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Korean Re's Business Results for 2021

Korean Re achieved strong business results for 2021, with net income increasing by 18.4% to KRW 178 billion. Although underwriting profitability remained weak, increased investment profit boosted overall bottom-line performance. We reported an underwriting loss of KRW 24.9 billion as our overseas business experienced weaker underwriting results due to COVID-19 losses and natural catastrophe losses. These figures are based on the company's separate financial statements.

The overall combined ratio stayed flat at 100.3%, with the combined ratio for overseas business soaring to 102.1%. Our domestic personal lines of business continued to deteriorate, resulting in a combined ratio of 101.9%, amid persistently high loss ratios of medical expense insurance and long-term property fire losses.

However, we made an impressive improvement in domestic commercial business, with its combined ratio falling to 90.8% from 99.7%. This higher underwriting profitability was driven by favorable pricing trends in most commercial lines of business and fewer large-loss events in Korea.

Combined Ratio
* The above figures are based on the company's separate financial statements, with foreign currency effects being excluded.

We saw our investment profit increase by 3.4% to KRW 244.8 billion, backed by returns on alternative investments. In spite of decreased gains on the sale of bonds, the yield on alternative investments increased strongly as we continued our expansion into new and diversifying sources of investment return to achieve stable investment results. Our alternative investment portfolio consists mostly of high-quality assets that generate stable cash flows. Overall, we posted an investment yield of 3.7% in a challenging investment climate arising from the COVID-19 pandemic and increased market volatility.

Korean Re's Business Results for 2021
* The above figures are based on the company's separate financial statements, with foreign currency effects being excluded for underwriting income, investment income, and combined ratio.

In terms of top-line performance, Korean Re showed flat growth, with gross written premiums of KRW 8,373.6 billion in 2021. Our domestic business growth slowed to 0.8% compared to 2.7% a year earlier. While domestic personal lines of business modestly expanded to a 1.9% growth backed by long-term and motor businesses, we delivered negative growth in domestic commercial business as we held fast to strict and selective underwriting guidelines. The reduction also reflected the base effect from one-off growth involving satellite launch insurance in 2020.

Our overseas business growth also turned negative, with premiums decreasing by 2.5%, in part because we reduced our participation in underperforming property proportional treaties in China and the Americas. Other factors include non-renewal of unprofitable business and the high base in the previous year when we booked a large volume of new overseas life business. In the face of rising overseas losses related to COVID-19, we also adjusted our overseas life business portfolio, which resulted in a sharp drop in gross premium income. With ongoing market hardening, however, we will be able to gain growth momentum for our overseas business going forward.

Korean Re New Year's Concert in 2022

In early January 2022, Korean Re held a new year’s concert under strictly enforced rules on social distancing. It is Korean Re's tradition to hold a classical music concert at the beginning of a new year, but no event was held last year due to the COVID-19 pandemic and strong social distancing measures. This year, however, as the government implemented the Living with COVID-19 scheme, Korean Re was able to organize a concert and invite its clients, partners, employees, and their family members to the event in celebration of the new year.

Before the concert started, CEO Jong-Gyu Won took the opportunity to welcome new employees and their parents, although a large-scale party was not held due to safety concerns. The annual function traditionally would serve as a welcoming party for new employees and their parents with the presence of all members of Korean Re. CEO Won said, "I hope the concert will offer comfort to all of us in these difficult times of the pandemic."

This year the concert was all the more special as the Seoul Philharmonic Orchestra performed together with Yekwon Sunwoo, a renowned pianist, led by a world-famous conductor, Shi-Yeon Sung. They made wonderful performances with the program consisting of Glinka's Ruslan and Lyumila - Overture, Prokofiev's Piano Concerto No.2, and Tchaikovsky's Symphony No.4.

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Korean Re Signed a Coinsurance Agreement with Shinhan Life

In December 2021, Korean Re entered into a coinsurance agreement with Shinhan Life to help the life insurer manage its assets and liabilities based on economic value. As the first coinsurance business that we have assumed, the agreement is expected to give rise to a raft of new business opportunities for us going forward.

Over the last year, Korean Re analyzed the business portfolios of Shinhan Life to figure out the best possible way to meet the life insurer's needs. The recently signed the agreement will lead to individual transactions collectively worth up to KRW 500 billion. Shinhan Life had been seeking to make use of coinsurance arrangements as an asset and liability management (ALM) tool, and its coinsurance deal with Korean Re will help mitigate its financial risks resulting from a mismatch of assets and liabilities.

Coinsurance allows primary insurers to transfer all risks associated with the insurance policies they issue, including underwriting risk and interest rate risk, to reinsurers, as opposed to the traditional reinsurance structure where investment risk is not transferred.

Korean Re will continue to deepen its cooperative business relationship with Shinhan Life as both parties agreed to keep working together to expand the scope of business to be ceded under coinsurance deals. In other words, the recent coinsurance agreement is expected to help set the stage for both companies to increase bilateral transactions over the long term.

Building on the success of its first coinsurance business, Korean Re will seek to lead the growth of the domestic coinsurance market. While we remain committed to providing traditional reinsurance arrangements, we will continue to develop a wide range of coinsurance solutions not only for local life insurers but also for overseas insurers.

Since July 2020, Korean Re has formed a strategic alliance with The Carlyle Group, one of the top private equity fund managers in the world in a bid to to provide coinsurance solutions and related services to insurance companies in Korea. Both parties are working closely together to develop coinsurance solutions that are best suitable for primary insurers in the domestic market. The bilateral cooperation covers a wide range of areas from product design, structuring, and pricing to reinsurance asset management, required capital management, and new capital funding.

Korean Re Received a Korea Sharing Award 2021

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Korean Re has been honored with a Korea Sharing Award 2021, bestowed for the company's commitment to supporting the underprivileged in the community where it belongs and advancing the public good within the community and beyond. The award is annually presented by the Minister of Health and Welfare to individuals and corporations that have made exemplary contributions to society. Korean Re won the award on the recommendation of the Seoul Metropolitan Government and the Jongno District Office.

Korean Re has been a longtime supporter of the Jongno District of Seoul where its head office is located. Since 2004, it has donated food and daily necessities worth KRW 500 million to the disadvantaged in the community. Over the last 17 years, Korean Re has also provided financial support of KRW 300 million to teenagers from low-income families in the community.

These support initiatives have been part of our community involvement activities. We have long been demonstrating what it means for a business to be good for society and the communities where it operates. Through a program called "Sharing Hopes with Our Neighborhood," we help our close neighbors by serving food that is personally cooked by our employees. Under this program, we annually organize a community food-sharing event at a local Red Cross volunteer center where groups of Korean Re employees cook food and bake bread. The food is packed and then delivered to those underserved families living in the Jongno District.

As a reinsurer, Korean Re is a for-profit business, but insurance or reinsurance is all about helping people, communities and companies in times of distress and protecting them against unexpected events. This is what we are strongly committed to. We will continue to make sure that our community support is one of the key pillars of our corporate social responsibility agenda.

Korean Re's Plogging Day

Korean Re organized a plogging event in January 2022 as part of its environment protection campaign. Plogging, which comes from Sweden, means picking up waste while running. The word is a combination of the Swedish phrase "plocka upp" and "jogging." Plogging is a great activity in two ways: it helps preserve the environment and keeps ploggers healthy.

The event was participated by a group of 25 Korean Re employees including 17 young men and women who just joined the company in 2022. The Korean Re ploggers picked up litter while walking along the main streets in the Jongno District where Korean Re’s head office is located. They walked about eight kilometers for three hours while filling up their trash bags. They used biodegradable trash bags, which are compostable and designed to break down into compost.

Korean Re strongly upholds the value of corporate contributions to the protection of the environment and society. Plogging can be a simple and easy way for Korean Re to increase its social contributions. It is also a perfect group activity for employees who want to improve their fitness and join volunteer programs.

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