Setting the Stage for Global Business Growth

Transcription

1 Setting the Stage for Global Business Growth

2 Features contents 01 Features 02 Message from the CEO 04 Financial Highlights Review of Operations 10 Consolidated Financial Statements 15 Organization 16 Network 01 Global Business Growth 02 Efficient Organizational Structure 03 Innovative Corporate Culture 1

3 Message from the CEO The enhanced financial strength combined with our stable operating performance led our S&P ratings to be upgraded to A. This was a long-awaited news for Korean Re, as it came in eight years since the last upgrade to A- in In the meantime, we have maintained an A.M. Best rating of A since Backed by these stronger financial strength ratings, Korean Re made a big push for its overseas business expansion in One of the noteworthy developments was our strategic plan to make our way into the Lloyd s market in London. We plan to establish an underwriting corporation at Lloyd s in April 2015 as a foothold for our global business operations. Our presence in the world s leading reinsurance market will hopefully allow us to expand our overseas business beyond Asia based on the expertise and experiences we have accumulated regionally, giving us a leg up on our path toward the goals under the new vision. There are a variety of other initiatives aimed to strengthen our global business such as plans to set up a branch in Shanghai and an underwriting agency in Dubai. Amid these new attempts and changes being underway, we continued to deliver stable business results in. Our gross written premiums increased by 1.3% year on year to KRW 5,989.5 billion while net written premiums grew by 2.8% to KRW 3,928.6 billon. It was encouraging to see our total comprehensive income, which translated into our capacity, increase by KRW billion to KRW billion. As of the end of, our total assets amounted to KRW 8,463.9 billion, up KRW 844 billion from the previous year, with invested assets expanding by KRW billion to KRW 4,473.8 billion. However, with increasingly softening market conditions and mounting competition, our net income after taxes decreased to KRW billion. The insurance market has been fraught with challenges and adversities such as super low interest rates, stunted growth and weak profitability. In the face of such headwinds, Korean Re is striving to achieve both top and bottom-line growth based on its strong underwriting skills and business network that has been built over the past decades. Dear shareholders, clients and investors, 2014 was a year of significant progress for Korean Re. We started it off with the announcement of Vision 2050: Value-Creating Reinsurance Leader. It clearly encapsulates our ambition to become one of the leading global reinsurers by the year 2050, creating long-term value for our clients, industries and the general public. As one of the first steps toward achieving Vision 2050, we successfully expanded our capacity through the issue of subordinated capital securities worth USD 200 million. Being the first of its kind in the Korean insurance industry, it marked a breakthrough achievement for Korean Re, bringing our total equity to more than KRW two trillion. Although we made considerable headways in 2014, there is still much to be done in the coming years. We will be implementing focused actions to make continued progress in expanding our business globally in accordance with Vision In doing so, we will also remain committed to improving gross margins in 2015 and beyond. In conclusion, I wish to thank our employees for their dedicated efforts and for the way they have relentlessly sought excellence in their work. And I would also like to thank our clients and shareholders for their continuing support. Korean Re will always remain a reliable partner for their growth and success. Jong-Gyu Won President and CEO 2 3

4 Financial Highlights 2014 Gross Written Premiums (Unit: KRW billion) Net Written Premiums (Unit: KRW billion) 4, , , ,928.6 total Shareholders' equity (Unit: KRW billion) Total Assets (Unit: KRW billion) (KRW billion) (USD million) (KRW billion) (USD million) FOR THE YEAR 1, ,619.9 Gross written premiums 5, , , ,125.7 Net written premiums 3, , , , , ,463.9 Net income AT THE YEAR END Total assets 8, , , ,150.9 Insurance contract liabilities 4, , , ,860.1 Total shareholders equity 1, , , ,361.6 Strength Ratings A.M. Best A S&P A RBC Ratio 236.2% FINANCIAL RATIO (%) RBC ratio Combined ratio ROA ROE Payout ratio EPS (KRW, USD) 1, , Note: All figures are based on K-IFRS. The conversion from KRW to USD is shown here and in the rest of this report for information purposes only 4 5

5 Review of Operations Summary of Gross Premium Income YoY Change** Fire Comprehensive 1,077,320 1,014, , , % Engineering Marine 514, , , , % Casualty 844, , , , % Long-Term 1,389,423 1,307, , , % Motor 598, , , , % Life 935, , , , % Overseas*** 629, , , , % Total 5,989,503 5,637,498 4,566,412 4,125, % ** YoY Change refers to a 12-month comparison from January to December *** The figures do not include engineering, marine and aviation, casualty and life business. Fire, Comprehensive and Engineering Fire 153, , , ,106 Comprehensive 384, , , ,110 Specialty 245, , , ,304 Engineering** 293, , , ,055 Total 1,077,320 1,014, , ,575 ** Engineering includes nuclear. Marine and Aviation Hull 363, , , ,884 Cargo 93,243 87,763 58,565 52,913 Aviation 58,080 54,667 45,608 41,207 Total 514, , , ,004 Overseas Commercial Casualty 11.4% Life 11.4% 21.2% 34.2% Liability 249, , , ,197 Workers Compensation 29,936 28,177 22,647 20, % 23.2% Personal Accident 268, , , ,011 Surety & Credit 72,780 68,503 62,394 56,373 Motor Long-Term Special Risks & Other 204, , , ,805 Overseas Inward Business 18,715 17,615 9,131 8,250 Total 844, , , ,

6 Long-Term and Motor Long-term 1,389,423 1,307, , ,470 Motor 598, , , ,188 Business Portfolio Domestic vs Overseas Domestic Business Portfolio Domestic 78.8% Long-Term 29.5% Overseas 21.2% Property (including 19.6% engineering) Casualty 15.5% Life Life 935, , , ,267 Life Motor Marine 8.2% 12.7% 14.5% Overseas Business Portfolio Overseas Life South East Asia Middle East & Africa Overseas** 629, , , ,140 ** The figures do not include engineering, marine and aviation, casualty, and life business. 50.3% Property (including engineering) 19.8% 16.0% 11.1% 2.7 % Motor Marine Casualty Far East 45.1% 6.2 % North America 16.1% 16.1% 2.7% 13.9% Latin America Europe Asset Management By Line of Business By Region Invested Assets 4, , , ,646.3 Investment Portfolio Investment Income (Investment Income**) Yield (%) (Yield**) (124.5) 3.3 (3.0) (117.2) 3.3 (3.0) ** Gains and/or losses from foreign exchange hedging for insurance liabilities have been excluded 84.7 (117.5) 3.0 (4.2) 76.5 (106.2) 3.0 (4.2) Bonds 44% 25% 17% 5% 9% Foreign investments Short-term funds Others Stocks 8 9

7 Consolidated Statements of Financial Position Consolidated Statements of Comprehensive Income As of December 31, 2014 and 2013 For the years ended December 31, 2014 and 2013 Assets I. Cash and cash equivalents 262, , , ,705 II. Financial assets 6,104,952 5,500,452 5,325,817 4,997, Deposits 703, , , , Financial assets at fair value through profit or loss 589, , , , Available-for-sale financial assets 2,651,951 2,389,360 2,302,826 2,161, Loans 77,378 69,716 77,339 72, Receivables 2,082,697 1,876,473 1,922,716 1,804,351 III. Property and equipment 82,637 74,454 79,361 74,475 IV. Investment properties 111, , , ,373 V. Intangible assets 36,477 32,865 15,978 14,994 VI. Other non-financial assets 1,865,812 1,681,063 1,792,762 1,682,397 Total assets 8,463,900 7,625,822 7,619,993 7,150,894 Liabilities I. Insurance contract liabilities 4,405,013 3,968,838 4,113,348 3,860,124 II. Financial liabilities 1,941,858 1,749,579 1,805,060 1,693,938 III. Other non-financial liabilities 278, , , , Current income tax liabilities ,888 13, Deferred income tax liabilities 254, , , , Retirement benefits 5,078 4,575 6,794 6, Others 18,881 17,011 29,067 27,278 Total liabilities 6,624,935 5,968,948 6,169,054 5,789,277 Equity I. stock 60,185 54,226 59,058 55,422 II. surplus 176, , , ,516 III. Hybrid equity security 212, , IV. adjustments (35,311) (31,815) (35,311) (33,137) V. Accumulated other comprehensive income 127, ,431 49,041 46,022 VI. Retained earnings 1,298,423 1,169,856 1,201,777 1,127,794 Total shareholders' equity 1,838,965 1,656,874 1,450,939 1,361,617 Total liabilities and shareholders' equity 8,463,900 7,625,822 7,619,993 7,150,894 I. Operating revenue 7,954,930 7,487,416 5,940,631 5,367, Premium income 5,989,503 5,637,498 4,566,412 4,125, Reinsurance income 1,450,230 1,364, , , Expenses recovered 299, , , , Interest income 92,869 87,411 72,599 65, Dividend income 5,410 5,092 2,697 2, Investment income from financial instruments 37,690 35,475 42,381 38, Other operating revenues 79,582 74,905 34,181 30,882 II. Operating expenses 7,796,556 7,338,349 5,776,061 5,218, Insurance claims and benefits related expenses 4,365,792 4,109,213 3,098,809 2,799, Reinsurance expenses 2,060,915 1,939,794 1,669,240 1,508, Provision for insurance contract liabilities 218, ,488 78,282 70, Operating and administrative expenses 983, , , , Loss adjustment expenses 80,923 76,167 52,236 47, Asset management expenses 2,766 2,603 1,707 1, Interest expenses Investment expenses from financial instruments 12,249 11,529 6,905 6, Other operating expenses 71,851 67,628 80,502 72,733 III. Operating income 158, , , ,689 IV. Non-operating income V. Non-operating expenses 3,029 2,851 1,903 1,719 VI. Income before income taxes 155, , , ,013 VII. Income tax expenses 37,934 35,705 38,847 35,098 VIII. Net income 117, , , ,914 IX. Other comprehensive income 77,966 73,384 (57,547) (51,994) X. Total comprehensive income 195, ,960 66,321 59,921 Note: For the B/S section, Korean won amounts have been converted into the US dollar based on the exchange rate of KRW 1, per USD 1 for and KRW 1, for FY For the I/S section, the applicable exchange rate was KRW 1, per USD 1 for and KRW 1, for FY Note: For the B/S section, Korean won amounts have been converted into the US dollar based on the exchange rate of KRW 1, per USD 1 for and KRW 1, for FY For the I/S section, the applicable exchange rate was KRW 1, per USD 1 for and KRW 1, for FY

8 consolidated statements of changes in equity consolidated statements of changes in equity For the years ended December 31, 2014 and 2013 For the years ended December 31, 2014 and 2013 Stock Surplus Hybrid Equity Security Adjustment Accumulated Other Comprehensive Income Retained Earnings (Unit: KRW million) As of April 1, , ,374 - (35,311) 106,587 1,106,063 1,412,771 Cash dividends (28,154) (28,154) Net income , ,868 Loss on valuation of available-for-sale (47,253) - (47,253) financial assets Exchange difference on translating foreign (10,815) - (10,815) operations Loss on remeasurement of the net defined benefit liabilities Total comprehensive income (57,547) 123,868 66,321 As of December 31, , ,374 - (35,311) 49,041 1,201,777 1,450,939 As of January 1, , ,374 - (35,311) 49,041 1,201,777 1,450,939 Cash dividends (19,708) (19,708) Stock dividends 1, (1,126) - Acquisition of treasury stock (18) - - (18) Proceeds from disposal of treasury stock Issuance of hybrid equity security , ,286 Net income , ,480 Gain on valuation of available-for-sale ,495-77,495 financial assets Exchange difference on translating foreign (723) - (723) operations Gain on remeasurement of the net defined ,194-1,194 benefit liabilities Total comprehensive income , , ,446 As of December 31, , , ,286 (35,311) 127,007 1,298,423 1,838,965 Note: For the B/S section, Korean won amounts have been converted into the US dollar based on the exchange rate of KRW 1, per USD 1 for and KRW 1, for FY For the I/S section, the applicable exchange rate was KRW 1, per USD 1 for and KRW 1, for FY Total Stock Surplus Hybrid Equity Security Adjustment Accumulated Other Comprehensive Income Retained Earnings (Unit: USD thousand) As of April 1, , ,910 - (31,815) 96, ,543 1,272,881 Cash dividends (25,366) (25,366) Net income , ,603 Loss on valuation of available-for-sale (42,574) - (42,574) financial assets Exchange difference on translating foreign (9,744) - (9,744) operations Loss on remeasurement of the net defined benefit liabilities Total comprehensive income (51,849) 111,603 59,754 As of December 31, , ,910 - (31,815) 44,184 1,082,780 1,307,269 As of January 1, , ,910 - (31,815) 44,184 1,082,780 1,307,269 Cash dividends (17,757) (17,757) Stock dividends 1, (1,015) - Acquisition of treasury stock (16) - - (16) Proceeds from disposal of treasury stock Issuance of hybrid equity security , ,266 Net income , ,847 Gain on valuation of available-for-sale ,822-69,822 financial assets Exchange difference on translating foreign (651) - (651) operations Gain on remeasurement of the net defined ,076-1,076 benefit liabilities Total comprehensive income , , ,093 As of December 31, , , ,266 (31,815) 114,430 1,169,856 1,656,873 Note: For the B/S section, Korean won amounts have been converted into the US dollar based on the exchange rate of KRW 1, per USD 1 for and KRW 1, for FY For the I/S section, the applicable exchange rate was KRW 1, per USD 1 for and KRW 1, for FY Total 12 13

9 Consolidated Statements of Cash flows Organization For the years ended December 31, 2014 and 2013 I. Cash flows from operating activities 4,388 3, , , Income before income taxes 155, , , , Cash generated from operations (216,219) (194,809) 419, , Receipt of interest 97,230 87,602 84,365 79, Payment of interest (864) (778) (1,372) (1,288) 5. Receipt of dividend 5,410 4,874 3,859 3, Payment of income tax (36,582) (32,960) (28,381) (26,634) II. Cash flows from investing activities (227,989) (205,414) (706,883) (663,366) 1. Cash inflows 2,018,488 1,818,621 1,487,994 1,396, Cash outflows (2,246,477) (2,024,035) (2,194,877) (2,059,757) III. Cash flows from financing activities 192, ,092 (28,234) (26,496) 1. Cash inflows 211, , Cash outflows (19,873) (17,905) (28,234) (26,496) IV. Net increase(decrease) in cash and cash equivalents (I+II+III) V. Effects of changes in foreign exchange rate cash and cash equivalents VI. Cash and cash equivalents at the beginning of the year (31,486) (28,368) (94,355) (88,546) - - (1) (1) 293, , , ,251 VII. Cash and cash equivalents at the end of year 262, , , ,705 Note: For the B/S section, Korean won amounts have been converted into the US dollar based on the exchange rate of KRW 1, per USD 1 for and KRW 1, for FY For the I/S section, the applicable exchange rate was KRW 1, per USD 1 for and KRW 1, for FY CEo Jong-Gyu Won Executive managing Director Nam-Deuk Chun Standing Auditor Young-Soo Choi Managing Directors Doo-Sup Chung Sung-Bum Kang Kyou-Chil Chae Joon-Kyo Kim Global Network Singapore Branch London Liaison Office Tokyo Liaison Office New York Liaison Office Beijing Liaison Office Dubai Liaison Office Worldwide Insurance Services, Ltd. (Hong Kong) Korean Re Lloyd s Syndicate Fire Dept. Marine Dept. Casualty Dept. Long-Term & Motor Dept. Life Dept. Overseas Dept. Planning & Management Office General Affairs Dept. Accounting Dept. ASSET MANAGEMENT OFFICE Information systems dept. Risk Management Team CLAIMS & SURVEY Dept. Actuarial Dept. Auditing Office Compliance Team 14 15

10 New York Liaison Office London Liaison Office & Korean Re Lloyd's Syndicate Dubai Liaison Office Beijing Liaison Office Head Office Worldwide Insurance Services, Ltd. Tokyo Liaison Office Singapore Branch network Head office Jongno 5 Gil, 68 (Susong-dong) Jongno-gu, Seoul, Korea Tel: (822) Fax: (822) service@koreanre.co.kr Overseas Branch and Offices Singapore Branch CEO: Jong-Seon Han 8 Cross Street, #23-05 PWC Building, Singapore Tel: (65) Fax: (65) Singapore@koreanre.co.krr London Liaison Office CEO: Joon-Ha Yoo International House, 1 St. Katharine s Way, London, UK E1W 1UN Tel: (4420) /2 Fax: (4420) london@koreanre.co.kr Tokyo Liaison Office CEO: Terry Kim Marunouchi Mitsui Building 5th Fl. No Marunouchi, Chiyoda-ku, Tokyo, Japan Tel: (813) Fax: (813) tokyo@koreanre.co.kr New York Liaison Office EO: Jin-Hyung Lee Room 1506, 111 John Street, New York, N.Y.10038, u.s.a. Tel: (1212) /3 Fax: (1212) newyork@koreanre.co.kr Beijing Liaison Office CEO: Sung-Muk Yoon unit 10F-A2, Merchants Tower, Jianguo Road No.118, Chaoyang District, Beijing , China Tel: (8610) /6277 Fax: (8610) beijing@koreanre.co.kr Dubai Liaison Office CEO : Seok-Pyo Hong unit 1102B, Level 11 Gate Building East Wing, DIFC, Dubai, UAE, PO Box Tel: (9714) Fax: (9714) dubai@koreanre.co.kr Subsidiaries Worldwide Insurance Services, ltd. CEO: Dong-Bin Kim Suite 3606, 36/F. Central Plaza 18 Harbour Road, Wanchai, Hong Kong Tel: (852) /3127 Fax: (852) hk@koreanre.co.kr Korean Re Underwriting Ltd. (Lloyd s Syndicate) Director: Joon-Ha Yoo International House, 1 St. Katharine s Way, London, UK E1W 1UN Tel: (4420) Fax: (4420) london@koreanre.co.kr Affiliates Pt. Asuransi Ramayana 49 Jalan Kebon Sirih, PO Box 4685, Central Jakarta 10340, Indonesia Tel: (6221) Fax: (6221) Liberty Insurance Berhad 9F, Menara uni. Asia 1008, Jalan Sultan Ismail Kuala Lumpur, Malaysia Tel: (603) Fax: (603) Asian Reinsurance Corporation 17F, Chamnan Phenjati Business Center (Tower B) 65, Rama 9 Road, Huaykwang Bangkok, 10320, Thailand Tel: (662) /2190/2197 Fax: (662) /8011 Shin Young Investment Co., Ltd 10F, Shin Young Bldg., 16, Gukjegeumyung-ro 8-gil, Yeongdeungpo-gu, Seoul, Korea Tel: (822) Fax: (822)

11 Korean Reinsurance Company Jongno 5 Gil, 68 (Susong-dong), Jongno-gu, Seoul , Korea Tel: (82-2) Fax: (82-2)