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Korean Re's Business Results for the First Nine Months of 2021

Korean Re achieved strong business results for the first three quarters of 2021, with net income increasing by 29.8% to KRW 177.9 billion, a record-high nine-month profit. This robust bottom-line performance was driven by both underwriting and investment operations. We reported KRW 40.7 billion in net underwriting income, and the combined ratio improved to 98.9% from 99.8% a year earlier amid favorable pricing trends in most commercial lines of business and fewer large-loss events in domestic commercial lines.

Combined Ratio
*The above figures are based on the company's separate financial statements, with foreign currency effects being excluded. The combined ratio for the overseas business would decrease to 93.4% as if basis excluding COVID-19 losses of KRW 71.9 billion.

We made an impressive improvement in domestic commercial business, with its combined ratio falling to 87.7% from 100.3%, whereas our overseas business experienced weaker underwriting results due to COVID-19 losses and natural catastrophe losses. The combined ratio for personal lines of business continued to remain above 100%.

We saw our investment profit increase by 5.2% to KRW 192.2 billion, backed by returns on alternative investments. In spite of decreased gains on the sale of bonds, the yield on alternative investments increased solidly 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 3.9% amid a low-yield climate.

Korean Re's Business Results for the First Nine Months of 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.

Our top-line growth turned positive, with gross written premiums rising by 1.7% to KRW 6,379.3 billion in the first nine months of 2021 on the back of domestic business growth. Led by personal lines, our domestic business growth accelerated to 4.3% compared to 2.6% a year earlier. Personal lines of business recovered to a 6.9% growth backed by long-term and motor businesses, but our focus remained on portfolio management to improve the overall profitability of personal lines. We delivered weak growth performance in domestic commercial business as we held fast to strict and selective underwriting guidelines. It also reflected the base effect from one-off growth involving satellite launch insurance in 2020.

On the other hand, we reported negative growth in overseas business, with premiums declining by 6%, 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 same period of the previous year when a large volume of new overseas life business was booked at one time. With ongoing market hardening, however, we will be able to gain growth momentum for our overseas business by the end of this year.

Korean Re Obtained a Reinsurance Intermediary License in New Jersey

Korean Re has obtained a reinsurance intermediary license for KoreanRe Insurance Services, Inc. from the Department of Banking & Insurance in the State of New Jersey, the United States. The reinsurance intermediary will help Korean Re build stronger brand recognition in the U.S. by serving the interests of insurance companies in the country and securing more flexible and creative reinsurance solutions.

Currently, Korean Re has a liaison office in New York, but it is not allowed to conduct actual business transactions. As a reinsurance intermediary, KoreanRe Insurance Services, Inc. can actively develop new business opportunities with a relatively smaller amount of capital than a branch or subsidiary.

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Since Korean Re announced its plan on a reinsurance intermediary in the U.S. in September 2020, it has made swift progress in setting up the business. In February 2021, Korean Re successfully established a registered business in New Jersey, followed by the license approval in September. KoreanRe Insurance Services, Inc. is expected to start operations by the end of this year.

The establishment of the new business in the U.S. is part of Korean Re's global expansion strategy. Since CEO Won took office in June 2013, he pushed ahead with an overseas business expansion drive, leading Korean Re to broaden its global business network. Over the past eight years, Korean Re built six new presences, i.e. Korean Re Underwriting Ltd. at Lloyd's of London in the U.K., the Labuan branch in Malaysia, the Dubai DIFC branch in the UAE, Korean Reinsurance Switzerland AG in Zurich, Switzerland, the Shanghai branch in China, and a representative office in Bogotá, Colombia.

The new reinsurance intermediary, which represents another important milestone in our efforts to expand into global markets, will first target to attract quality business in the northeastern part of the U.S. and then gradually tap into other parts of the country. Backed by the activities of the reinsurance intermediary, we will continue to raise our business profile and drive our business growth in the U.S., which has a global market share of 40% in terms of premium income.

Korean Re Became the 10th Largest Reinsurer in the World

Korean Re ranked 10th in the world in terms of gross premiums written (GPW) in 2020. Our global ranking was up one notch from the previous year, with our GPW increasing to USD 7,777 million according to AM Best, a global credit rating agency. Korean Re is the only local financial company in Korea that ranks among the global top 10 players in its industry.

One of the key drivers for the growth was our global business expansion backed by effective risk management. Korean Re now has 12 presences across the world, and six of them have been established over the last six years. This effort to expand into global markets resulted in steady growth of our overseas business. In 2020, our overseas business accounted for 26% of the total GPW, up from 21% in 2015. In addition, we have recently obtained a license for a reinsurance intermediary in the U.S., which will start operations later this year.

Korean Re has also been keen to portfolio management in a bid to enhance its profitability. As a result, we were able to achieve robust business results with a combined ratio of 99.6% in 2020 according to the calculation of AM Best in spite of a challenging business environment amid the pandemic. It is also noteworthy that Korean Re was the only reinsurer that recorded a combined ratio of below 100% among the 20 largest reinsurers in the world. The average combined ratio of the global top 20 reinsurers was 105.7% in 2020.

Munich Re took the number one spot, followed by Swiss Re, Hannover Re, and SCOR. To achieve greater precision in its annual ranking of global reinsurance companies, AM Best said this year's analysis included only year-end gross reinsurance premiums written, removing any primary premiums.

Since Korean Re joined the ranks of the world’s top 10 reinsurers for the first time in 2011, it has achieved stable business growth, with its ranking remaining mostly steady, close to the 10th spot. We will continue our effort to explore new markets and execute effective portfolio management strategies so that our competitive strength can be maintained and even enhanced among the leading global reinsurers.