Korean Re News
Korean Re's Business Results for the First Half of 2021
Korean Re delivered strong underwriting performance for the first half of 2021, with underwriting income surging by 82.3% to KRW 41.2 billion in spite of COVID-19 losses on overseas business and weak underwriting results of personal lines of business. A combination of factors contributed to this robust business performance, including favorable pricing trends in most commercial lines of business and fewer large-loss events. The combined ratio improved to 98.1% compared to 98.8% a year earlier. In particular, our domestic commercial business sharply improved to an 86.2% combined ratio from 98.8%. The strong improvement in underwriting results led our net income to grow by 1.8% to KRW 120.3 billion for the first six months of the year.
Investment income declined to KRW 116 billion due to smaller gains on the sale of bonds, but returns on loans and alternative investments remained fairly good, generating an investment yield of 3.6%. This solid investment yield came amid a persistently low yield investment climate. We have continued to focus on rebalancing our investment portfolio to maintain an asset mix that best reflects our risk and return profile.
In terms of premium growth, we suffered a marginal setback. Our gross written premiums decreased by 0.3% to KRW 4,168.3 billion in the first half of 2021 due to a reduction in overseas business and domestic commercial business. The contraction reflected our strict and selective underwriting guidelines, non-renewal of unprofitable accounts in some territories, and the high base in the same period of the previous year due to large-volume processing of statements of accounts from overseas life business. However, ongoing market hardening is expected to support the top-line growth of our overseas business later this year.
Our domestic business growth slowed to 1.2% in the first half of the year compared to 3% in the same period of the prior year. Commercial lines of business showed some contraction in premium growth mostly due to the base effect from one-off growth involving satellite launch insurance in 2020. On the other hand, personal lines of business recovered to a 3.5% growth backed by long-term and motor businesses, but our focus remained on portfolio management to improve the overall profitability of personal lines.
Korean Re's Unwavering Commitment to Corporate Social Responsibility
Korean Re has been strongly committed to the value of corporate social responsibility. In addition to doing good business, we seek various charitable ways to do good things for the communities where we live and work, making a positive impact on society. Our success as a company will be driven not just by how well our business is operated commercially, but also by how well we support the communities in which we operate.
Recently, there was a temporary suspension of our in-person participation in volunteering projects due to COVID-19. Despite a reduction in the physical time we spent on volunteering works, we have continued our support for good causes. Besides the programs we have been already supporting, we started to engage in several new initiatives in 2020. For instance, we began sponsoring Seoul Rehabilitation Center for the Cerebral Palsied in February 2020, which was established in 1990 to support those suffering from cerebral palsy and help improve their quality of lives. In particular, the financial resources we contributed were used for purchasing specialty medical beds for cerebral palsy patients.
Korean Re also signed an MOU with Korea Association for Suicide Prevention in September 2020 to support a suicide prevention program for high school students. Korea has the highest suicide rate among OECD members, and suicide is the leading death cause among teenagers. Recognizing the severity of suicide and mental health issues in Korea, we will continue to sponsor the program with a view to reducing suicides and suicide attempts among young students and raising awareness of suicide prevention and early intervention.
Another new program that we started to support involved the strengthening of social safety net in a community where Korean Re's head office is based. Specifically, we provided financial support for the installation of fire prevention equipment or devices such as smoke detectors at places that are vulnerable to fire events in the community. Our support was also intended to help people on welfare buy a government-sponsored personal accident insurance.
(Re) insurance is all about helping people, communities and businesses in times of distress and protecting them against unexpected events. This is what Korean Re is committed to. We will continue to do good things for society and live up to our corporate social responsibility, while doing good business to support our clients and stakeholders.