risk of household debt Maximize performance of asset management subsidiaries - Drive 3rd party fund management business Samsung Asset Management : Expand into other asset classes Samsung SRA : Enter discretionary wrap account business Grow fee income by boosting variable product sales - Differentiate investment strategy for each fund category Extend success in Corporate Pension market - Maintain #1 market share

27 EV KRW 25.3 tn 29.3 tn 32 tn 1) VoNB Growth -3.2% +2.8% +5% Insurance Profit KRW 1.6 tn 1.6 tn 1.7 tn 1) Using 2016 EV economic assumptions, before dividends and share repurchases

3,217 2, % Total Assets 264, , % Invested Assets 214, , % RBC Ratio 302.2% 314.3% +12.1%p

3,217 2, % Total Assets 264, , % Invested Assets 214, , % RBC Ratio 302.2% 314.3% +12.1%p 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