2014 Financial Performance EV Results Strategic Priorities

Transcription

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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 2014 Financial Performance 2014 EV Results 2015 Strategic Priorities

4 2014 Financial Performance

5 2014 Financial Highlights (KRW billion) YoY VoNB 1,218 1, % A P E 3,871 4, % Protection APE 2,107 1, % Total Premiums 2 22,858 24, % Net Profit 1, % Total Assets 214, , % Invested Assets 3 172, , % Shareholder s Equity 22,285 19, % Embedded Value 24,889 24, % EV per share (KRW) (124,447) (122,366) (RoEV +3.9% 4 ) calendar year, except for VoNB and APE figures, which were calculated by annualizing the 9 month reported figures for FY Excludes corporate pension and retirement insurance 3. Excludes separate account assets and deferred acquisition costs 4. RoEV prior to dividends and share repurchase - 5 -

6 APE by Product Robust new business growth driven by high-margin protection sales APE by Product (monthly average, KRW billion) Protection 337 Annuity - 4.3% Savings 323 Protection APE (monthly average, KRW billion) Q 2Q 3Q 4Q Protection Market Share % % +3.1%p 28.7% FY13 FY13 1 Based on first month premiums - 6 -

7 Exclusive Channel Performance Exclusive channel focused on high-margin protection sales Market leadership strengthened through continued increase in per agent protection APE Exclusive Channel APE (monthly average, KRW billion) Per Agent Protection APE (monthly average, KRW million) Protection Annuity Savings +30.6% % FY13 Exclusive Channel Protection Market Share % %p 35.8% 32.1% FY13 FY13 1 Based on first month premiums - 7 -

8 Non-exclusive Channel Performance Protection sales growth and annuity sales recovery in GA channel Continued market leadership in Bancassurance leveraging on capital strength and brand power GA Channel APE (monthly average, KRW billion) Bancassurance APE (monthly average, KRW billion) Protection Annuity Savings Annuity Savings % % % % 21 FY13 FY13-8 -

9 Corporate Pension Growth Rapid increase in reserves and dominance in the corporate pension market Stronger service and asset management competitiveness with easing of rates competition Corporate Pension Reserves (KRW trillion) Corporate Pension Market Share 1 [ Peer Comparison ] +42.3% % 9.3% 8.5% 7.4% 6.8% 12.2 Samsung Life A B C D [ Annual Trend ] 14.9% 14.2% 14.6% 16.3% Dec 13 Dec 14 Dec 11 Dec 12 Dec 13 Dec FSS Corporate Pension Statistics (Dec 14) - 9 -

10 HNW Market Growth Expansion of HNW customer base leads to growth in HNW s contribution to total premiums HNW Customer Growth Trend (customers, thousand) [ HNW Customers 1 ] [ Ultra-HNW Customers 2 ] HNW Premium and Share of Total Premiums 3 (monthly average, KRW billion) Contribution to total premiums 72 +9% % 20.2% 20.6% 20.9% 21.2% +15% Dec 13 Dec 14 Dec 13 Dec 14 3Q FY13 1Q 2Q 3Q 4Q 1. Those with financial assets of KRW 1B+ (monthly premium equivalent of KRW 3M+) 2. Those with financial assets of KRW 3B+ (monthly premium equivalent of KRW 8M+) 3. Excludes group insurance, corporate pension and retirement insurance; 1/10 of single premiums reflected over 10 years

11 Invested Assets Sound investment yield under adherence to ALM strategy Asset Trend Invested Asset Portfolio (KRW trillion) (KRW trillion) [ Total Assets ] [ Invested Assets ] Beneficiary Certificates 2.1% Real Estate 4.6% Cash & Equivalents 3.2% +11.1% % Equity 12.3% 172 Bonds 60.8% Loans 17.0% Dec 13 Dec 14 Dec 13 Dec Investment yield 1 5.0% 4.9% 10-yr KTB yield 3.6% 2.6% 1. Adjusted Investment yield = (Investment income + capital gains - expenses) / adjusted invested assets Adjusted invested assets exclude net valuation gains and losses on AFS securities

12 Interest-earning Assets Growing higher-yielding assets under stable management centered on treasuries, agency bonds, and policy loans Bond Portfolio Loan Portfolio (KRW trillion) (KRW trillion) Treasury & Agency Bonds (50.4%) 86.9 Corporate (3.4%) (60.8%) Household Credit (0.6%) (17.0%) Corporate Bonds (5.0%) AAA (45%) AA (50%) Residential Mortgage 1 (4.7%) 8.0 Policy (8.3%) Foreign Currency Bonds (5.4%) Overseas bonds (54%) Korean paper (46%) A (5%) * Parentheses denote share of total investment portfolio 1. LTV for residential mortgage loans is 45%

13 Improving Reserve Composition Reserve Composition Reserve Coverage 5.62% Average reserve interest rate Yield on interest-earning assets 5.31% 5.27% 5.24% 5.20% 5.13% 44.0% 49.5% 51.5% 54.0% 5.09% 4.77% % % 4.57% 4.52% -61bp 50% Dec 12 Dec 13 Mar 14 Jun 14 Sep 14 Dec % 50.5% 48.5% 46.0% FY11 FY12 FY13 FY15 (E) Floating-rate Reserves Fixed-rate Reserves FY16 (E) Non-interest Investment Income (excl. Bonds, Loans, Capital Gains) Rental income Dividend income Fee income (KRW billion)

14 Expense / Loss / Persistency Rates Accelerated improvement in loss rate and expense rate Persistency rates continue steady increase Expense Rate 1 Persistency Rate (%) th month 25th month (%) FY12 FY Loss Rate (%) FY12 FY13 FY12 FY13 1. Expense rate = maintenance expense / adjusted total premiums (ATP)* 5. Figures based on premiums * ATP excludes corp. pension & retirement insurance and includes 1/10 of single premiums 2. Excluding restructuring costs 3. Loss Rate = (net amount at risk + waiver of premium + reinsurance expense) / risk premium 4. Excluding impact of IBNR regulation change

15 Profitability and Capital Adequacy Solid increase in net profit due to improved management efficiency and higher investment income Maintaining top-notch RBC level in the industry Net Profit RBC Ratio (KRW billion) 330% +39%p 369% 1, % 142 4Q Surplus Capital Required Capital(150%) Required Capital(100%) (KRW trillion) , Dec 13 Dec

16 2014 EV Results

17 Embedded Value Summary VoNB increased by +6.9% to KRW 1.2 trillion 1 EV at December 2014 end is KRW 24.9 trillion with RoEV of +3.9% 2 Value of New Business Embedded Value (KRW billion) (KRW billion) ANW VIF 1, % 1,218 24,473 24,889 4,878 2,074 19,595 22,816 FY13 FY13 1. For comparison, FY2013 VoNB here was calculated by annualizing the 9 month FY2013 VoNB of KRW 855 bn 2. RoEV prior to dividends and share repurchase (Dividend and share repurchase of KRW 54.2 billion in 2014)

18 VoNB Movement VoNB increased +6.9% due to robust protection sales and operating efficiency improvements including loss rate and persistency rates Value of New Business +6.9% (KRW billion) New Business Margin +3.3%p 1, , % +0.1%p +4.4%p -1.2%p 31.5% -49 FY13 APE growth Change in product P/F & mix Changes in actuarial assumptions Changes in economic assumptions FY13 Change in Product P/F & mix Changes in actuarial assumptions Changes in economic assumptions

19 EV Movement Analysis EV Movement RoEV + 3.9% (KRW billion) 1,734 1,584 1,030 28,305 24,473 1,218-4,608 25, ,889 EV Operating Profit 3,832 FY13 VoNB Unwind Operating Variance & changes in actuarial assumptions Nonoperating Variance Changes in economic assumptions Dividend & share repurchase

20 EV Movement Details VIF Movement 4,878 1, ,133 7, (KRW billion) Operating Profit 2,556-4, ,074 FY13 VoNB Unwind Expected profits Changes in actuarial assumptions Nonoperating Variance Changes in economic assumptions Dividend & share repurchase ANW Movement (KRW billion) 2, ,816 19, , Operating Profit 1,277 FY13 VoNB Unwind Expected profits Operating Variance Nonoperating Variance Changes in economic assumptions Dividend & share repurchase

21 2014 EV Key Assumptions NIER (Net Investment Earnings Rate) 3.9% (4.6% assumed for FY13 EV calculation) Discount Rate 9.5% (10.0% assumed for FY13 EV calculation) Lapse & Surrender Rate 6-year historical experience data Loss Rate 6-year historical experience data Required Capital Capital required to attain 150% RBC Ratio under the Korean RBC regulation Other Assumptions Maintenance expense assumed to rise at the rate of inflation : 3% per annum Operating expense : actual operating expense incurred during past three years Corporate tax rate : 24.2%

22 Sensitivity Analysis (at Dec 2014 end, KRW billion) EV Sensitivity Mid-point : 24,889 VoNB Sensitivity Mid-point : 1,218 1 Discount Rate +/ 0.5%p Interest Rate /+ 0.5%p Lapse & Surrender Rates +/ 10% Claims Ratio +/ 10% -1,786 1, Maintenance Expense +/ 10% Valuation Gains 6 /+ 10% from SEC shares - 1,064 1,052 Required Capital 7 +/ 50%p (RBC 150%) -2,084 2,

23 2015 Strategic Priorities

24 2014 Review Transform into an EV-centered Corporate Value-emphasizing organization (KRW billion) YoY Protection Market Share 25.6% 28.7% +3.1%p Value of New Business 1,140 1, % Pre-tax Insurance Profit 1,080 1, %

25 2015 Management Strategy Maximizing Corporate Value through Quality Growth Maximize Value of New Business Strengthen earnings foundation Secure future growth engines

26 1. Maximize Value of New Business Continue Protection growth & Recover Annuity sales Protection - Continue resilient Protection sales growth - Increase sales of high margin protection products (Critical Illness / mid-to-low priced health) Annuity - Strengthen product & service competitiveness Recover growth in annuity sales VoNB (KRW billion) 1,218 +6% (E) Increase Balanced exclusive growth channel of Protection competitiveness Annuity Differentiate customer targets by FC productivity Assign matching products & target customers Innovate new recruit training program Expand recruiting & improve retention Differentiating targets by FC productivity Productivity High Retirement /HNW 10% Expand cross-selling of financial affiliate products Average Mass 70% increase customer engagement & synergy creation Low Mass/ Lower 20%

27 2. Strengthen earnings foundation Innovate insurance margin management process Establish detailed control system for each stage of Value Chain - Increase expertise of product development & underwriting functions - Improve persistency & lapse rates Loss Rate (%) %p Counter insurance fraud / over-diagnosis / unjust claims (E) Improve investment yield Increase higher yielding investments & fee income Improve global asset allocation capacity - Securities: mostly domestic increase overseas investments - Real estate: diversify geography & property type Loan Portfolio (as a % of Invested Assets) 29 tn (17%) +10 tn (+3%p) (E) 39 tn (20%) New overseas investment 2.1 tn +1 tn 3.1 tn (E) Bonds /Loans Equity Real Estate

28 3. Secure future growth engines : Domestic Market Retirement Market Annuity - Improve product & service competitiveness including variable annuity returns - Establish dedicated channel to serve retirees increase single premium sales Corporate Pension - Increase market leadership & profitability Pension reserves Corporate Pension Individual Annuity (KRW trillion) +12% (E) HNW Market Leverage unique marketing platforms - Family Office / FP Centers / WM Board Strengthen product development tailored to meet HNW needs - Launch products exclusively for the affluent - Expand non-insurance product suite increase fee income HNW Customers and fee income HNW Customers (thousand) Non-insurance fee income (billion) % +11% (E)

29 3. Secure future growth engines : Overseas Market Expand overseas insurance business Accelerate new market entry through M&A - Identify target markets based on size, growth potential, profitability Emerging Asia including Vietnam, Indonesia Achieve quick-wins in China and Thailand operations Commence Bank of China JV operations Expand bancassurance, quickly attain economies of scale (6 provincial offices 16 offices by 2018) Quality growth through agent channel Globalize asset management business Maximize synergy with asset mgmt subsidiaries - Fixed Income/Equity (SAM), Real Estate (SRA) Overseas Investment Offices Drive 3rd party fund management business Establish global asset management platform - Partner with overseas asset managers, pursue M&A aim to become Top 3 asset management group London Hong Kong New York in Asia by

30 Growth Target Mid-term Target 2014 Results 2015 Target Protection APE 5-6% +17.2% 2-3% Total APE 7-8% -4.3% 7-8% VoNB 6-7% +6.9% 6%+ R o E V 10-12% +3.9% 9-10% Insurance Profit 10% +14.1% 10%+ (vs. CY 2013)

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32 Definitions and Notes APE: Annualized Premium Equivalent = (Monthly Premium x 12) + (Single Premium 10) HNW customers: customers with estimated financial assets of KRW 1B+ (paying monthly premium equivalent of KRW 3M+) Ultra-HNW customers: customers with estimated financial assets of KRW 3B+ (paying monthly premium equivalent of KRW 8M+) Monthly Premium Equivalent = Monthly Premium + (Yearly Premium 12) + (Single Premium 120) Adjusted Investment Yield = (Investment Income + Realized Capital Gains Expenses) Adjusted Invested Assets Adjusted Invested Assets exclude net valuation gains and losses on available-for-sale securities Fixed-rate Reserves includes Fixed-rate riders attached to floating-rate main policies Expense Rate = Maintenance Expense ATP (Adjusted Total Premium) ATP: Adjusted Total Premium = 100% of regular premium and 10% of single premium excluding corporate pension Loss Rate = (Net Amount at Risk + Waiver of Premium + Reinsurance Expense) Risk Premium Persistency Rate(13 th month) = The percentage of policies remaining in force from contract to 13 th month, as measured by premiums EV = Adjusted Net Worth + Value of In-Force Business VIF: Value of In-Force business = Present value of future shareholder profits from Value of In Force Cost of Capital VoNB: Value of New Business = Value of In-Force Business expected to emerge from the previous 1-year new business