annual report 2006 · kim, eui hyeon bae, ho kyung yeon, je hoon hwang, seong tae park, hyun jung...

Total Risk Solution Partner Caring For Your Happiness Forever

ANNUAL REPORT 2006

CONTENTS

PROFILE 1

FINANCIAL HIGHLIGHTS 2

MESSAGE FROM THE CEO 4

CORPORATE DIRECTORY 7

CHANGE and

CHALLENGEVISION & STRATEGIES 10

BRAND STRATEGY 12

GLOBAL STRATEGY 13

TRUST and

HAPPINESSETHICAL MANAGEMENT 16

CORPORATE COMMUNITY RELATIONS 18

GROWTH and

FUTUREAUTOMOBILE INSURANCE 22

LONG-TERM INSURANCE 24

COMMERCIAL INSURANCE 26

ENTERPRISE RISK MANAGEMENT 28

SF&M MEANS... 30

FINANCIAL SECTIONMD&A 32

FINANCIAL STATEMENTS 42

WORLDWIDE NETWORK 86

SAMSUNG AFFILIATES 87

CORPORATE HISTORY 88

1ANNUAL

REPORT

2006

PROFILE Samsung Fire &

Marine Insurance

Dedicated to value, growth, and securitySamsung Fire & Marine Insurance Company (or SF&M) was established in January 1952 as AnkukFire & Marine Insurance and was renamed in December 1993. Today, it is the leading Korean non-life insurance company in terms of size, performance, and financial structure. The company is alsoactively expanding oversea markets-including the US, Europe, China, Indonesia, Japan, andVietnam-where new sales networks and claim service systems have been established throughstrategic alliance with advanced players in major cities. The overall goal is to grow into a world-class, comprehensive insurance service provider.

SF&M had total assets of KRW 18,511 billion and total shareholders’ equity of KRW 3,203 billionas of fiscal 2006, which ended on March 31, 2007. Direct premiums written and net incomeamounted to KRW 8,242.6 billion and KRW 341.2 billion, respectively. The solvency margin stoodat 388.1%, while earnings per share were KRW 8,450.

The company has dedicated itself to winning trust through a combination of ethical management,customer satisfaction, social contributions, and financial soundness. All employees are committed topractice a management of sharing and sustainability.

SF&M is committed to heighten its shareholder value by increasing its competitiveness, introducingcreative and efficient financial products, services, and technologies, and cultivating top-notchprofessionals.

PROFILE

2

Total Risk Solution Partner

Caring For Your Happiness Forever

CHANGE AND INNOVATION

FINANCIALHIGHLIGHTS

Direct Premiums Written 8,243 7,256 13.6%

Net Premiums Earned 7,263 6,557 10.8%

Increase in Catastrophe Reserves 38 63 -39.2%

Underwriting Income -197 - 184 -7.2%

Investment Income 703 591 18.9%

Operating Income 506 407 24.3%

Non-Operating Income -28 - 47 - 40.6%

Pre-Tax Net Income 478 360 32.6%

Net Income 341 262 30.2%

Adjusted Net Income 380 325 16.7%

Adjusted EPS (in Won) 8,450 7,281 16.1%

YoYFY2006 FY2005

(In billions of Korean Won)Summary of Income Statements

Cash & Equivalent 311 131 138.0%

Stocks 1,751 1,720 1.8%

Bonds 9,059 8,091 12.0%

Loans 3,589 3,108 15.5%

Fixed Assets 959 928 3.4%

Non-Invested Assets 2,841 2,403 18.3%

Total Assets 18,511 16,381 13.0%

Policy Reserves 12,468 10,711 16.4%

Catastrophe Reserves 935 897 4.3%

Other Liabilities 1,012 1,005 0.7%

Separate A/C Liabilities 893 784 13.9%

Total Liabilities 15,309 13,397 14.3%

Shareholders’ Equity 3,203 2,984 7.4%

Total Liabilities and Shareholders’ Equity 18,512 16,381 13.0%

Solvency Margin Ratio 388.1% 414.9% -26.8%P

YoYFY2006 FY2005

(In billions of Korean Won)Summary of Balance Sheet

3ANNUAL

REPORT

2006

FINANCIAL HIGHLIGHTS Samsung Fire &

Marine Insurance

Direct Premiums Written, by line(In billions of Korean Won)

FY2006 2,761 4,546 936 8,243

FY2005 2,458 3,957 842 7,257

FY2004 2,522 3,500 783 6,805

Net Income(In billions of Korean Won)

FY2006 341

FY2005 262

FY2004 278

Investment Income(In billions of Korean Won)

FY2006 703

FY2005 591

FY2004 550

Operating Income(In billions of Korean Won)

FY2006 506

FY2005 407

FY2004 444

Total Assets(In billions of Korean Won)

FY2006 18,511

FY2005 16,381

FY2004 14,477

Total Liabilities(In billions of Korean Won)

FY2006 15,309

FY2005 13,397

FY2004 11,599

Shareholders' Equity(In billions of Korean Won)

FY2006 3,203

FY2005 2,984

FY2004 2,878

General

Long-term

Automobile

5ANNUAL

REPORT

2006

MESSAGE FROM THE CEO Samsung Fire &

Marine Insurance

Samsung Fire and Marine Insurance achieved its target results in fiscal year 2006 in spite of

operating in a difficult environment, both at home and overseas. Some of the complications

that faced included economic slowdown, a strong won, uncertainties in real estate prices, and

fierce competition throughout the industry. We owe our shareholders a debt of thanks for their

unswerving support and trust.

Direct premiums written grew by 13.6% over the year to 8.2 trillion won, while net income

was 341.2 billion won. Total assets increased by 2.1 trillion won to 18.5 trillion won. We

established an additional catastrophe reserve of 38.4 billion won, solidifying our financial

position all the more.

We became the only insurance company in Korea to earn a fifth-straight “A+ (Superior)”

rating from A.M. Best, a worldwide insurance rating and information agency. We also received

an “A+ (Stable)” rating from S&P for the fourth consecutive year-another industry first. In

addition, we ranked first in surveys by three domestic major customer satisfaction index-rating

agencies for the fifth year in a row.

We were also honored to receive the Differently Abled Human Rights Award from the Korea

Differently Abled Federation in recognition of our “500-Won Gifts of Hope” campaign to

improve the living conditions of such people. We also obtained the Presidential Commendation

at the Korea Brands awards. Last-but far from least-our share price continued to hit new

highs, enhancing our brand power and enterprise value even more.

Unfortunately, fiscal 2007 is expected to be a year with difficulties-including a delayed recovery

in consumer spending, declining exports, unlimited competition in financial circles following the

conclusion of a free trade agreement between Korea and the U.S., and the political uncertainty

surrounding the year’s-end presidential election. This means that our operating environment

faces tough challenges. The opening up of the bancassurance market for auto and long-term

insurance in 2008 will further intensify competition among financial business sector operators.

Despite these negative factors, we will do our best to reap solid accomplishments in fiscal 2007,

making more good use of our experience in turning crises into opportunities.

Samsung Fire and Marine Insurance wishes tocontribute to society by offering the finest inproducts, services, talents, and technologies.

MESSAGEFROM THE CEO

6




To this end, we have decided that fiscal 2007 will be a year of change and innovation. We

plan to put four core strategies into action.

First, we will work to bring the auto insurance business back to normal from the many

difficulties it has faced over the past few years. To do so, we will develop advanced price

models to increase our number of high-quality customers and secure price competitiveness. At

the same time, we will reform our auto insurance expense structure by overhauling claims

service processes from scratch.

Secondly, we will build stable growth foundations for long-term insurance, which we see as

our future growth engine. To guarantee stable growth and continuous earnings in this sector,

we will improve our product structure, reform our business principles, and devote more effort

to customer satisfaction-oriented sales.

Thirdly, we will continue to augment our competitiveness in the area of face-to-face

channels. This flows from our belief that the ability to compete in the field is directly connected

to our overall competitiveness. In order to bolster our competitiveness in this sector, we will

develop more rigorous criteria for their establishment and improve their way of businesses.

Last, but not least, we will create an exciting organizational culture by building an

independently operating management system through a bold delegation of responsibility. The

result of this will be to create an energetic, dynamic, and creative company that can thrive on

change, innovation, and challenge.

We are determined to put these four core strategies into practice so that we can develop into a

world-class insurance company. By maximizing our profitability, serving our customers with

devotion, and managing with creativity, we will remain the leading Korean non-life insurance

provider. I look forward to your constant support and encouragement.

Thank you.

May 31, 2007

Hwang, Tae Seon

President and CEO

CORPORATE DIRECTORY7ANNUAL

REPORT

2006

CORPORATE DIRECTORY Samsung Fire &

Marine Insurance

HWANG, TAE SEON

President & CEO

YOON, HYUNG MO

Executive VP

SON, GWANG KI

Inspection Commissioner

KIM,YOUNG CHUL

KIM, KANG CHUNG

LEE, WON CHANG

HONG, JI HO

Outside Director

LEE, KYE HA

LIM, SUNG ZIN

BRIAN O'BRIEN

LEE, JAE WOOK

YOON, YONG AM

JUNG, YOUNG MAN

KIM, SEUNG EON

CHAE, MOON PYO

NAM, JAE HO

Executive VP

HWANG, HAI SUN

CHO, YOUNG HWAN

EDWIN BETZ

KIM, TAE HWAN

KO, YOUNG CHANG

SHIN, KEE CHUL

PARK, JUNG IL

KIM, EUI HYEON

BAE, HO KYUNG

YEON, JE HOON

HWANG, SEONG TAE

PARK, HYUN JUNG

SHIN, KI HONG

LEE, SANG JOO

KIM, SUNG JUN

HWANG, SUN SEOL

CHO, JIN IL

Vice President

CHANG, WON KYUN

LEE, JI SEOK

JUNG, HOE YONG

PARK, JONG KOO

KWON, TAE MYUNG

CHOI, YOUNG MOO

KIM, JONG WOO

KO, JUNG BIN

KWAK, NO GIL

CHOI, YOUNG KAP

LIM, YUN BAE

KIM, SUNG GYU

OH, HOON TAEK

WHOANG, HAG GUEN

CHOI, BYUNG SEOK

LEE, YANG HEE

LEE, SUK HAN

Thriving on change, facing all challengesSamsung Fire and Marine Insurance has the experience and expertise to transform risksinto opportunities. Because of this, we have garnered numerous awards and enjoyedbetter-than-average earnings in the market-even when faced with an extremelyvolatile operating environment. As we continue growing into a world-class financialservices provider for the 21st century, we will continue our tradition of thriving onchange and facing all challenges.

VISION andSTRATEGIES

VISION & STRATEGIES 10

BRAND STRATEGY 12

GLOBAL STRATEGY 13

10



CHANGE AND CHALLENGE

Become a total risk solution providerSamsung Fire and Marine Insurance’s vision is to become a total risk solution provider for the21st century

Our underlying goals are to improve our customer’s quality of life, realize sustainablegrowth and earnings for our shareholders, practice a management of sharing for society,form “win-win” partnerships with our sales organizations, and grow with our employees.

Our shared values are fourfold. “Customer Satisfaction” reflects the fact that customers driveour corporate growth. “Ethical Management” means acting in accordance with rules andregulations. “Team Work” refers to building a cooperative organizational culture and “Future-Oriented” to operating for profit-based, sustainable growth.

Three strategies for realizing management vision and goalsSamsung Fire and Marine Insurance is a first-class, total risk solution provider. It offers itscustomers reliable risk management and financial services and is committed to financialsoundness and developing foundations for sustainable growth. Our goals are to increase ourcompetitiveness, diversify our business operations, and become a comprehensive financialservices provider.

August 23Established Beijing branch office-the first local subsidiary of aforeign based corporation

The company now has a full-scale insurance operation in Beijing. This allowed itto enter the Chinese underwriting business, targeting Korean companies andforeign-based investment organizations while also providing convenientinsurance services to individual Korean residents. This marked the first time thata foreign based insurance operator has jumped the high entry barriers imposedby the Chinese government.

October 20 Introduced Consumer Complaints Management System (CCMS)

The company became the first non-life insurer in Korea to introduce aConsumer Complaints Management System (CCMS) as part of its customersatisfaction management efforts. It enables companies and consumers to solveproblems by anticipating customer complaints in advance and proactivelycoping with those that do arise. This system will assist the company indeveloping a global-standard customer grievances management system, furtherstrengthening customer trust and its overall competitive position.

VISION andSTRATEGIESGrowing into a world-class, comprehensivefinancial service providerfor the 21st Century

2006 HIGHLIGHTS & AWARDS

Vision

Strategies

11ANNUAL

REPORT

2006

VISION & STRATEGIES Samsung Fire &

Marine Insurance

Strengthen core competenciesWe will enhance our profitability and core competencies by working to cope proactively withrapidly changing market demands and emphasizing our unique position in the marketplace.- Strengthen insurance technologies (e.g., products, underwriting, and reinsurance)- Develop high-quality direct sales channels and financial consulting capabilities- Strengthen compliance system

Diversify insurance-related businessesWe will exploit promising new markets and bolster our competencies in overseas operations inpreparation for globalized competition with other financial players, including banks and life insurers.- Enhance asset management competencies- Develop new risk management capabilities (e.g., health, retirement, and group)- Improve overseas business acumen

Become a comprehensive financial services providerWe will grow into a comprehensive financial services company. This will allow us to offer ourcustomers sophisticated hybrid financial instruments in insurance and other financial service areas.- Realize economies of scale through modular growth- Develop a competitive, multiple-channel structure- Provide total risk solutions to satisfy customers

November Garnered highest credit rating among domestic private companies

The company received an “A+ (Stable)” rating-the highest one possible for domesticprivate companies-from Standard & Poor’s (S&P) for the fourth year in a row. It alsoobtained an “A+ (Superior)” rating from A.M. Best, a worldwide insurance ratingand information agency, for the fifth consecutive year. A.M. Best praised “SamsungFire and Marine Insurance’s advanced management strategies and risk managementabilities, along with its strong capital position, market dominance, and stableearnings structure”.

November 27Installed “Metro Pole 50”

The Samsung building, which is located in Euljiro, Seoul, is now graced with asculpture entitled “Metro Pole 50”. Certain to become another enjoyable sightfor customers, citizens, and tourists visiting the Seoul Plaza, this artwork servesas a corporate image publicity tool while providing people with a newcommunity space.

12



CHANGE AND CHALLENGE

Leading Korea’s auto insurance marketSamsung Fire and Marine Insurance opened a new era in Korea’s auto

insurance market in 2002 by introducing “Anycar”. An amalgam of “Anytime, Anywhere, Anything,+ Car”, Samsung “Anycar” has since become a leading auto insurance brand that offers customersprompt and efficient solutions 24 hours by 7 days. It has been hailed as a new model of branddevelopment and customer service enhancement even by other financial companies.

We also launched an industry-first automobile insurance consulting service in 2004. “SamsungConsulting Anycar Automobile Insurance” offers customized policies that match the characteristics ofeach customer-each one of which has been designed by our professional sales organization of riskconsultants, RCs. We have developed the nation’s largest claims service network to strive to keep ourcustomers satisfied by settling claims as quickly as possible. In the future, we plan to provide a totalauto life consulting services-a complete package of services related to all facets of automobileownership and usage.

Offering protection for health, wealth, safety and moreThe insurance industry is currently seeing a rapid breakdown of the

boundaries between non-life insurance and life insurance, due primarily to the dramatic changes ofthe financial environment. This means that long-term insurance has become an important growthengine for non-life operators.

We created Samsung “Allife” to enhance our competitiveness in the long-term insurance market bydelivering clear product benefits to customers. An amalgam of "All, Always, and Life", it includessuch long-term insurance products as disease, accident, fire, property, and general liability. Theprimary attraction of long-term, non-life insurance is that it runs the gamut of every aspect of acustomer’s life-from minor illnesses and property damages to protection against misfortunes thatcustomers face in their daily lives. We have even anticipated the competition by introducing a newindustry term-”living insurance”. The purpose of this dramatic change was to facilitate a betterunderstanding among our customers of what we can do for them. From hereon in, our emphasis willbe on “living”, rather than on “life”.

BRANDSTRATEGYAdvancing “Two-Top”brand strategies bypromoting “Anycar”, ourhigh-quality autoinsurance brand, and“Allife”, our signaturelong-term insuranceproduct brand

DecemberLed the pack in customer satisfaction surveys

The company was placed first in three major domestic customer satisfactionsurveys. These included the Korean Standard Service Quality Index (KS-SQI)(first for five years in a row), the Korean Customer Satisfaction Index (KCSI)(first for nine years in a row), and the National Customer Service Index (NCSI)(first for six years in a row).

January 18Named one of “Fab 50” Companies in the Asia-Pacific region by Forbes

The company was named one of the 50 most promising companies in the Asia-Pacific region in 2006 by Forbes, a US-based economic journal. This resultedfrom comprehensive evaluations of long-term prospects, sales, operatingincome, and other factors. The survey targeted the region’s publicly tradedcompanies with revenue or market capitalization of at least USD 5.0 billion andincluded 21 business sectors in 10 countries. We were the only player in theinsurance sector to be included in such august company.

13ANNUAL

REPORT

2006

BRAND STRATEGY

GLOBAL STRATEGY

Samsung Fire &

Marine Insurance

Expanding overseasSamsung Fire and Marine Insurance entered the overseas non-life insurance market by opening aLondon office in 1978. At first, our overseas operations were mainly focused on advanced nationssuch as the United States, where we established a branch in 1990. In the late 1990s, with Asiaemerging as a promising market due to rapid increases in investments and dramatic advances byKorean companies, we increased our activities in this area by opening subsidiaries in Indonesia andVietnam and a branch in Shanghai. Later, in April 2005, we became the world’s first non-lifeinsurance company to set up a local subsidiary in China- a rising new economic power and primeinvestment base for many Korean companies.

Our overseas operations as of June 2007 include 3 local subsidiaries (in Shanghai, Jakarta, and HoChi Minh City), 2 branches (in New York and Beijing), and 4 offices (in Beijing, Qingdao, Tokyo, andLondon) in six countries.

Developing overseas marketsOur international bases offer high-quality insurance services to overseas customers. We are increasingour ability to compete in the international arena by researching advanced insurance services and dataand adapting them to our own use.

In order to build bases for differentiated customer services overseas, we are improving our consultingcapabilities through comprehensive risk management and insurance service providing systems. Wealso plan to increase the profitability of our overseas underwriting bases.

One of our primary goals is to increase our presence in new markets with great growth potential-including China and Vietnam. This is being done to create additional stable earnings sources. We willcarry out similar operations in other promising countries and regions.

Our overall strategy is to continue expanding overseas by emphasizing our expertise in risk managementand our knowledge of advanced management techniques. This will give us a bridgehead ininternational markets and add to our profile as a world-class non-life insurance service provider.

GLOBALSTRATEGYUsing steady growth tobecome a world-class,total risk solution partner

AWARDS RECEIVED

November 29, 2006Grand Prize at the 2006 Korea Brand Award Ceremony

December 12, 2006Presidential Citation at the First and Foremost Movement for Persons withDisabilities Awards Ceremony

Ministry of Culture and Tourism Award at the Corporate CommunicationAwards Ceremony

December 20, 2006President’s Award at the Digital Innovative Enterprise Award Ceremony

January 9, 2007Samsung Award of Honor from the Samsung Traffic Safety Research Institute

June 14, 2006Grand Prize at the Korea Customer Satisfaction Awards Ceremony

June 26, 2006Grand Prix in the Korea Services Contest

Creating a happier and more trusting worldSamsung Fire and Marine Insurance is committed to transparent management and a culture ofsharing that leads to satisfied and trusting customers. Our goal is to help you design dreams andhopes that will create greater values and build a better society for everyone.

SOCIALRESPONSIBILITYMANAGEMENT

ETHICAL MANAGEMENT 16

CORPORATE COMMUNITY RELATIONS 18

16



TRUST AND HAPPINESS

ETHICALMANAGEMENTResponding to the need forethical decision-making toguarantee long-term success

Ethical Managementstrengthening our reputationIn 2002, Samsung Fire and Marine Insurance committed itself to practicing ethicalmanagement. Its basic directions can be summarized under the heading “3C”, meaning“Clean, Change, and Challenge”. We also developed a Code of Ethics. It focuses on three keyareas: "transparent management" (to earn people's trust), "fair trade" (to respect free andfair competition), and "an open and honest organizational climate" (to prevent illegal andcorrupt practices.)

In addition, we established a completely new set of sales standards that define and guide theprocess from start to finish. In 2005, the company outlined “Samsung Values and SamsungBusiness Principles”. All our executives must abide by these principles, since they reflect ourcommitment to open, honest, and transparent management. Their pledges must be renewedevery year.

All the staff members at Samsung Fire and Marine Insurance-from the CEO down-know thatethical management is essential to our success. Our president and CEO, Mr. Hwang Tae-seon,constantly stresses, in both internal and external forums, that ethical management is anorganization’s single greatest asset in ensuring its competitiveness. In his 2007 New Year’sspeech, for example, Mr. Hwang reiterated the need to adhere to basic business principles andenhance the company’s overall competitiveness. Just as importantly, he affirmed that ethical,honest, and open management can prevent the generation of compliance risk, since it leads to

ETHICAL MANAGEMENT Samsung Fire &

Marine Insurance

fairness in such areas as product planning, sales, compensation, and services and forces anorganization to respect and follow all relevant rules and regulations. As one sign of hispersonal and professional commitment to ethical management, Mr. Hwang attended the 2007B.E.S.T. (Business Ethics is the Source of Top Performance) Forum Seminar and signed its CEOPledge. This took place at a meeting hosted by the BEST Forum and the Institute for IndustrialPolicy Studies on March 7, 2007.

Transparent Managementensuring ultimate values of our stakeholdersIn 2001, Samsung Fire and Marine Insurance became the first Korean non-life insurancecompany to proclaim its adherence to the principles and practice of fair trade. We thendeveloped “Compliance Program” to put these words into practice. In 2005, we establishedInternal Trade Committee to expedite the development of transparent managementoperations. Its membership is limited to outside directors. We also developed the “JeongdoJikimi”, a whistle-blowing program, to facilitate the anonymous reporting of wrongdoing andmalfeasance within the company, with an emphasis on prevention rather than punishment.We also offered classes on ethical management throughout the year.

Centering on matters that have been reported within the company and on examples of bothoutstanding and inadequate accomplishments, they are designed to involve the entireworkforce in sharing our values.

17ANNUAL

REPORT

2006

CORPORATECOMMUNITYRELATIONSSharing Happiness andSecurity

We are committed tosharing with our neighborsin need

Participating in a broadrange of socialcontribution activities intandem with communityservice groups

Traffic Safety ProgramsIn keeping with the nature of its operations, Samsung Fire and Marine Insurance regard“traffic safety culture” as the core theme of its social contribution efforts. Some of theprograms that SF&M participates in are, the prevention of traffic accidents involving children,support for the children of traffic accident victims, and training in preventing traffic accidents.In addition, the Samsung Traffic Safety Research Institute and the Samsung TransportationMuseum offer a variety of programs on traffic safety. These include a children’s traffic safetytraining center, the publication of safety education materials, and a children's biking licensingcourse.

The company has also carried out a “safety jacket distribution campaign” since 2007,targeting beginning students at elementary schools. The jackets are given to elementaryschools across the nation to promote traffic safety and remind everyone that children shouldbe treated as “walking traffic lights”.

Support for the differently abledWe are also committed to help the differently abled live fuller and more independent lives.Some of our projects, which are offered in tandem with the “You First Campaign Group”,include social adjustment training programs for the visually impaired and the wheelchair-bound and campaigns to improve the public awareness of the differently abled.

18



TRUST AND HAPPINESS

2006

August 28 Held “For Safe Driving”, a public service event advocating traffic safety

September 23 Held a Sharing Festival for Chuseok (Korean Thanksgiving Day). It was attended by employees’ families, residents of childcare institutions and schools for the visually impaired, and others

December 1 Received the 2006 Differently Abled Human Rights Award from the Korea Differently Abled Federation

December 4 Donated 1,000 bells to the Korean Salvation ArmyDecember 12 Received Presidential citation from the “First and Foremost

Movement for Persons with Disabilities” in recognition of our participation in its activities

SOCIAL CONTRIBUTION HIGHLIGHTS, FISCAL 2006

We have donated specially trained guide dogs to the visually and differently abled since 1994.They come from the Samsung Guide Dog School-the only Korean guide dog institution that ismanaged and funded by a corporation. The school trains guide dogs to encourageindependence and self-reliance among the visually impaired. We also supported amendmentsto the Welfare Law for the Differently Abled recognizing the value and broadening the statusof these unique and valuable animals.

Samsung Anycar Volunteer GroupThe “Samsung Anycar Volunteer Group” is another means by which we fulfill ourresponsibilities as a corporate citizen. Consisting of over 180 clubs, the group engages in abroad array of volunteer activities across the nation, including blood donation campaigns andhelping the differently abled to adapt to society. In addition, our employees raise about KRW0.3 billion every year through the “Dream Fund”, a matching-grant program.

We inaugurated the “One Division-One Rural Community” partnership campaign in August2005 and have now formed helping relationships with 105 rural population centers. Inaddition, Samsung Risk Consultants operate the "500-Won Gift of Hope Smile Fund” bydonating KRW 500 per long-term insurance contract signed since May 2005. This programhelps improve living conditions for the differently abled.

Samsung Fire and Marine Insurance will involve itself in even more “management of sharing”community-centered activities in the future.

19ANNUAL

REPORT

2006

CORPORATE COMMUNITY RELATIONS Samsung Fire &

Marine Insurance

2007

February Held nationwide “Blood Service of Love Campaign”February 26 Held a Youth Economic Camp for the Differently Abled.

Its goals were to help those attending learn about the Korean economy and improve other people’s understandings of the differently abled

February 27 Donated college tuition fees to children of traffic accident victims

March 22 Initiated the “Safety Jacket Distribution Campaign”,targeting beginning students at elementary schools as part of our children’s traffic safety campaign

March 27 Inaugurated “2007 Samsung Anycar Volunteer Group”April 15 Held “Walk of Love with the Wheelchair-bound” event in

commemoration of the Day for the Differently Abled

Increasing security and stability-for steady growth and a brighter futureSamsung Fire and Marine Insurance has maintained its industry leadership and enjoyeddynamic growth over the past 55 years. Armed with the expertise and experience tocontinue on this trajectory as this new century unfolds, we dedicate ourselves to breakingnew ground in our search for the ultimate in insurance services and technologies.

REVIEW OF OPERATIONS

AUTOMOBILE INSURANCE 22

LONG-TERM INSURANCE 24

COMMERCIAL INSURANCE 26

ENTERPRISE RISK MANAGEMENT 28

SF&M MEANS... 30

22



GROWTH AND FUTURE

AUTOMOBILEINSURANCE

The proportion of online automobile insurance sales in Korea in fiscalyear 2006 was 13.3% - 3.1% higher than the previous year. Thisgrowth reflects the fact that all domestic insurance companies, exceptSamsung Fire and Marine Insurance, have advanced into this fieldsince it has been first introduced in October 2001.

The traffic accident rate increased by 3.7% over the year to 10.4% ofall registered vehicles, resulting in reduced profits of the autoinsurance business. These losses were due to rises in propertydamage and collision accidents.

To cope with growth in direct sales and competition for externalgrowth, Samsung Fire and Marine Insurance decided to set rates thatmatched the real costs of insuring its customers. Our goal was toprovide customers with quality products and services rather than pricecompetition.

We made improvements in the “module-type” underwriting systemthat we had first introduced in 2005 and enhanced the underwritingactivities of our sales organizations-including financial planners andagents-by improving on our screening processes. In addition, wedeveloped more flexible underwriting policies that focused onmaximizing profitability through reflecting market changes.

Most importantly, we increased the competitiveness against directsales structures through the development of consulting-type products.For example, sales of our “Samsung Consulting Anycar AutomobileInsurance” grew dramatically, accounting for 73.6% of all ourautomobile policies at year-end compared to 56.9% the year before.

Providing efficient and speedypayments and differentiated vehiclemanagement services to our customers

Most importantly, we increased ourcompetitiveness against direct salesstructures through the development ofconsulting-type products.

2,760.5

2,457.5

Direct Premiums(In billions of Korean Won)

FY2006

FY2005

28.6

28.0

Market Share(%)

FY2006

FY2005

23ANNUAL

REPORT

2006

AUTOMOBILE INSURANCE Samsung Fire &

Marine Insurance

This July, we introduced “Samsung Corporate Anycar AutomobileInsurance” to enhance our competitiveness in the business relatedfield.

We also strengthened our traffic accident prevention activities. In2006, the Samsung Traffic Safety Research Institute aired 296 public-service announcements on this matter through various media outlets,including broadcasting stations. We have also produced a number oftraffic safety-related programs that focus on praiseworthy cases inadvanced countries. They have been shown by major broadcasterssince 2006. Last year, we trained nearly 10,000 school crossingguards. In addition, our traffic safety programs were attended by 1.13million children. We also held two traffic safety symposiums in supportof the government’s traffic safety policies.

The L/R of the auto insurance is expected to be stable in fiscal year2007, primarily due to changes in the “No Claim Discount” (NCD)system. In addition, non-life insurers are abandoning the practice ofcutting prices in the wake of dramatic increases in their loss ratios in2005 and 2006. As a consequence, we plan to continue with ourprofit-oriented pricing policies, which take actual loss ratios andexpenses into account.

Some of our other goals include development of more accurateunderwriting scoring systems to enhance our contract structures andimprovement of our module-type underwriting systems. We will alsocontinue to cope with changes in the market environment bymaintaining consistent guidelines for underwriting.

We do not consider joining in the online automobile insurance fieldunless we can reasonably expect to make a profit by doing so.Instead, we will concentrate on supplying consulting-type products tomaintain our position against direct channels. In addition, we will addto our volume of sales by upgrading our products, such as SamsungConsulting Anycar Automobile Insurance and Samsung CorporateAnycar Automobile Insurance.

The Samsung Traffic Safety Research Institute is planning to producemore programs on traffic safety overseas for airing on TV stations. Wehope that this will heighten the public’s awareness of the traffic safetyand lead to more governmental investments in traffic relatedinfrastructure. Finally, we will do our best to make the automobileinsurance business profitable as a leading company in Korea.

Left Choi, Doo YulAutomobile Insurance Product Pricing Dept. / Senior Manager

Center Lee, Young JiAutomobile Insurance Underwriting Dept. / Associator

Right Cho, Kyung KeunTraffic Safety Research Institute / Engineering Researcher

LONG-TERMINSURANCE

In fiscal year 2006, the Korean financial market witnessed the gradualcollapse of boundaries between financial institutions and intensifyingcompetition by domestic and foreign-based players. Theseoccurrences were primarily due to the passage of the Capital MarketIntegration Act and discussions regarding the Free Trade Agreementbetween Korea and the U.S..

We also experienced rapid changes in our operating environment.Demand for long-term, non-death benefits products (such as healthinsurance, investment-type products, pensions, and products forseniors) grew dramatically, due to Korea’s low birth rate and theconcomitant evolution of an aging society. Other factors includedincreased coverage offered by public health insurance programs, theintroduction of publicly run long-term care insurance, and theexpansion of bancassurance to take in automobile insurance.

Faced with these difficulties, Samsung Fire and Marine Insurance focusedon profit-oriented, sustainable growth. For example, we worked toensure the profitability of our long-term insurance line-which includesproperty and personal accident insurance, drivers' insurance, healthinsurance, nursing-care insurance, savings insurance and pension savings,casualty insurance, and integrated insurance-by focusing on productdevelopment and improvements to our underwriting policies. Thisstrategy reflected our policy of securing the financial industry’s highestlevel of competitiveness. We also set up a new division to conductresearch into future forms of long-term insurance products. Finally, webolstered our business territories to adapt to changes in the financiallandscape in a more effective and efficient manner.

Providing security and stability foryour life and your family

Our risk consultants will continue to workto retain their competitive edges over lifeinsurance companies and other financialservice providers.

Left Ahn, Hyo SooPension Dept. / Assistant Manager

Center Park, Jeong EunLong-Term Insurance Product Development Dept. / Associator

Right Byun, Seung HyupLTS-Product Development Team / Senior Manager

24



GROWTH AND FUTURE

In addition, we worked to enhance the competitiveness andprofitability of our long-term insurance products. We did this becauselong-term insurance is a key revenue driver in terms of both salesvolume and profitability, with sales accounting for 55% of our totalvolume in fiscal 2006. To accomplish this goal, we continued with ourefforts to differentiate these products from those offered by otherplayers. We did this by emphasizing the development of new productsand underwriting technologies, optimizing our product portfolios, andstrengthening our compliance system. We also reinforced ourinstitutional apparatus to prepare against future uncertainties in themarket and secure stable earnings bases for the company. Forexample, we lessened product risk by revising coverages with highloss ratios, expanding our renewal systems, and strengthening ourcontrol over product risk rates.

We also upgraded the consulting capabilities of our agent channels.This was done to cope with the ongoing integration of Koreanfinancial service players-including crossovers between life and non-lifeinsurance products that are slated to occur in 2008. Since 2004, wehave offered buyers of Samsung Super Insurance (the industry’s firstfully integrated insurance product) full-scale consulting servicesfeaturing total risk, lifetime, and household management throughSamsung Risk Consultants (SRCs).

We also augmented our financial knowledge and consultingtechniques to deal with the reality of a completely open field ofcompetition. Working with the industry’s finest insurance consultingorganization, our SRCs will continue to work to retain their

competitive edges over life insurance companies and other financialservice providers.

Fiscal year 2007 will probably see a near-total integration of theKorean financial services industry. This will include a completely openmarket for bancassurance, the previously referenced crossovers, andthe introduction of a public long-term care system. As a consequence,the market will probably divide into two major categories: traditionalinsurance products (such as products with death benefits, long-termcare insurance, and health insurance) and products with non-deathbenefits (such as investment-type products and pension products inpreparation for longer lifetime).

In response to this situation, we are retaining our commitment toprofitable products and continuous growth in our market share. Thiswill include operating our long-term insurance line with an increasedfocus on risk management. We also plan to add to our customer base.To do this, we will augment our risk controls for health coverage bysystematizing our rate renewal systems and introducing a self-riskrating system. In addition, we will work proactively to cope with suchinstitutional changes as increased coverage by the national healthinsurance plan and improve products that supplement medicalexpenses. We will also tap into new product areas, such as financialand investment-type products.

4,545.9

3,956.8


FY2006

FY2005

31.6

33.3

Market Share(%)

FY2006

FY2005

25ANNUAL

REPORT

2006

LONG-TERM INSURANCE Samsung Fire &

Marine Insurance

COMMERCIALINSURANCE

As the leader in the Korean insurance industry, Samsung Fire andMarine has been relentless in the pursuit of its corporate objectives byproviding superb products and services to our clients for the variousrisks they face in their daily lives. We have the industry’s largest losscontrol center, with more than 50 experienced specialists in variousfields providing Risk Management solutions and risk analysis expertiseto our clients. Last year, we launched “Total Risk Solutions” for ourclients both here and overseas, offering comprehensive risk consultingservices to their business locations. The response was overwhelminglypositive.

We have also been hiring experienced underwriters from overseas,and believe that we have the best underwriting expertise in theindustry. While continuing to build sound foundations in bothunderwriting and loss control services, we are also channeling ourefforts towards customer-focused product development to meet thechallenges of cl ients faced with an everchanging businessenvironment. In our pursuit of globalization and to provide close-at-hand services to our clients, we have branch offices in 6 countries,including the U.S., England, China, and Vietnam, and have plans toexpand even further in the future. We also boast a network of over300 international brokers and reinsurance companies that are alwaysready to lend a helping hand to us and our clients.

In fiscal year 2006, the commercial insurance market faced a widerange of challenges, including soaring oil prices, declining corporateprofits, lowered investments, and breakneck competition. Despitesuch an unfavorable environment, we increased our revenues and

Delivering innovative products andquality services to our customers

We are also committed to developing newengines for offshore growth and entering intomutually beneficial relationships with otherinsurance entities.

936.2

841.9


FY2006

FY2005

29.1

28.6

Market Share(%)

FY2006

FY2005

26



GROWTH AND FUTURE

profits to unprecedented levels with our unwavering commitment toour core strategy, which places great emphasis on balancing growthand profit. As a result, direct premiums written for general insuranceincreased to KRW 936.2 billion at the end of fiscal year 2006, a riseof 11.2% from a year ago and one that greatly outperformed themarket as a whole. Our market share reached a new peak of 29.1%,up by 0.5% from the previous year. We also recorded our largest-everoperating income.

In order to meet the challenges posed by the current market, we alsoenhanced our organizational structure and improved our businesscapabilities in various areas. This involved making improvements toour infrastructure and introducing new management innovations. ; westrengthened our international network by establishing an integratedoverseas client information system, advanced our reinsurancestructure through the application of Six Sigma to our retentionoptimization projects, and standardized our sales and underwritingprocesses by making key adjustments to our operating infrastructure.

Overseas, we opened our Beijing branch office in August 2006,following the establishment of a subsidiary in China in April 2005-a“first”for a foreign-based insurance company. These movesstrengthened our position as a global financial company and led toimproved sales and customer service capabilities in the Chinesemarket.

In fiscal year 2007, competition is likely to intensify even further.Fortunately for us, premium rates in the reinsurance market forcommercial lines have decreased, due to fewer large accidents and

natural disasters in 2006. Maintaining relations with our reinsurancepartners is a matter of the highest priority, and we plan to continuedifferentiating our premium rates from those of our competitors bysecuring the best reinsurance rates possible. In addition, we willcontinue with our operational strategies-including risk management,selective underwriting, high-quality services, a steady expansion of ouroverseas network, and the advancement of our operationalcapabilities.

In the international arena, we will work to provide high quality,differentiated insurance products, offering loss control and integratedservices to Korean companies that have established overseasoperations. Among other things, this will involve sending additionalhuman resources to our overseas bases and increasing their visibilityand contacts in the region. We are also committed to developing newengines for offshore growth by entering into mutually beneficialrelationships with other insurance entities. Domestically, our strategyis to improve on our already-enviable market position by committingour efforts and resources to diversifying the sources of our futuregrowth and earnings.

Left Lee, Ho JunSamsung Loss Control Center / Principal Consultant, PhD

Center Choi, Hyun WhaSpecialty Underwriting Dept. / Assistant Manager

Right Lee, Yong HwanCommercial Lines Planning & Support Dept. / Manager

27ANNUAL

REPORT

2006

COMMERCIAL INSURANCE Samsung Fire &

Marine Insurance

ENTERPRISE RISKMANAGEMENT

Samsung Fire & Marine Insurance (SF&M) uses the Enterprise RiskManagement (ERM) system. It has two functions: to ensure financialstability through controlled risk-taking and to provide for adequatecapitalization through a broad range of risk analysis.

SF&M's Enterprise Risk Management Principles

At SF&M, Enterprise Risk Management (ERM) is based on threeprinciples that are applied throughout the company.

Early Warning Risk Identification : Risk management and analysisinvolving projections for the future and requiring risk managementforecasts and prognostications. Key Risk Indicators (KRIs) allowSF&M's risk managers to evaluate risk in advance using real time data.

Independent Risk Management Function : A specialized SF&Mdepartment that is charged with managing any conflicts of interest.

Value-based Management Support : Embedded Value (EV) appraisalenable SF&M to practice Value-Based Management (VBM) andmeasure the economic value of SF&M's overall insurance operations.

Enterprise Risk Management Organization and Structure

The Board of Directors is responsible for establishing the framework,principles, and guidelines for Enterprise Risk Management (ERM) atSF&M. The Enterprise Risk Management Committee is responsible foraddressing risk and controlling risk-related issues in a timely andappropriate manner.

Dedicated to identifying, assessingand managing potential threats

Our Enterprise Risk ManagementCommittee is responsible for addressingrisk and controlling risk-related issues in a timely and appropriate manner.

Left Park, Chul Soo, CFA, FRMFinancial Risk Management Part / Senior Manager

Center Hwang, Sun IlFinancial Risk Management Part / Assistant Manager

Right Kang, Byoung KwanCorporate Risk Management Part / Assistant Manager

28



GROWTH AND FUTURE

Loss Ratio

Expense Ratio

SF&M’s Enterprise Risk Management Department monitors risk throughanalysis, reports, and risk modeling and is tasked with identifying awide range of possible risk scenarios that may be encountered by eachof the company’s business units as well as company-wide. By applyingthese processes, the department assesses each risk scenario, monitorsit, and implements appropriate action plans.

Risk Categories

The major risks that Samsung Fire & Marine Insurance (SF&M) facesare as follows.

Asset-Liability Management (ALM) Risk : ALM manages structuralrisks (i.e., interest rate, equity, and liquidity) from the perspective ofoptimized returns. Managing ALM Risk involves strategizing from thedual viewpoints of assets and liabilities. Strategic Asset Allocation(SAA) involves the optimization of asset structures, while Product MixStrategy is concerned with the optimization of liability structures.

Insurance Risk (Underwriting Risk) : Insurance Risk refers to thedanger of incurring a financial loss due to property, casualty, auto, orlong-term insurance events. Our Enterprise Risk ManagementDepartment manages the transfer of such risks-including setting limitson underwriting authorizations and requiring approvals fortransactions involving new products. It also oversees the managementof reinsurance and monitors emerging issues that may affect thecompany’s overall exposure to risk.

Market Risk : Market Risk refers to the danger of being negativelyimpacted by movements in financial markets-including equity marketprices, credit spreads, foreign exchange rates, and real estate prices.

Credit Risk : Credit Risk refers to the danger of incurring a financialloss due to the diminished credit-worthiness of counter-parties ofSF&M and/or third parties. To help mitigate the possibility of suchoccurrences, SF&M transfers a portion of its new business toauthorized reinsurers that are rated at least “A-”.

Regulatory Perspective

SF&M is engaged in preparing for the introduction of the RiskAssessment & Application System (RAAS) and the Risk-Based Capital(RBC) System, both of which are statutory requirements of the KoreanFinancial Supervisory Service.

Underwriting Efficiency(%)

FY2006

FY2005

29ANNUAL

REPORT

2006

ENTERPRISE RISK MANAGEMENT Samsung Fire &

Marine Insurance

101.4

101.8

80.4

82.3

21.0

19.5

SF&M means . . .We are committed to growing into a world-

class, comprehensive financial services provider,

winning the respect and trust of all our valued

customers in the 21st century.

Change

to always meet the

constantly evolving needs

of our customers

Challenge

to always seek out and

accept new challenges

Happiness

to always bring a happy

smile to the faces of our

longtime customers and

friends

Trust

to always stand beside you

as a reliable helper and

partner

Future

to always work towards a

brighter and better

tomorrow

Growth

to always take the initiative

in furthering the growth of

the financial industry

FINANCIALSECTION

MD&A 32

FINANCIAL STATEMENTS 42

WORLDWIDE NETWORK 86

SAMSUNG AFFILIATES 87

CORPORATE HISTORY 88

Management Discussion & Analysis

A. Operational Results

1. Overview

The Korean insurance industry suffered from a series of difficulties both at home and overseas, in fiscal 2006, which ended March 31, 2007. They

included economic slowdown, a strong won, fluctuations in real estate prices, and intensifying competition. Despite this, Samsung Fire and Marine

Insurance recorded extremely satisfactory operational results.

To begin, operating income exceeded the KRW 500.0 billion mark. This resulted from increases in insurance underwritings and investment income

due to our profitability oriented management strategy. Strengthened underwriting policies for automobile insurance played an especially important

role, despite an overall rise in accident rates. Long-term insurance grew by 14.9% over the year, centering on guarantee-type products with high

profitability. Sales of general insurance advanced by 11.2% due to the development of new markets for foreign and satellite insurance and the

renewal of existing contracts.

We also experienced improvements to our earnings structure. To begin, we regained our leadership in the automobile insurance business, thanks to

an improved operating environment and an expanded market share. We also minimized our loss ratios for automobile insurance by reducing our

market share through preemptive risk management when the accident rate went up. Our share of the market grew to 30.3% in the fourth quarter of

2006 from 27.1% in the first quarter. This happened because our competitors were forced to raise premium rates to cover losses following

expansions in their operations. We believe that automobile insurance results will improve even more, triggered mainly by the reformed automobile

insurance premium rate system that came into force during the first half of 2007.

We also prepared the foundations for future growth in long-term insurance. Sales of new contracts continued to grow, loss ratios remained stable,

and we augmented the competitiveness of our various sales channels. The annualized premium equivalent (APE) of new contracts grew by 15.0% to

KRW 1,698.4 billion from a year earlier, while risk premium loss ratios fell by 2.8% to 76.0%. The number of elite risk consultants increased by 1,200

to 10,000 in the wake of improvements to our direct sales organization.

Shareholder value also rose. Our earnings in 2006 were the highest ever, and we responded by paying dividends for the 31st consecutive year. We

also bought back and retired KRW 262.8 billion worth of shares. This meant that 98.2% of our net income was returned to shareholders--including

cash dividends worth KRW 72.1 billion. These efforts to heighten shareholder value led to a concomitant improvement in capital efficiency and an

increase in our share prices. ROE moved up by 2.1% to 11.0%, while market capitalization passed KRW 8.0 trillion. Our level of soundness was

extremely positive, with our solvency margin ratio standing at 388.1%. This will significantly contribute to a continual heightening of our shareholder

value in an operating environment that stresses the need for risk-oriented insurance and asset management.

Net Income 267.8 170.1 278.2 262.0 341.2

Change -36.5% 63.6% -5.8% 30.2%

Adjusted Net Income 310.8 214.3 324.2 325.3 379.5

Change -31.0% 51.3% 0.3% 16.7%

FY2002 FY2003 FY2004 FY2005 FY2006

(In billions of Korean Won)Net Income, by Year

32



FINANCIAL SECTION

2. Profit And Loss Summary

Direct premiums written and net premiums earned moved up by 13.6% and 10.8%, respectively, to KRW 8,242.6 billion and KRW 7,263.3 billion.

The overall level of catastrophe reserves shrank by KRW 24.8 billion to KRW 38.4 billion. Unfortunately, underwriting losses grew by KRW 13.2 billion

(or 7.2%) to KRW 197.3 billion, even in the face of increased premiums. This was largely the result of larger expense ratios for general insurance and

long-term insurance. On the other hand, investment income ballooned by KRW 111.9 billion to KRW 702.7 billion, allowing operating income to rise

by an extremely healthy KRW 98.8 billion (or 24.3%) to KRW 505.5 billion. Non-operating losses fell back to KRW 27.6 billion, mainly due to a rise in

miscellaneous non-operating income and a reduction in non-operating miscellaneous losses.

As a result, pre-tax net income expanded by KRW 117.6 billion to KRW 477.8 billion, while net income advanced by KRW 79.2 billion (30.2%) to

KRW 341.2 billion. Adjusted net income (including catastrophe reserves) climbed by KRW 54.2 billion to KRW 379.5 billion, and adjusted net income

per share rose by KRW 8,450, up by KRW 1,169 from a year earlier.

33ANNUAL

REPORT

2006

MANAGEMENT DISCUSSION & ANALYSIS Samsung Fire &

Marine Insurance

Amount %

Direct premiums written 8,242.6 7,256.2 986.4 13.6%

Net premiums earned 7,263.3 6,557.2 706.1 10.8%

Increase in catastrophe reserves 38.4 63.2 -24.8 -39.2%

Underwriting income -197.3 -184.1 -13.2 -7.2%

Investment income 702.7 590.8 111.9 18.9%

Operating income 505.5 406.7 98.8 24.3%

Non-operating income -27.6 -46.5 18.9 40.6%

Pre-tax net income 477.8 360.2 117.6 32.6%

Net income 341.2 262.0 79.2 30.2%

Adjusted net income 379.5 325.3 54.2 16.7%

Adjusted EPS (in Won) 8,450 7,281 1,169 16.1%

ChangeFY2006 FY2005

(In billions of Korean Won)Income Summary


FY2006 FY2005 FY2004 % Change

General 29.1% 28.6% 28.9% 0.5 %P

Long-term 31.6% 33.3% 34.1% -1.7 %P

Automobile 30.0% 28.7% 30.1% 1.3 %P

Total 30.8% 31.0% 31.9% -0.2 %P

Market Share, By Line

3. Earnings by Product Line

Sales of all product lines increased, with long-term products leading the way followed by automobile and general insurance. Direct premiums for long-

term insurance enjoyed the greatest level of growth, rising by 14.9% to KRW 4,545.9 billion. This accounted for 55.2% of our total direct premiums,

an increase of 0.7% from the preceding year.

In the area of long-term insurance, pension insurance registered growth of 18.0% over the year. First premiums for long-term insurance rose by 5.8% to

KRW 161.3 billion. The volume of initial premiums also expanded over the year, leading to hopes that this line will perform equally well in the future.

Automobile insurance, which had declined in the previous year, grew by KRW 303.0 billion (12.3%) over the year to KRW 2,760.5 billion. However, the

outstanding growth of long-term insurance meant that the ratio of direct premiums written for automobile insurance to total direct premiums written

lessened to 33.5%. General insurance expanded by KRW 94.3 billion (11.2%) to KRW 936.2 billion. Key factors here were a substantial rise in marine

insurance and a marginal decrease in fire insurance. Finally, the overall weighting of general insurance to total premiums contracted by 0.2% to 11.4%.

Total market share contracted by 0.2% to 30.8% in fiscal 2006. We attribute this minimal decline to our insistence on profitability in an extremely

competitive market environment and dramatic increases in loss ratios for automobile insurance. Market shares in the general and automobile

insurance sectors expanded, while that for long-term insurance fell by 1.7% to 31.6%. Our general insurance market share moved up by 0.5% to

29.1%, reflecting a change in the status of our Chinese branch to a subsidiary. Our automobile insurance market share declined slightly because of

our focus on high-end products and top-quality customers. Another factor here was continuing cut-throat competition that resulted in unhealthy and

unsustainable price cuts. Fortunately, this trend was reversed in the second half of 2006, with our portion of the market nearing the 30.0% level of

fiscal 2003. This resulted from a lessening in price gaps in the wake of price hikes by our competitors.

Amount % Amount % Amount %

General 936.2 11.4% 841.9 11.6% 94.3 11.2%

Long-term 4,545.9 55.2% 3,956.8 54.5% 589.1 14.9%

Initial Premiums 161.3 2.0% 152.4 2.1% 8.9 5.8%

Renewal Premiums 4,384.6 53.2% 3,804.4 52.4% 580.2 15.3%

Automobile 2,760.5 33.5% 2,457.5 33.9% 303.0 12.3%

Total 8,242.6 100.0% 7,256.2 100.0% 986.4 13.6%

ChangeFY2006 FY2005

(In billions of Korean Won)Direct Premiums Written, By Line

34



FINANCIAL SECTION

Direct Premiums Written, by line

General

936.

2FY2005

FY2006

841.

9

Long-term

3,95

6.8

(In Billions of Korean Won)

* Our estimate, targeting 11 domestic insurers (but excluding mono-line automobile insurers) that are members of the General Insurance Association of Korea.

4,54

5.9

Automobile

2,45

7.5

2,76

0.5

Market Share, by line

General

FY2005

FY2006

28.6

Long-term

33.3

(%)

31.6

Automobile

28.7

30.0

29.1

The company’s loss ratio declined by 1.9% to stand at 80.4% at fiscal 2006-end. Loss ratios for long-term insurance fell by 2.7% to 86.8%. Those for

general insurance and automobile insurance dipped by 1.5% and 1.1%, respectively, to 47.9% and 74.8%.

Our overall expense ratio edged up by 1.5% to stand at 21.0%. The expense ratio for general insurance increased sharply, while that for automobile

insurance decreased. The combined ratio went down by a slight 0.4% to 101.4%.

Analyzing combined ratios by product, we see that loss ratios and expense ratios for automobile insurance both dropped, meaning that their

combined ratio also declined. Although the expense ratio of long-term insurance rose due to the amortization of deferred expenses, this was offset by

premium reserves in the saving-type insurance sector. Accordingly, the combined ratio remained similar to that of the previous year. In contrast, loss

ratios for general insurance declined while the expense ratio grew by 5.9%. As a result, the combined ratio increased from the previous year’s figure.

Taking expense ratios by item, wages & severance benefit ratio dipped by 0.1%p to 5.1%, while distribution cost increased by 1.1%p to 10.5% and

business administration costs stayed at 7.4%. Expenses recovered decreased by 0.5%p to -2.0%. Consequently, the company’s overall expense ratio

grew by 1.5% to stand at 21.0% at year-end.

FY2006 FY2005 % Change

Loss Ratio 80.4% 82.3% -1.9 %p

General 47.9% 49.4% -1.5 %p

Long-term 86.8% 89.5% -2.7 %p

Automobile 74.8% 75.9% -1.1 %p

Expense Ratio 21.0% 19.5% 1.5 %p

General 16.8% 10.9% 5.9 %p

Long-term 16.4% 13.6% 2.8 %p

Automobile 29.4% 30.6% -1.2 %p

Combined Ratio 101.4% 101.8% -0.4 %p

Underwriting Efficiency

35ANNUAL

REPORT

2006


Marine Insurance

Underwriting Efficiency

Loss Ratio

FY2005

FY2006

82.3

Expense Ratio

19.5

(%)

21.0

80.4


4. Investment Income

Investment income grew by KRW 111.9 billion (or 18.9%) to KRW 702.7 billion. This was largely due to increased revenues from bonds and stocks.

Investment income from bonds went up by KRW 47.1 billion (or 12.2%) to KRW 432.9 billion, while stocks-related income swelled by KRW 45.3

billion (or 129.8%) to KRW 80.2 billion. Interest income from loans rose by KRW 14.3 billion to KRW 229.9 billion, while investment income from

cash and equivalents, overseas and real estate-related income appreciated over the year. As a result, net investment yield edged up by 0.3% to stand

at 4.9% at year-end.

5. Income Tax ExpensesPre-tax income in fiscal 2006 increased by a healthy KRW 117.6 billion, or 32.7%, to reach KRW 477.8 billion. As a consequence, income tax

expenses also increased, rising by KRW 38.6 billion to KRW 136.7 billion. This meant that our effective tax rate rose by 1.4% to 28.6%--even though

the overall corporate income tax rate (including residency tax) had been set at 27.5%.

36



FINANCIAL SECTION

Amount %

Cash & equivalents 6.9 5.5 1.4 25.5

Bonds 432.9 385.8 47.1 12.2

Stocks 80.2 34.9 45.3 129.8

Loans 229.9 215.6 14.3 6.6

Overseas 19.5 12.3 7.2 58.5

Real estate 3.4 1.9 1.5 78.9

Total 772.8 656.0 116.8 17.8

Investment Administration Expenses 1) 70.2 65.2 5.0 7.7%

Investment Income 702.7 590.8 111.9 18.9%

Net Investment Yield 4.9% 4.6% 0.3 %

ChangeFY2006 FY2005

(In billions of Korean Won)Investment Income

Amount %

Income Before Income Tax Charges 477.8 360.2 117.6 32.7

Income Tax Charges 136.7 98.1 38.6 39.3

Effective Tax Rate 28.6% 27.2% 1.4 %

ChangeFY2006 FY2005

(In billions of Korean Won)Income Tax Charges

1) Bad debt expenses and depreciation costs have been distributed by asset.

Investment Income

InvestmentAdministration

Expenses

FY2005

FY2006

65.2

InvestmentIncome

590.

8

(In Billions of Korean Won, %)

702.

7

Net InvestmentYield

4.6%

4.9%

70.2

37ANNUAL

REPORT

2006


Marine Insurance

B. Balance Sheet Analysis

1. Financial Conditions

The company’s total assets increased by KRW 2,130.8 billion to KRW 18,511.6 billion--a rise of 13.0% from the previous year’s figure. Bonds were the

primary contributors to this growth, surging by KRW 968.0 billion (or 12.0%) to KRW 9,059.4 billion. Despite this, the overall weighting of bonds to total

assets contracted to 48.9% from the previous year’s 49.4%. The greatest contributor to the growth of bonds was non-invested assets. These expanded

by 18.3% over the year in response to rises in deferred acquisition costs and separate account assets.

The value of stocks amounted to KRW 1,751.1 billion, a rise of KRW 30.8 billion (or 1.8%) from a year earlier. The weighting of stocks to total assets

dipped by 1.0% to 9.5%. This was mainly attributable to the sale of LG Card stocks resulting from debt-for-equity swaps. Loans swelled by KRW 481.7

billion (15.5%) to KRW 3,589.4 billion at year-end. The ratio of loans to total assets also expanded, rising by 0.4% to 19.4%.

Total liabilities increased by KRW 1,911.3 billion (or 14.3%) to KRW 15,308.6 billion at fiscal 2006-end. Policy reserves (which constitute the largest

portion of our liabilities) climbed by KRW 1,757.0 billion (or 16.4%) to KRW 12,468.2 billion. As a result, the overall ratio of policy reserves to total

liabilities expanded by 2.0%, to 67.4%. Our catastrophe reserves rose marginally to KRW 935.3 billion. Other liabilities remained similar to those of the

previous year, while liabilities in separate accounts grew by KRW 109.1 billion to KRW 893.3 billion.

Total shareholders’ equity moved up by KRW 219.5 billion (or 7.4%) over the year to KRW 3,203.0 billion, while capital stock and capital surplus

remained at about 2005 levels. However, retained earnings increased by KRW 269.3 billion to KRW 1,656.2 billion, reflecting our large net operating

income. Capital adjustments decreased by KRW 51.7 billion to KRW 787.0 billion due to a decline in gains on valuations of available-for-sale securities.

The company’s solvency margin ratio remained at a very satisfactory 388.1%. This level, which is the industry’s highest and healthiest, compares

extremely favorably to the 100% required by the Korean Financial Supervisory Service.


Cash & Bank Deposits 311.1 1.7 130.7 0.8 180.4 138.0

Stocks 1,751.1 9.5 1,720.3 10.5 30.8 1.8

Bonds 9,059.4 48.9 8,091.4 49.4 968.0 12.0

Loans 3,589.4 19.4 3,107.7 19.0 481.7 15.5

Fixed Assets 959.4 5.2 928.0 5.7 31.4 3.4

Non-Invested Assets 2,841.3 15.4 2,402.7 14.7 438.6 18.3

Total Assets 18,510.7 100.0 16,380.8 100.0 2,129.9 13.0

Policy Reserves 12,468.2 67.4 10,711.2 65.4 1,757.0 16.4

Catastrophe Reserves 935.3 5.1 897.0 5.5 38.3 4.3

Other Liabilities 1,011.8 5.5 1,004.9 6.1 6.9 0.7

Separate A/C Liabilities 893.3 4.8 784.2 4.8 109.1 13.9

Total Liabilities 15,308.6 82.7 13,397.3 81.8 1,911.3 14.3

Shareholders’ Equity 3,203.0 17.3 2,983.5 18.2 219.5 7.4

Total Liabilities and Shareholders’ Equity 18,511.6 100.0 16,380.8 100.0 2,130.8 13.0

Solvency Margin Ratio 388.1% 414.9% -26.8%

ChangeFY2006 FY2005

(In billions of Korean Won)Balance Sheet Summary


2. Securities

The value of securities held by the company (including stocks and bonds) increased by KRW 998.7 billion (or 10.2%) to KRW 10,810.4 billion at FY

2006-end. Stocks edged up by 1.8% (or KRW 30.8 billion) to KRW 1,751.1 billion. Short-term trading securities amounted to zero, as they had all

been disposed of during the previous fiscal year. Available-for-sale stocks rose by KRW 21.1 billion (or 1.3%) to KRW 1,688.4 billion. Shares in

Samsung Electronics and Samsung Securities accounted for the majority of available-for-sale securities. Their value declined slightly from a year

earlier, and there were no changes in the number of our holdings.

Stocks, applying the equity method rose by KRW 9.8 billion to KRW 62.7 billion. This resulted from the reclassification of some of our available-for-

sale securities into equity method securities and increases in our investments in Samsung Venture Investments.

The value of bonds amounted to KRW 9,059.4 billion at year-end, surging upwards by KRW 968.0 billion (or 12.0%) from a year earlier. This rise was

mainly due to increases in special bonds among available-for-sale bonds and long-term bonds centering on foreign securities and equity-linked

securities. Short-term trading bonds plummeted by KRW 265.0 billion (45.8%) to KRW 313.0 billion, mainly due to a decline in special bonds which

had swelled the previous year.

38



FINANCIAL SECTION

Amount %

Stocks 1,751.1 1,720.3 30.8 1.8%

Stocks--Applying The Equity Method 62.7 52.9 9.8 18.5%

Available-For-Sale Stocks 1,688.4 1,667.3 21.1 1.3%

Bonds 9,059.4 8,091.4 968.0 12.0%

Short-Term Trading Bonds 313.0 578.0 -265.0 -45.8%

Available-For-Sale Bonds 8,745.0 7,513.4 1,231.6 16.4%

Held to Maturity Bonds 1.3 0.0 1.3 N/A

Total 10,810.4 9,811.7 998.7 10.2%

ChangeFY2006 FY2005

(In billions of Korean Won)Securities

Securities

Stocks

FY2005

FY2006

1,72

0.3

Bonds

8,09

1.4

(In billions of Korean Won)

9,05

9.4

Total

9,81

1.7

10,8

10.4

1,75

1.1

39ANNUAL

REPORT

2006


Marine Insurance

3. Loans and Asset Quality

Loans swelled by 16.4% (KRW 493.5 billion) year-on-year to KRW 3,507.5 billion. These are divided into household loans and corporate loans.

Household loans grew by KRW 370.6 billion (or 13.6%) to reach KRW 3,086.0 billion, with the weighting decreasing by 2.1% to 88.0% of total

loans. Secured household loans increased by KRW 239.5 billion to KRW 1,820.6 billion, while policyholder loans expanded by 12.9% KRW 139.9

billion to KRW 1,226.4 billion. Non-secured loans were reduced from the previous year. Corporate loans ballooned by KRW 122.9 billion (or 41.2%)

to KRW 421.5 billion. The majority of these were secured loans. Non-secured loans decreased.

The quality of our loans continued to improve in fiscal 2006. Although their overall volume increased, the number of substandard and lower loans

contracted by 32.0% (or KRW10.3 billion) to KRW 21.9 billion. We attribute this welcome news to the company’s continuing efforts to improve on

the quality of its loans. As a result, the ratio of substandard and lower loans decreased by 0.5%p to 0.6%. This resulted in the coverage ratio

improving significantly, so that the ratio of loan loss provisions to substandard and lower loans shot up by 64.2% to reach 179.8%. Delinquency

ratios also fell (by 0.4%p to 0.8%) on the strength of our effective loan management operations. Delinquency ratios for both household loans and

corporate loans lessened by 0.4%p and 0.9%p, respectively, to 0.7% and 1.5%.


Household Loans 3,086.0 88.0% 2,715.4 90.1% 370.6 13.6%

Mortgages 1,820.6 51.9% 1,581.1 52.5% 239.5 15.1%

Policyholders 1,226.4 35.0% 1,086.5 36.0% 139.9 12.9%

Non-Secured 39.1 1.1% 47.8 1.6% -8.7 -18.2%

Corporate Loans 421.5 12.0% 298.6 9.9% 122.9 41.2%

Secured 405.1 11.5% 280.4 9.3% 124.7 44.5%

Non-Secured 16.4 0.5% 18.1 0.6% -1.7 -9.4%

Total 1) 3,507.5 100.0% 3,014.0 100.0% 493.5 16.4%

ChangeFY2006 FY2005

(In billions of Korean Won)Loans

Amount %

Total Loans 3,507.5 3,015.0 492.6 16.3%

Normal 3,480.0 2,978.4 501.6 16.8%

Precautionary 5.7 4.4 1.3 29.5%

Substandard 12.4 18.6 -6.2 -33.3%

Doubtful 2.1 4.9 -2.8 -57.1%

Estimated Losses 7.4 8.6 -1.2 -14.0%

Substandard & Lower 21.9 32.2 -10.3 -32.0%

Non-Performing Loans To Total Loans 0.6% 1.1% -0.5 %P -45.5%

Loan Loss Provisions/Substandard & Lower Loans 179.8% 115.6% 64.2 %P 55.5%

Delinquency Ratio 0.8% 1.2% -0.4 %P -33.3%

Household 0.7% 1.1% -0.4 %P -36.4%

Corporate 1.5% 2.4% -0.9 %P -37.5%

ChangeFY2006 FY2005

(In billions of Korean Won)Asset Quality

1) Excluding call loans and before deducting loan loss provisions


40



FINANCIAL SECTION

4. Asset & Liability Management

The company’s asset and liability management (ALM) spread on long-term insurance improved over the year, rising by 0.12% to 0.47% at year-end.

This happened because the rate of returns on matching assets fell by 0.16% (to 5.57%) while the interest crediting rate on liabilities experienced a

larger decrease.

In terms of duration, the difference between assets and liabilities decreased by 0.16 years over the year to 0.36 years. This happened because the

duration of assets increased slightly (by 0.21 years to 3.00 years) while that for liabilities remained static.

Amount Yield Duration Amount Yield Duration Amount Yield Duration

Asset1) 9,811.1 5.57 3.00 8,422.3 5.73 2.79 1,388.8 -0.16 0.21

Liability2) 9,814.5 5.10 3.36 8,465.2 5.38 3.31 1,349.3 -0.28 0.05

Spread -3.4 0.47 -0.36 -42.9 0.35 -0.52 39.5 0.12 0.16

ChangeFY2006 FY2005

(In billions of Korean Won, %, Years)ALM on Long-Term Insurance

1) The sum of invested assets and unamortized deferred assets2) The sum total of reserves for savings, reserves for unearned premiums, and reserves for lapsed policies

41ANNUAL

REPORT

2006

FINANCIAL STATEMENTS Samsung Fire &

Marine Insurance

Independent Auditors’ Report English Translation of a Report Originally Issued in Korean

Deloitte Anjin LLC14Fl., Hanwha Securities Bldg., 23-5 Yoido-dong,

Youngdeungpo-gu, Seoul 150-717, Korea

Tel:+82.2.6676 1000, 1114 Fax:+82.2.6674 2114www.deloitteanjin.co.kr

To the Shareholders and Board of Directors ofSamsung Fire & Marine Insurance Co., Ltd.:

We have audited the accompanying balance sheets of Samsung Fire & Marine Insurance Co., Ltd. (the “Company”) as of March 31, 2007 and 2006,

and the related statements of income, appropriations of retained earnings and cash flows for the years then ended, all expressed in Korean won.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial

statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those standards require that we plan

and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We

believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31,

2007 and 2006, and the results of its operations, changes in its retained earnings and its cash flows for the years then ended in conformity with

accounting principles generally accepted in the Republic of Korea (See Note 2).

Our audits also comprehended the translation of Korea Won amounts into U.S. dollar amounts and, in our opinion, such translation has been made in

conformity with the basis in Note 2. Such U.S. dollar amounts are presented solely for the convenience of the reader outside of Korea.

Accounting principles and auditing standards and their application in practice vary among countries. The accompanying financial statements are not

intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally

accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to audit such

financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying financial

statements are intended for use by those knowledgeable about Korean accounting procedures and auditing standards and their application in

practice.

May 7, 2007

Notice to Readers

This report is effective as of May 7, 2007, the auditors’ report date. Certain subsequent events or circumstances may have occurred between the auditors’ report dateand the time the auditors’ report is read. Such events or circumstances could significantly affect the accompanying financial statements and may result in modificationsto the auditors’ report.

Audit.Tax.Consulting.Financial Advisory. Member of Deloitte Touche Tohmatsu

BALANCE SHEETSAS OF MARCH 31, 2007 AND 2006

2007 2006 2007 2006

ASSETS

Cash and bank deposits (Notes 3 and 17) -----W 311,091 -----W 130,698 $ 330,842 $ 138,996

Trading securities (Notes 4, 8 and 17) 313,043 578,017 332,918 614,716

Available-for-sale securities (Notes 5, 8, 17 and 30) 10,433,379 9,180,731 11,095,798 9,763,619

Held-to-maturity securities (Note 6) 1,340 - 1,425 -

Securities accounted for using the equity method (Note 7) 62,657 52,938 66,635 56,299

Loans, net of allowance for doubtful accounts of

-----W39,306 million in 2007 and

-----W37,246 million in 2006 (Notes 9) 3,589,421 3,107,745 3,817,315 3,305,057

Property and equipment, net (Notes 10 and 14) 1,027,494 990,007 1,092,730 1,052,863

Insurance receivables, net of allowance for doubtful

accounts of -----W4,756 million in 2007 and

-----W4,778 million in 2006 (Notes 12, 17 and 28) 173,182 174,425 184,177 185,499

Leasehold and other deposits (Notes 28 and 30) 199,188 204,599 211,835 217,589

Accrued income, net of allowance for doubtful

accounts of -----W136 million in 2007 and

-----W157 million in 2006 177,990 177,811 189,291 189,100

Due from separate account (Note 31) 3,048 11,817 3,242 12,567

Compensation receivables (Note 13) 97,381 94,362 103,564 100,353

Deferred acquisition costs (Note 21) 955,451 677,283 1,016,113 720,284

Other assets (Notes 11 and 33) 273,639 216,230 291,012 229,959

17,618,304 15,596,663 18,736,897 16,586,901

Separate account assets (Note 31) 893,333 784,157 950,051 833,943

Total assets -----W 18,511,637 -----W 16,380,820 $ 19,686,948 $ 17,420,844

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES:

Policy reserves (Notes 2, 15 and 30) -----W 12,468,184 -----W 10,711,227 $ 13,259,794 $ 11,391,287

Catastrophe reserves (Notes 2 and 16) 935,337 896,982 994,722 953,932

13,403,521 11,608,209 14,254,516 12,345,219

Other liabilities:

Insurance payables (Notes 12 and 17) 286,883 282,010 305,097 299,915

Accrued expenses 126,259 82,246 134,275 87,468

Borrowings (Note 18) 100 13,100 106 13,932

Income tax payables 49,005 38,875 52,116 41,343

Due to separate account (Note 31) 16,701 23,449 17,761 24,938

Rental deposits received (Note 28) 32,256 35,014 34,304 37,237

Deferred income tax liabilities (Note 23) 375,820 400,646 399,681 426,083

Other liabilities (Notes 2, 22 and 33) 124,769 129,607 132,692 137,836

1,011,793 1,004,947 1,076,032 1,068,751

Separate account liabilities (Note 31) 893,333 784,157 950,051 833,943

Total liabilities -----W 15,308,647 -----W 13,397,313 $ 16,280,599 $ 14,247,913

42



FINANCIAL SECTION

Korean Won(In millions)

Translation into U.S. Dollars (Note 2)(In thousands)



43ANNUAL

REPORT

2006

BALANCE SHEETS Samsung Fire &

Marine Insurance

2007 2006 2007 2006

COMMITMENTS AND CONTINGENCIES (Note 30)

SHAREHOLDERS’ EQUITY

(Notes 24, 25 and 26):

Capital stock of -----W500 par value,

Authorized (100,000,000 shares),

Issued and outstanding:

-Common stock (48,874,837 shares) -----W 24,802 -----W 24,802 $ 26,377 $ 26,377

-Preferred stock ( 3,292,000 shares) 1,671 1,671 1,777 1,777

26,473 26,473 28,154 28,154

Capital surplus 733,340 731,491 779,900 777,934

Retained earnings (Net income of

-----W341,174 million in 2007 and

-----W262,042 million in 2006) 1,656,175 1,386,876 1,761,326 1,474,929

Capital adjustments 787,002 838,667 836,969 891,914

Total shareholders' equity 3,202,990 2,983,507 3,406,349 3,172,931

Total liabilities and shareholders' equity -----W 18,511,637 -----W 16,380,820 $ 19,686,948 $ 17,420,844

44



FINANCIAL SECTION

STATEMENTS OF INCOMESFOR THE YEARS ENDED MARCH 31, 2007 AND 2006

2007 2006 2007 2006

OPERATING REVENUES:

Premium income (Notes 19 and 28) -----W 8,181,848 -----W 7,199,076 $ 8,701,317 $ 7,656,148

Reinsurance income (Note 20) 274,972 286,914 292,431 305,130

Interest income (Notes 5 and 6) 685,464 615,945 728,984 655,052

Dividend income 23,520 15,892 25,013 16,901

Rental income 34,415 29,183 36,601 31,036

Gain on disposal of trading securities 1,627 1,834 1,730 1,950

Gain on valuation of trading securities (Notes 4 and 8) 318 469 338 499

Compensation income 3,019 6,423 3,210 6,831

Miscellaneous investment income 751 624 799 664

Expenses recovered 146,652 152,284 155,963 161,953

Miscellaneous income 786 526 835 558

Separate account income (Notes 2 and 31) 371,683 395,890 395,281 421,025

9,725,055 8,705,060 10,342,502 9,257,747

OPERATING EXPENSES:

Provision for policy reserves (Notes 2, 15 and 30) 1,756,956 1,153,772 1,868,506 1,227,025

Provision for catastrophe reserves (Note 16) 38,354 63,233 40,789 67,248

Claims paid (Note 28) 2,790,477 2,766,251 2,967,646 2,941,881

Dividend expense 8,134 6,423 8,650 6,831

Refund of long-term insurance policies 1,820,336 1,777,041 1,935,910 1,889,866

Reinsurance premium expenses (Note 20) 662,936 629,289 705,026 669,243

Interest expense 1,255 1,230 1,335 1,308

Loss on disposal of trading securities 933 4,145 992 4,408

Loss on valuation of trading securities (Note 4) 177 1,823 189 1,939

Selling and general operating expenses (Notes 10, 22 and 32) 1,383,861 1,233,197 1,471,723 1,311,493

Amortization of deferred acquisition costs (Note 21) 343,098 210,668 364,882 224,043

Investment administrative expenses (Notes 10 and 22) 82,564 75,906 87,806 80,725

Maintenance expenses on investments 16,071 13,875 17,092 14,756

Depreciation expense on investments (Note 10) 7,034 6,209 7,480 6,603

Miscellaneous investment expenses 2,847 2,132 3,027 2,267

Miscellaneous expenses 386 221 410 236

Separate account expense (Notes 2 and 31) 371,683 395,890 395,281 421,025

9,287,102 8,341,305 9,876,744 8,870,897

OPERATING INCOME 437,953 363,755 465,758 386,850

Korean Won(In millions, except per share amounts)

Translation into U.S. Dollars (Note 2)(In thousands, except per share amounts)

45ANNUAL

REPORT

2006

STATEMENTS OF INCOMES Samsung Fire &

Marine Insurance

2007 2006 2007 2006

OTHER INCOME (EXPENSES):

Gain on disposal of available-for-sale securities, net -----W 62,823 -----W 32,556 $ 66,812 $ 34,623

Gain on valuation of securities

accounted for using the equity method (Note 7) 6,652 5,336 7,074 5,675

Loss on valuation of securities

accounted for using the equity method (Note 7) (99) - (106) -

Gain on sales of securities

accounted for using the equity method (Note 7) - 1,193 - 1,269

Reversal of impairment loss on

available- for-sale securities (Note 5) - 2,909 - 3,094

Impairment loss on available-for-sale securities (Note 5) (2,755) (10,170) (2,930) (10,816)

Amortization (22,869) (18,503) (24,321) (19,678)

Foreign currency loss, net (4,109) (6,171) (4,370) (6,563)

Reversal of allowance for doubtful accounts 1 10,737 1 11,419

Donations (Note 34) (20,000) (22,943) (21,269) (24,400)

Separate account commission, net (Note 31) 4,744 3,946 5,045 4,197

Gain on derivatives, net (Note 30) 2,348 3,864 2,497 4,109

Miscellaneous, net 13,149 (6,341) 13,984 (6,744)

39,885 (3,587) 42,417 (3,815)

ORDINARY INCOME 477,838 360,168 508,175 383,035

EXTRAORDINARY ITEM - - - -

INCOME BEFORE INCOME TAX 477,838 360,168 508,175 383,035

INCOME TAX EXPENSE (Note 23) 136,664 98,126 145,341 104,356

NET INCOME -----W 341,174 -----W 262,042 $ 362,834 $ 278,679

NET INCOME PER COMMON SHARE (Note 29) -----W 7,488 -----W 5,739 $ 7.96 $ 6.10

DILUTED NET INCOME PER COMMON SHARE (Note 29) -----W 7,449 -----W 5,711 $ 7.92 $ 6.07

Korean Won(In millions, except per share amounts)

Translation into U.S. Dollars (Note 2)(In thousands, except per share amounts)

46



FINANCIAL SECTION

STATEMENTS OF APPROPRIATIONS OF RETAINED EARNINGSFOR THE YEARS ENDED MARCH 31, 2007 AND 2006

2007 2006 2007 2006

RETAINED EARNINGS BEFORE APPROPRIATIONS:

Retained earnings carried forward from prior years -----W 753 -----W 586 $ 801 $ 623

Net income 341,174 262,042 362,834 278,679

341,927 262,628 363,635 279,302

APPROPRIATIONS:

Dividends (Note 27) 72,052 71,875 76,626 76,438

Voluntary reserves - 190,000 - 202,063

72,052 261,875 76,626 278,501

UNAPPROPRIATED RETAINED

EARNINGS TO BE CARRIED

FORWARD TO SUBSEQUENT YEAR -----W 269,875 -----W 753 $ 287,009 $ 801



47ANNUAL

REPORT

2006

STATEMENTS OF CASH FLOWS Samsung Fire &

Marine Insurance

STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED MARCH 31, 2007 AND 2006

2007 2006 2007 2006

CASH FLOWS FROM OPERATING

ACTIVITIES:

Net income -----W 341,174 -----W 262,042 $ 362,834 $ 278,679

Adjustments to reconcile net income to net

cash provided by operating activities:

Executive compensation - stock options 101 739 107 786

Loss (gain) on disposal of trading securities, net (694) 2,311 (738) 2,458

Loss (gain) on valuation of trading securities, net (141) 1,354 (150) 1,440

Loss on foreign currency translation, net 1,664 3,700 1,770 3,935

Net provision for policy and catastrophe reserves 1,795,311 1,217,005 1,909,296 1,294,273

Gain on disposal of available-for-sale securities, net (62,823) (32,556) (66,812) (34,623)

Impairment loss on available-for-sale securities 2,755 10,170 2,930 10,816

Amortization of deferred acquisition cost 343,098 210,668 364,882 224,043

Compensation income (3,019) (6,423) (3,210) (6,831)

Loss on valuation of securities

accounted for using the equity method 99 - 106 -

Gain on valuation of securities

accounted for using the equity method (6,652) 5,336) (7,074) (5,675)

Gain on sales of securities

accounted for using the equity method - (1,193) - (1,269)

Reversal of impairment loss on available- for-sale securities - (2,909) - (3,094)

Interest income (25,033) (30,143) (26,622) (32,057)

Miscellaneous gain, net (230) (601) (245) (639)

Donations 4 - 4 -

Depreciation 58,648 48,772 62,371 51,869

Amortization 22,869 18,503 24,321 19,678

Provision for retirement and severance benefits 30,440 29,548 32,373 31,424

Bad debt expense 3,813 2,307 4,055 2,453

Reversal of allowance for doubtful accounts (1) (10,737) (1) (11,419)

Gain on disposal of property and equipment, net (2,344) (1,804) (2,493) (1,919)

Gain on derivatives, net (2,348) (3,864) (2,497) (4,109)

Changes in assets and liabilities resulting from operations:

Decrease in insurance receivables 1,155 11,954 1,228 12,713

Increase in other assets (73,456) (32,756) (78,120) (34,836)

Increase in deferred acquisition costs (621,266) (524,691) (660,710) (558,004)

Increase in accrued income (158) (3,359) (168) (3,572)

Decrease (increase) in leasehold and other deposits 5,240 (10,878) 5,573 (11,569)

Decrease (increase) in due from separate account 8,769 (11,817) 9,326 (12,567)

Increase in insurance payables 4,899 56,670 5,210 60,268



48



FINANCIAL SECTION

STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED MARCH 31, 2007 AND 2006

2007 2006 2007 2006

Increase in accrued expenses -----W 44,013 -----W 19,795 $ 46,808 $ 21,052

Payment of retirement and severance benefits (25,655) (19,576) (27,283) (20,819)

Decrease (increase) in deposits for severance insurance 11,693 (5,937) 12,436 (6,314)

Transfer of deposits from the National Pension Fund 299 225 318 239

Increase in pension plan assets (21,456) - (22,818) -

Decrease in due to separate account (6,748) (2,802) (7,177) (2,980)

Increase (decrease) in income tax payables 10,130 (9,929) 10,773 (10,559)

Decrease in deferred income tax liabilities (1,421) (6,791) (1,511) (7,222)

Increase (decrease) in rental deposits received (2,757) 1,972 (2,932) 2,097

Increase (decrease) in other liabilities (6,408) 29,231 (6,819) 31,087

Increase in overseas operation translation debit (1,514) (2,593) (1,610) (2,758)

Increase in dividends 1,736 - 1,846 -

Net cash provided by operating activities 1,823,786 1,200,271 1,939,577 1,276,475

CASH FLOWS FROM INVESTING

ACTIVITIES:

Decrease (increase) in bank deposits, net (157,900) 8,316 (167,925) 8,844

Increase in loans, net (485,270) (146,107) (516,080) (155,383)

Decrease (increase) in trading securities, net 267,681 (107,101) 284,676 (113,901)

Increase in available-for-sale securities, net (1,259,495) (815,123) (1,339,461) (866,875)

Increase in held-to-maturity securities (1,340) - (1,425) -

Decrease (increase) in securities

accounted for using the equity method 8,715 (4,729) 9,269 (5,029)

Increase in intangible assets (7,959) (7,505) (8,464) (7,981)

Acquisition of property and equipment, net (93,814) (89,262) (99,770) (94,929)

Decrease in financial derivative assets, net 9,483 35,618 10,084 37,879

Net cash used in investing activities (1,719,899) (1,125,893) (1,829,096) (1,197,375)

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of dividends (71,875) (71,751) (76,438) (76,306)

Increase (decrease) of borrowings, net (13,000) 13,100 (13,825) 13,932

Disposition of treasury stock 3,481 3,395 3,702 3,611

Net cash used in financing activities (81,394) (55,256) (86,561) (58,763)

NET INCREASE(DECREASE) IN CASH

AND CASH EQUIVALENTS 22,493 19,122 23,921 20,337

NET DECREASE IN CASH AND BANK DEPOSITS

DUE TO CONVERSION TO SUBSIDIARY IN CHINA - (28,010) - (29,788)

CASH AND BANK DEPOSITS, BEGINNING OF YEAR (Note 36) 76,110 84,998 80,942 90,394

CASH AND BANK DEPOSITS, END OF YEAR (Note 36) -----W 98,603 -----W 76,110 $ 104,863 $ 80,943



49ANNUAL

REPORT

2006

NOTES TO FINANCIAL STATEMENTS Samsung Fire &

Marine Insurance

NOTES TO FINANCIAL STATEMENTSFOR THE YEARS ENDED MARCH 31, 2007 AND 2006

Samsung Life Insurance Co., Ltd. 4,905,718 10.04 720 0.02

Treasury stock 3,841,596 7.86 300,780 9.14

Samsung Card Co., Ltd. 2,298,377 4.70 - -

Samsung Foundation of Culture 1,451,241 2.97 - -

Other 36,377,905 74.43 2,990,500 90.84

48,874,837 100.00 3,292,000 100.00

1. GENERAL

Samsung Fire & Marine Insurance Co., Ltd. (the “Company") was incorporated on January 26, 1952 under the Commercial Code of the Republic of

Korea to engage in non-life insurance and other related investment activities. The shares of the Company have been listed on the Korea Stock Exchange

since 1975. As of March 31, 2007, the Company’s issued common shares and preferred shares amounting to -----W24,802 million and -----W1,671 million,

respectively.

The Company’s shareholders as of March 31, 2007 are as follows:

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Financial Statement PresentationThe Company maintains its official accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in

conformity with the accounting principles generally accepted in the Republic of Korea. Certain accounting principles applied by the Company that

conform with financial accounting standards and accounting principles in the Republic of Korea may not conform with generally accepted accounting

principles in other countries. Accordingly, these financial statements are intended for use only by those who are informed about Korean accounting

principles and practices. The accompanying financial statements have been condensed, restructured and translated into English (with certain

expanded descriptions) from the Korean language financial statements. Certain information attached to the Korean language financial statements,

but not required for a fair presentation of the Company's financial position, results of operations or cash flows, is not presented in the accompanying

financial statements.

The accompanying financial statements are stated in Korean Won, the currency of the country in which the Company is incorporated and operates.

The translation of Korean Won amounts into U.S. dollar amounts is included solely for the convenience of the readers outside of the Republic of Korea

and has been made at the rate of -----W940.30 to US£§1.00 at March 31, 2007, the Base Rate announced by Seoul Money Brokerage Services, Ltd. Such

translation should not be construed as representations that the Korean won amounts could be converted at that or any other rate.

The significant accounting policies followed by the Company in the preparation of its financial statements are summarized below.

Application of the Statements of Korean Accounting StandardsThe Korean Accounting Standards Board (“KASB”) under the Korean Accounting Institute (“KAI”) has issued a series of Statements of Korea

Accounting Standards (“SKAS”) to replace the existing Korean Financial Accounting Standards since March 2001. As of March 31, 2007, the Korea

Accounting Standards Board (“KASB”) has published a series of Statements of Korea Accounting Standards (“SKAS”) No. 1~25, which replace the

existing financial accounting standards.

Shareholders Number ofshares

Common stock Preferred stock

Percentage ofownership (%)

Number ofshares

Percentage ofownership (%)

The Company prepared its financial statements as of March 31, 2007 in accordance with Statements of Korea Accounting Standards (“SKAS”) No.

1~13 (except No. 11) from April 1, 2004, SKAS No. 14~17 from April 1, 2005, SKAS No. 18~20 from April 1, 2006, and SKAS No. 21~25 will be

adopted from April 1, 2007.

The balance sheet as of March 31, 2006 and the related statements of income and cash flows for the year ended March 31, 2006, which are

presented for comparative purposes, are not restated in accordance with SKAS No. 18~20.

The major changes from adoption of new SKAS are as follows:

50



FINANCIAL SECTION


Statements of Korea Accounting Standards

No. 20 Related Party Disclosure

Major changes

- To expand notes for key management’s compensation

Revenue RecognitionRevenues from premium income are recognized at the time when such premium payments become due. However, in the case of insurance contracts

of which the first premium payment or lump-sum premium payment are uncollected as of the first day of the insured period due to payment extension

allowed by the Company, the first premium payment or lump-sum premium payment may be recognized as revenue in the period in which the first

day of insured period falls. If premium income is received before the nominated collection date, the Company records unearned insurance premium

based on calendar period calculation.

The Company applies the accrual basis in recognizing interest income related to deposits, loans and securities, except for non-secured uncollectible

receivables. Interest on loans and collapsible corporation’s securities, whose principal or interest is past due at the balance sheet date, is generally

not accrued. When a loan is placed on non-accrual status, previously accrued interest is generally reversed and deducted from the current interest

income, and future interest income is recognized on cash basis in accordance with the accounting standard.

Investment Securities other than those Accounted for Using the Equity Method

Classification of Securities

At acquisition, the Company classifies securities into one of the three categories: trading, held-to-maturity or available-for-sale. Trading securities

are those that were acquired principally to generate profits from short-term fluctuations in prices. Held-to-maturity securities are those with fixed or

determinable payments and fixed maturity that an enterprise has the positive intent and ability to hold to maturity. Available-for-sale securities are

those securities that are not classified either as held-to-maturity or trading securities. Trading securities are classified as short-term investment

securities, whereas available-for-sale and held-to-maturity securities are classified as long-term investment securities except for those whose maturity

dates or whose likelihood of being disposed are within one year from balance sheet date, which are classified as short-term investment securities.

Valuation of Securities

Investments in securities are initially recognized at cost, which includes the market price of the consideration given to acquire them and incidental

expenses. If the market price of the consideration is not available, the market prices of the securities purchased are used as the basis for

measurement. If neither the market prices of the consideration given nor those of the acquired securities are available, the acquisition cost is

measured at the best estimates of its fair value.

After initial recognition, held-to-maturity securities are valued at amortized cost. The difference between their acquisition costs and face vales

(commonly referred to as “discounts” or “premiums” on debt securities) is amortized over the remaining term of the securities by applying the

effective interest method and added to or subtracted from the acquisition costs and interest income of the remaining period. Trading securities are

valued at fair value, with unrealized holding gains or losses included in current operations. Available-for-sales securities are also valued at fair value,

with unrealized holding gains or losses included in capital adjustments, until the securities are sold or if the securities are determined to be impaired

and the lump-sum cumulative amount of capital adjustments are reflected in current operations. However, available-for-sales securities that are not

51ANNUAL

REPORT

2006


Marine Insurance

traded in an active market and whose fair values cannot be reliably estimated are accounted for at their acquisition cost. For those securities that are

traded in an active market (“marketable securities”), fair values refer to those quoted market prices, which are measured as the closing price at the

balance sheet date. The fair value of non-marketable securities are measured at the discounted future cash flows by using the discount rate that

appropriately reflects the credit rating of issuing entity assessed by a publicly reliable independent credit rating agency. If application of such

measurement method is not feasible, estimates of the fair values may be made using a reasonable valuation model or quoted market prices of similar

debt securities issued by entities conducting similar business in similar industries.

Securities are evaluated at each balance sheet date to determine whether there is any objective evidence of impairment loss. When any such

evidence exists, unless there is a clear counter-evidence that recognition of impairment is unnecessary, the Company estimates the recoverable

amount of the impaired security and recognizes any impairment loss in current operations. The amount of impairment loss of the held-to-maturity

security or non-marketable equity security is measured as the difference between the recoverable amount and the carrying amount. The recoverable

amount of held-to maturity security is the present value of expected future cash flows discounted at the securities' original effective interest rate. For

available-for-sale debt or equity security, the amount of impairment loss to be recognized in the current period is determined by subtracting the

amount of impairment loss of debt or equity security already recognized in prior period from the amount of amortized cost in excess of the recoverable

amount for debt security or the amount of the acquisition cost in excess of the fair value for equity security.

If the realizable values subsequently recovers, in case of a security stated at fair value, the increase in value is recorded in current operations, up to

the amount of the previously recognized impairment loss, while for security stated at amortized cost or acquisition cost, the increase in value is

recorded in current operations, so that its recovered value does not exceed what its amortized cost would be as of the recovery date if there had been

no impairment loss.

Securities Accounted for using the Equity MethodEquity securities held for investment in companies in which the Company is able to exercise significant influence over the operating and financial

policies of the investees are accounted for using the equity method. If the cost of the acquisition exceeded the acquirer’s interest in the fair value of

the identifiable assets and liabilities at the date of acquisition, the difference is amortized over the period during which future economic benefits are

expected to flow to the Company. However, if the cost of the acquisition is less than the acquirer’s interest in the fair value of the identifiable assets

and liabilities, (1) the difference that relates to expectations of future losses and expenses that are identified in the acquirer’s plan for the acquisition

is recognized as income in the income statement when the future losses and expenses are recognized, (2) the difference not exceeding the fair values

of acquired identifiable non-monetary assets is recognized as income on a systematic basis over the remaining weighted average useful life of the

identifiable acquired depreciable or amortizable assets, and (3) the difference in excess of the fair values of acquired identifiable non-monetary assets

is immediately recognized as income.

The Company’s share in the net income or net loss of investees is reflected in current operations. Changes in the retained earnings, capital surplus or

other capital accounts of investees are accounted for as an adjustment to retained earnings or to capital adjustments.

The Company’s portion of profits and losses resulting from inter-company (not subsidiary company) transactions that are recognized in assets, such as

inventories and fixed assets, are eliminated and charged to equity securities accounted for using the equity method. However, unrealized profits and

losses resulting from sales of assets from the Company to investee are eliminated in full.

Allowance for Loan LossesIn accordance with the Regulation on Supervision of Insurance Business (the “Supervisory Regulation”) legislated by the Korean Financial Supervisory

Service (FSS) and the Company’s analysis of its assets and estimated loss on uncollectible accounts computed using past collection experience, the

Company classifies all credits into five categories as normal, precautionary, substandard, doubtful or estimated loss, based on borrowers’ repayment

capability and historical financial transaction records. The Supervisory Regulation also requires the Company to provide the minimum rate of loss

provision for each category balance using the prescribed minimum percentages of 0.5 percent (individual loan is 0.75 percent) or more, 2 percent

(individual loan is 5 percent) or more, 20 percent or more, 50 percent or more and 100 percent, respectively.

52



FINANCIAL SECTION


However, the Company does not provide allowances for loans to the Korean government and local government entities, and call loans, which are

classified as normal, in accordance with the Accounting Standards for the Insurance Industry.

Restructuring of LoansIn case the contractual terms, such as those pertaining to the face amount, interest rate or maturity, have been modified to alleviate the debtor’s

burdens, as a result of an agreement between the creditor and debtor or through initiation of corporate reorganization procedures under court trustee

or under debtor’s management and in case of transfer of an asset or issue of equity securities in order to restructure troubled debts, the assets

transferred or equity securities issued are accounted for at fair values by the creditor. If the fair value of the asset received is less than the carrying

amount of the receivable before subtracting relevant provisions, the carrying amount of the receivable is written off against the relevant provisions

and any remaining difference is recognized as bad debt expense. Furthermore, the difference between the fair value and the carrying amount of the

asset transferred is recognized as gain or loss on disposal of the asset by the debtor. When a troubled debt restructuring occurs as a result of various

different types of modification of terms, the difference between the present value calculated by discounting the future cash flows determined under

the modified terms of the restructuring by the effective interest rate as of the inception of the debt and the carrying amount of the debt is recognized

as discount on present valuation of debt and gain on debt restructuring by the debtor. However, if the aggregate sum of the future cash flows

contractually determined in a troubled debt restructuring effected through modification of terms involving reduction of the maturity amount and

accrued interest of a debt is less than the carrying amount of the debt, the debtor shall first write down the carrying amount of the debt to the sum of

the future cash flows and the effects resulting from other modifications of terms are recognized.

Property and EquipmentProperty and equipment are stated at cost, except in the case of revaluation made in accordance with the Asset Revaluation Law on January 1,1999.

Significant additions or improvements extending the useful lives of assets are capitalized. However, normal maintenance and repairs are charged to

expense as incurred.

Interest costs on borrowings for property and equipment are expensed as incurred.

Depreciation is computed by the declining-balance method (straight-line method for buildings and structures purchased from January 1, 1995) using

the rates based on the useful lives of the respective assets as follows:

Development Costs and Other Intangible AssetsExpenditure on development incurred in conjunction with new software, in which the elements of cost can be identified and future economic benefits

are clearly expected, is capitalized and amortized on a straight-line basis over the expected periods to be benefited.

Other intangible assets, which are acquired by the Company, are stated at cost less accumulated amortization and impairment losses. Such assets

are amortized using the straight-line method over a reasonable period, based on the nature of the assets as follows:

Useful lives (years)

Buildings 10-60

Structures 15-25

Equipment 4-20

Vehicles 4

Useful lives (years)

Goodwill 5

Development cost 5

Software 4

Others 4

53ANNUAL

REPORT

2006


Marine Insurance

Insurance ReservesIn accordance with Article 120 of the Insurance Business Law, the Company is required to maintain insurance reserves determined as follows:

1) Reserve for outstanding claims

Reserve for outstanding claims is based on the accumulation of estimates for losses reported and incurred but not reported (IBNR) prior to the balance

sheet date on the direct business written by the Company and estimates received from ceding companies.

In accordance with the amended Regulation on Supervision of Insurance Business and Enforcement Rules of Supervision of Insurance Business, the

Company is required to report IBNR against long-term non-life insurance as reserve for outstanding claims. As a result, the Company recorded -----W53,642

million ($57,048 thousand) and -----W40,284 million ($42,842 thousand) of reserve for outstanding claims against long-term non-life insurance as of

March 31, 2007 and 2006, respectively.

2) Long-term insurance premium reserve

The Company maintains a reserve for the portion of premiums (and investment income on such portion), which is refundable to policyholders upon

maturity and cancellation of the policy under long-term deposit-type insurance, unless there has been a substantial claim for payment under the

policy.

3) Unearned premium reserve

The Company is required to maintain an unearned premium reserve at amounts determined based on lines of insurance and types of policy.

4) Reserves for participating policyholder dividend

The Company is required to maintain a reserve for participating policyholder dividend based on the regulations approved by the Governor of the

Financial Supervisory Service.

5) Excess participating policyholder dividend reserve

Pursuant to relevant laws and contracts, the Company may establish excess participating policyholder dividend reserve depending on the operating

results of related insurance products. The reserve may be used to pay participating policyholder dividend or additional dividend.

Catastrophe ReservesCatastrophe reserves are required based on the regulations approved by the Governor of the Financial Supervisory Service. Non-life insurance

companies may establish a catastrophe reserve amounting to 30%~100% multiplied net cash premiums by reserve basic rate for each type of

insurance products in proportion to underwriting profit for the year, if any, up to 50% (in case of car insurance, 40%) of the current year earned

premiums. These reserves can be used against exceptionally large claims in the future.

From this fiscal year, the Company provides reserve in proportion from 35% to 100% considering realized loss ratio as compared to 100% reserve

ratio until prior fiscal year. Accordingly, net income before tax increased by -----W31,613 million ($33,620 thousand).

Revenue Recognition of Compensation ReceivablesThe Company recognizes compensation receivables according to Accounting Standards for the Insurance Industry and Insurance Supervisory

Regulations. Compensation ratio is calculated by dividing the salvage and recovery account balance paid in the last three consecutive years by net

claims paid, and such ratio is applied to net claims paid for one year prior to the balance sheet date to arrive at the estimated compensation

receivables for the year.

54



FINANCIAL SECTION

Compensation ReceivablesOf the amounts paid for claims during the year, amounts recoverable by exercising compensation and other rights or through disposal of secured

assets acquired in the resolution of accidents are accounted for as compensation receivables and deducted directly from insurance reserves in the

accompanying balance sheet. Compensation receivables are calculated by multiplying the average recovery ratio (recovery amount/net claims) for the

last 3 years from the prior year balance sheet date to the amount of net claims for the last year from the prior year balance sheet date claimed.

Retirement and Severance BenefitsEmployees who have been with the Company for more than one year are entitled to lump-sum payments based on current rates of pay and length of

service when they leave the Company. The Company's estimated liability is based on the assumption that all employees left the Company on the

balance sheet date. From this year, the Company has made defined benefit retirement pension plan and defined contribution retirement pension

plan in Samsung Life Insurance which guarantees the employees’ pension right.

Defined benefit retirement pension plan is a financial instrument, which pay a lump-sum allowance at retirement or pay an annual pension after

retirement through pension plan assets accumulated by the Company. Accordingly, accrued severance indemnities in the accompanying balance

sheet are presented net of these pension plan assets. Defined contributions retirement pension plan is a retirement plan where in a certain amount

or percentage of money is set aside each year by the Company for the benefit of the employee, and the expense is recognized as Provision for

retirement and severance benefits.

In prior fiscal year, the deposit for severance benefits insurance is reflected in the accompanying balance sheets as a deduction from the liability for

retirement and severance benefits. Through March 1999, under the National Pension Law of Korea, the Company transferred a certain portion of

retirement allowances of employees to the National Pension Fund. The amount transferred reduces the retirement and severance benefit amount

payable to the employees when they leave the Company and is reflected in the accompanying financial statements as a reduction from the retirement

and severance benefit liability. However, from April 1999, a new regulation is applied and such transfers to the National Pension Fund are no longer

required.

Separate Account Assets and LiabilitiesIn accordance with Article No.108 of the Insurance Business Law and Article 34 of the Labor Standards Act, all assets and liabilities related to

retirement benefit insurance are managed and accounted for separately. And In accordance with Article No.6-23 of the Regulation on Supervision of

Insurance Business, operating incomes and operating expenses of capital guarantee separate account are increased by -----W371,683 million ($395,281

thousand) and -----W395,890 million ($421,025 thousand) for the years ended March 31, 2007 and 2006, respectively.

Deferred Acquisition CostsDeferred acquisition costs are equally amortized over the period of premium payment of insurance contracts or over seven years for insurance

contracts of which premium payment period exceeds seven years. Further, if the insurance contracts are surrendered or have lapsed, the related

unamortized balance of deferred acquisition costs is charged to current operations.

Premium DeficiencyWhen the pre-assumed interest rate to be applied in accumulating premium reserve is higher than the interest rate for one year time deposits and this

situation is expected to continue for a long period, the Company is considered to have a premium deficiency. This situation is becoming more

common given the current low interest rate environment in Korea.

The above reserve for premium deficiency is initially offset against any unamortized deferred acquisition costs and then against the excess dividend

reserve. The remaining balance, if any, is charged to current operations.


Accounting for Foreign Currency Transactions and TranslationThe Company maintains its accounts in Korean won. Transactions in foreign currencies are recorded in Korean won based on the prevailing rates of

exchange on the transaction date. Monetary accounts with balances denominated in foreign currencies are recorded and reported in the

accompanying financial statements at the exchange rates prevailing at the balance sheet dates. The balances have been translated using the basic

rate announced by Seoul Money Brokerage Services, Ltd., which was -----W940.30 to US $1.00 at March 31, 2007 and the resulting translation gains

and losses are reflected in current operations. Financial statements of overseas branches and subsidiaries in which investments are accounted for

using the equity method are translated based on the prevailing rates at the balance sheet dates.

Income TaxIncome tax on the earnings for the year comprises current and deferred taxes. Income tax is recognized in the statement of income, except to the

extent that it relates to items recognized directly to equity, in which case it is recognized in equity.

Deferred taxes are provided using the asset and liability method, providing for temporary differences between the carrying amounts of assets and

liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred taxes provided is based on the

expected realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted at the balance sheet date.

Deferred tax assets are recognized only to the extent that it is probable that future taxable earnings will be available against which the unused tax

losses and credits can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be

realized.

From this fiscal year, the Company applies Korea Accounting Institute Opinion 06-02 “Deferred Income Taxes on Investments in Subsidiaries,

Associates and Interests in Joint Ventures” which was announced on Dec. 29, 2006.

DerivativesDerivative instruments are presented as assets or liabilities valued principally at fair value of the rights or obligations associated with the derivative

contracts. The unrealized gain or loss from derivative transactions is recognized in current operations.

However, for derivative instruments for the purpose of hedging the exposure to the variability of cash flows of a forecasted transaction, the effective

portion of the derivative’s gain or loss is deferred as a capital adjustment, a component of shareholder’s equity. The ineffective portion of the gain or

loss is charged or credited to current operations.

Stock OptionsThe stock option program allows the Company’s employees to acquire shares of the Company. The option exercise price is generally fixed below the

market price of underlying shares at the date of the grant. The Company values stock options based on option pricing model under the fair value

method and recognizes this value as an expense over the period in which the options vest. When the options are exercised, equity is increased by

the amount of the proceeds received, and the difference between the exercise price and market price is included in compensation cost and credited to

the capital adjustment account.

Contingent LiabilitiesContingent losses are generally recognized as a liability when probable and reasonably estimable.

Recognition of Liabilities on Expired InsuranceThe Company has not recognized other liabilities on insurance of which extinctive prescription of insurance payment expired because legal payment

obligation is not imposed. However, the Company recognized liabilities amounting to -----W20,535 million, which is probable and reasonably estimable

55ANNUAL

REPORT

2006


Marine Insurance

based on insurance payment empirical rate from the year ended March 31, 2007 because payment obligation is actually granted to the Company in

view of the public character of insurance transaction and the practice of insurance industries, even though the extinctive prescription of insurance

payment expired.

3. RESTRICTED BANK DEPOSITS

Restricted bank deposits as of March 31, 2007 and 2006 are as follows:

4. TRADING SECURITIES

Trading securities as of March 31, 2007 and 2006 are as follows:

As the trading securities are valued at fair value, the gains on valuation of trading securities amounted to -----W318 million ($338 thousand) and the

losses on valuation of trading securities amounted to -----W177 million ($189 thousand) for the year ended March 31, 2007.

5. AVAILABLE-FOR-SALE SECURITIES

(1) Available-for-sale securities as of March 31, 2007 and 2006 are as follows:

56



FINANCIAL SECTION


2007 2006 2007 2006

Deposits for maintenance of checking accounts -----W 11 -----W 8 $ 12 $ 9



Government and public bonds -----W 91,098 -----W 91,218 -----W 120 -----W 106,564

Special bonds 120,003 119,901 (102) 413,388

Corporate bonds - - - 11,795

Beneficiary certificates 50,000 50,081 81 -

Securities denominated in foreign currencies 51,801 51,843 42 46,270

-----W 312,902 -----W 313,043 -----W 141 -----W 578,017

Translation into U.S. Dollars (In thousands) (Note 2) $ 332,768 $ 332,918 $ 150 $ 614,716

Book value before valuation Fair value

2007

Book value

2006

Valuation gain(loss)

(Won in millions)

2007 2006 2007 2006

Equity securities -----W 1,357,997 -----W 1,532,663 $ 1,444,217 $ 1,629,972

Investments in partnerships 245 390 261 415

Government and public bonds 2,574,051 3,168,470 2,737,478 3,369,637

Special bonds 3,590,803 2,388,761 3,818,784 2,540,424

Corporate bonds 1,313,016 1,246,533 1,396,380 1,325,676

Beneficiary certificates 304,933 104,604 324,293 111,245

Securities denominated in foreign currencies 395,148 165,735 420,236 176,258

Structured securities 891,546 565,725 948,151 601,643

Others 5,640 7,850 5,998 8,349

-----W 10,433,379 -----W 9,180,731 $ 11,095,798 $ 9,763,619



57ANNUAL

REPORT

2006


Marine Insurance

(3) For the years ended March 31, 2007 and 2006, the Company recorded net impairment loss on available-for-sale securities amounting to -----W2,755

million ($2,930 thousand) and -----W10,170 million ($10,816 thousand), respectively, which are not expected to be recovered. The Company also

recorded reversal of impairment loss amounting to -----W2,909 million ($3,094 thousand) whose fair value were recovered for the years ended March 31,

2006.

(4) Maturities of debt securities included in available-for-sale securities as of March 31, 2007 are as follows:

Equity securities -----W 1,303,658 -----W (134,146) -----W 16,900 -----W (1,528) -----W 1,151,084

Investments in partnerships 174 108 174 - 108

Government and public bonds (35,175) 42,473 (7,825) - 15,123

Special bonds (19,800) 25,310 1,738 - 3,772

Corporate bonds (425) 4,939 1,789 - 2,725

Beneficiary certificates 41,264 19,262 7,257 - 53,269

Securities denominated in foreign currencies 7,607 (238) 3,762 - 3,607

Structured securities 7,217 (5,653) 1,447 - 117

Others 1,074 124 686 - 512

-----W 1,305,594 -----W (47,821) -----W 25,928 -----W (1,528) -----W 1,230,317

Translation into U.S. Dollars (In thousands) (Note 2) $ 1,388,487 $ (50,857) $ 27,574 $ (1,625) $ 1,308,431

BeginningbalanceDescription Gain(loss) on

Valuation Others Ending balanceRealized ondisposal

(Won in millions)

(2) Changes in gain (loss) on valuation of available-for-sale securities recorded as capital adjustments (before deferred taxes), all of which are stated

at fair value for the year ended March 31, 2007, are as follows:

For the year ended March 31, 2007, the Company recognized interest income amounting to -----W17,848 million ($18,981 thousand) and -----W424,102

million ($451,028 thousand) related to trading securities and available-for-sale securities, respectively.

6. HELD-TO-MATURITY SECURITIES

Held-to-maturity securities as of March 31, 2007 are as follows:

(*) Bonds consist of government and public bonds, special bonds and corporate bonds.(**) Other securities consist of securities denominated in foreign currencies and structured securities.

Within 1 year -----W 933,868 -----W 931,404 -----W 40,000 -----W 39,759

Within 5 years 3,624,696 3,614,983 277,217 273,580

Within 10 years 2,914,692 2,880,037 687,381 686,715

More than 10 years 48,146 51,446 133,806 136,036

-----W 7,521,402 -----W 7,477,870 -----W 1,138,404 -----W 1,136,090

Face valueMaturities Book value

Bonds (*)

Book value

Other securities (**)

Face value

(Won in millions)

For the year ended March 31, 2007, the Company recognized interest income amounting to -----W51 million ($54 thousand) related to held-to-maturity

securities.

Within 1 year Special bonds Industrial finance bond and others -----W 1,340 -----W 1,340

Translation into U.S. Dollars (In thousands) (Note 2) $ 1,425 $ 1,425

TypeMaturities Description Book valueAcquisition cost

(Won in millions)

7. SECURITIES ACCOUNTED FOR USING THE EQUITY METHOD

(1) Securities accounted for using the equity method as of March 31, 2007 and 2006 consist of the following:

The Company has significant influence on Macquarie Central, KOCREPII, KOCREPIII, KOCREPVII and New Airport Hiway since the Company’s

employee holds an additional position for the directors of invested companies. Until prior fiscal year, the Company had excluded these invested

companies from applying securities accounted for using the equity method since the amount of changes in equity is not significant, while evaluating

them as available-for-sale securities. From this fiscal year, however, the Company has reclassified them into securities accounted for using the equity

method since the amount of changes in equity is considered significant. As a result, the Company transferred available-for-sale securities amounting

to -----W14,535 million ($15,458 thousand) and gain on valuation of available-for-sale securities amounting to -----W1,528 million ($1,625 thousand) into

securities accounted for using the equity method amounting to -----W13,007 million ($13,833 thousand).

58



FINANCIAL SECTION


P.T Asuransi Samsung Tugu 70.00 -----W 3,761 -----W 3,591 -----W 3,591 $ 3,819

Samsung Fire & Marine Insurance

Claim Adjustment Service 96.79 880 1,926 1,926 2,048

Anycar Claim Adjustment Service 100.00 250 536 536 570

Macquarie Central 4.98 3,800 3,804 3,804 4,046

KOCREPII 11.61 65 84 84 89

KOCREPIII 4.71 3,200 3,346 3,346 3,558

KOCREPVII 4.83 2,900 2,901 2,901 3,085

New Airport Hiway 1.38 3,042 3,138 3,138 3,337

Samsung Vina Insurance 50.00 3,031 2,445 2,445 2,600

Samsung Venture Investment 29.00 2,757 3,744 3,744 3,982

Samsung Fire & Marine Insurance of

China Limited (*) 100.00 32,594 37,142 37,142 39,501

-----W 56,280 -----W 62,657 -----W 62,657 $ 66,635

Ownershipratio (%)Investees Acquisition

cost Book value Translation into U.S. Dollars (Note 2)

Net bookvalue

(Won in millions, dollars in thousands)2007

P.T Asuransi Samsung Tugu 70.00 -----W 3,761 -----W 2,801 -----W 2,801 $ 2,979


Claim Adjustment Service 96.79 880 1,759 1,759 1,871

Anycar Claim Adjustment Service 100.00 250 400 400 425

Samsung Vina Insurance 50.00 3,031 2,382 2,382 2,533

Samsung Venture Investment 29.00 11,472 11,968 11,968 12,728

Samsung Fire & Marine Insurance of China Limited (*) 100.00 32,594 33,628 33,628 35,763

-----W 51,988 -----W 52,938 -----W 52,938 $ 56,299

Ownershipratio (%)Investees Acquisition

cost Book value Translation into U.S. Dollars (Note 2)

Net bookvalue

(Won in millions, dollars in thousands)2006

(*) Samsung Fire & Marine Insurance of China Limited was converted from China branch to corporation for the year ended March 31, 2006 (See Note 39).

59ANNUAL

REPORT

2006


Marine Insurance

(2) The valuation of securities accounted for using the equity method for the years ended March 31, 2007 and 2006 wereas as follows:

Net asset value of Samsung Fire & Marine Insurance Claim Adjustment Service, Anycar Claim Adjustment Service, P.T Asuransi Samsung Tugu,

Samsung Vina Insurance, Samsung Venture Investment and Samsung Fire & Marine Insurance of China Limited are calculated based on its unaudited

financial statements as of March 31, 2007. Its net asset value may change if audited (reviewed) financial statements were used.

In addition, for Macquarie Central, KOCREPII, KOCREPIII and KOCREPVII, as it is impossible to obtain their financial statements as of March 31, 2007

at the moment, the Company used the financial statements as of December 31, 2006 for evaluation. However, For Macquarie Central and New

Airport Hiway, on the other hand, the Company decreased the securities accounted for using the equity method since it gained from the dividend

after the settling day of these invested companies. Due to this way of accounting As a result, there is difference in amount as much as of -----W250

million ($266 thousand) and -----W565 million ($601 thousand) between the equity of net asset of the invested companies and securities accounted for

using the equity method.

Except for the matters mentioned above, the Company's executives expect that there is no significant difference between the financial statements

used for evaluation and the financial statements audited hereafter. When the Company evaluates the securities of investees based on unaudited

Investees

(Won in millions)2007

P.T Asuransi Samsung Tugu -----W 2,801 -----W 784 -----W 6 -----W 3,591


Claim Adjustment Service 1,759 167 - 1,926

Anycar Claim Adjustment Service 400 136 - 536

Macquarie Central - 498 3,306 3,804

KOCREPII - 19 65 84

KOCREPIII - 466 2,880 3,346

KOCREPVII - 380 2,521 2,901

New Airport Hiway - 662 2,476 3,138

Samsung Vina Insurance 2,382 115 (52) 2,445

Samsung Venture Investment 11,968 (99) (8,125) 3,744

Samsung Fire & Marine Insurance of China Limited 33,628 3,425 89 37,142

-----W 52,938 -----W 6,553 -----W 3,166 -----W 62,657

Translation into U.S. Dollars (In thousands) (Note 2) $ 56,299 $ 6,968 $ 3,367 $ 66,635

Beginningbook value

Equity income (loss)on valuation

Endingbook value

Other increase(decrease)

Investees

( Won in millions)2006

P.T Asuransi Samsung Tugu -----W 2,290 -----W 530 -----W (19) -----W 2,801

Samsung Insurance Company of Europe Limited 791 - (791) -


Claim Adjustment Service 1,340 419 - 1,759

Anycar Claim Adjustment Service 233 167 - 400

Samsung Vina Insurance 2,294 93 (5) 2,382

Samsung Venture Investment 879 2,854 235 11,968

Samsung Fire & Marine Insurance of China Limited - 1,273 32,355 33,628

-----W 15,827 -----W 5,336 -----W 31,775 -----W 52,938


Beginningbook value

Equity income (loss)on valuation

Endingbook value

Other increase(decrease)

financial statements or the adjusted financial statements which reflects difference in the accounting period, the Company verifies the reliability of the

financial statements, which proved there is no significant discrepancy. The elimination of investment account did not incurred at the time of

acquisition for the above securities accounted for using the equity method. In case of Samsung Fire & Marine Insurance Claim Adjustment Service,

the negative goodwill due to equity ratio change caused by offset of treasury stock by retained earnings has occurred and the Company recognized

this change in prior year.

(3) The summarized financial information of investees, of which securities are accounted for using the equity method as of and for the year ended

March 31, 2007, is as follows:

60



FINANCIAL SECTION

P.T Asuransi Samsung Tugu -----W 8,689 -----W 3,559 -----W 3,163 -----W 1,120

Samsung Fire & Marine Insurance Claim Adjustment Service 6,789 4,799 65,125 173

Anycar Claim Adjustment Service 3,713 3,177 22,571 136

Macquarie Central 71,700 90,303 22,378 10,009

KOCREPII 1,601 879 - (9)

KOCREPIII 155,206 84,100 18,494 6,735

KOCREPVII 125,556 65,540 19,428 7,854

New Airport Hiway 1,274,083 1,006,472 123,812 44,924

Samsung Vina Insurance 8,667 3,777 2,775 229

Samsung Venture Investment 13,177 267 5,883 (342)

Samsung Fire & Marine Insurance of China Limited 46,452 9,310 4,818 3,592

Investees Total assets Total liabilities Net income (loss)Sales


Beneficiary certificates -----W 160,717 -----W 213,140 -----W 59,740 -----W 100,096


Description Acquisition cost Fair value Fair valueAcquisition cost

8. DISCRETIONARY ASSET MANAGEMENT CONTRACTS AND OTHERS

(1) Discretionary asset management contracts

The Company has entered into discretionary asset management contracts with investment trust management company (Samsung Trust Investment

Corporation), in order to manage trading securities and available-for-sale securities amounting to -----W29,242 million ($31,099 thousand) and -----W7,393,364

million ($7,862,771 thousand), respectively, as of March 31, 2007.

The Company entrusts Prudential Financial, Inc. with the management of foreign investment securities among trading securities according to the

discretionary asset management contracts. All amount of corresponding foreign investment securities are foreign bonds of which book value is -----W51,843

million ($55,135 thousand), and the gain amounting to -----W42 million ($45 thousand) from foreign investment securities are reflected in the income

statements regarded as the account for the gain on valuation for trading securities.

(2) Private equity fund

Private equity fund as of March 31, 2007 and 2006 consist of the following is summarized below. The Company presents private equity fund as a

beneficiary certificates of the available-for-sale securities.


2007 2006(Won in millions)

61ANNUAL

REPORT

2006


Marine Insurance

9. LOANS

(1) In accordance with the Insurance Business Act and the Regulation on Supervision of Insurance Business, the Company provides various loans.

Loans as of March 31, 2007 bear an annual interest rate ranging from 5.40% to 15.50%. Ratios of allowance for loan losses are 1.29%, 1.43%,

1.85%, and 2.26% in 2007, 2006, 2005 and 2004, respectively.

(2) Loans as of March 31, 2007 and 2006 are summarized as follows:

For the years ended March 31, 2007 and 2006, the Company recognized gain (loss) on valuation of a beneficiary certificates as a capital adjustment

amounting to -----W52,423 million ($55,751 thousand) and -----W41,166 million ($43,780 thousand) related to private equity fund. And In addition, the

Company recorded disposal loss on beneficiary certificates amounting to -----W18,474 million ($19,647 thousand) related to private equity fund.

In addition, Main assets of private equity fund as of March 31, 2007 are as follows:Korean Won

(In millions)


Equity securities -----W 141,441 $ 150,421

Call loans 11,343 12,063

Bank deposits 291 309

Time deposits 19,524 20,764

Bonds 37,660 40,051

Other assets 2,881 3,064

-----W 213,140 $ 226,672

Description AmountAmount

2007 2006 2007 2006

Call loan -----W 121,200 -----W 130,000 $ 128,895 $ 138,254

Policy loans 1,226,380 1,086,532 1,304,243 1,155,516

Loans secured by real estate 1,895,332 1,639,106 2,015,667 1,743,173

Unsecured loans 55,489 65,977 59,012 70,166

Loans secured by third party guarantees 4,493 6,531 4,778 6,946

Other loans 325,833 216,845 346,520 230,613

3,628,727 3,144,991 3,859,116 3,344,668

Allowance for loan losses (39,306) (37,246) (41,801) (39,611)

-----W 3,589,421 -----W 3,107,745 $ 3,817,315 $ 3,305,057



(3) Loans by maturity as of March 31, 2007 and 2006 are as follows:

(3) Loans to employees as of March 31, 2007 and 2006 are as follows:

62



FINANCIAL SECTION


Within1 year

Within2 year

More than5 years TotalWithin

5 yearWithin3 year

(In millions)2006

Call loans -----W 121,200 -----W - -----W - -----W - -----W - -----W 121,200

Policy loans 92,699 73,246 70,763 121,045 868,627 1,226,380

Loans secured by real estate 155,559 105,359 34,880 107,163 1,492,371 1,895,332

Unsecured loans 34,118 14,971 4,671 386 1,343 55,489

Loans secured by third party guarantees 1,284 405 147 1,361 1,296 4,493

Other loans 15,229 7,030 10,000 63,771 229,803 325,833

-----W 420,089 -----W 201,011 -----W 120,461 -----W 293,726 -----W 2,593,440 -----W 3,628,727

Translation into U.S. Dollars (In thousands) (Note 2) $ 446,761 $ 213,773 $ 128,109 $ 312,375 $ 2,758,098 $ 3,859,116

Within1 year

Within2 year

More than5 years TotalWithin

5 yearWithin3 year

(In millions)2007

2007 2006 2007 2006

Loans secured by real estate -----W 23,557 -----W 22,096 $ 25,053 $ 23,499

Unsecured loans 30,882 34,826 32,843 37,037

Loans secured by third party guarantees 3,574 5,264 3,800 5,598

Other loans 29 59 31 63

-----W 58,042 -----W 62,245 $ 61,727 $ 66,197



Call loans -----W 130,000 -----W - -----W - -----W - -----W - -----W 130,000

Policy loans 97,860 85,668 67,311 99,884 735,809 1,086,532

Loans secured by real estate 120,783 138,582 131,769 92,580 1,155,392 1,639,106

Unsecured loans 39,998 16,713 5,421 730 3,115 65,977

Loans secured by third party guarantees 1,818 585 40 596 3,492 6,531

Other loans 11,601 12,540 7,083 7,000 178,621 216,845

-----W 402,060 -----W 254,088 -----W 211,624 -----W 200,790 -----W 2,076,429 -----W 3,144,991

Translation into U.S. Dollars (In thousands) (Note 2) $ 427,587 $ 270,220 $ 225,060 $ 213,538 $ 2,208,263 $ 3,344,668

63ANNUAL

REPORT

2006


Marine Insurance

(4) Loans by forward looking criteria as of March 31, 2007 and 2006 are summarized as follows:

Policy loans -----W 1,226,380 -----W - -----W - -----W - -----W - -----W 1,226,380

Loans secured by real estate 1,869,045 5,442 12,382 1,429 7,034 1,895,332

Unsecured loans 54,643 215 - 302 329 55,489

Loans secured by third party guarantees 4,448 45 - - - 4,493

Other loans 325,450 - 2 381 - 325,833

3,479,966 5,702 12,384 2,112 7,363 3,507,527

Insurance receivables (*) 74,920 4,453 293 1,838 3,315 84,819

Other receivables 147,744 10 8 2,776 1,191 151,729

Accrued income 16,766 120 - - - 16,886

Notes receivable 2,399 - - - - 2,399

Other assets (**) - - 318 - - 318

241,829 4,583 619 4,614 4,506 256,151

Total -----W 3,721,795 -----W 10,285 -----W 13,003 -----W 6,726 -----W 11,869 -----W 3,763,678

Translation into

U.S. Dollars (In thousands) (Note 2) $ 3,958,093 $ 10,938 $ 13,828 $ 7,153 $ 12,623 $ 4,002,635

Normal Precautionary Loss TotalDoubtfulSubstandard

(In millions)2007

Policy loans -----W 1,086,532 -----W - -----W - -----W - -----W - -----W 1,086,532

Loans secured by real estate 1,605,916 3,842 18,649 3,117 7,582 1,639,106

Unsecured loans 63,067 542 - 1,314 1,054 65,977

Loans secured by third party guarantees 6,503 28 - - - 6,531

Other loans 216,354 - - 483 8 216,845

2,978,372 4,412 18,649 4,914 8,644 3,014,991

Insurance receivables (*) 74,040 4,576 1,003 2,573 2,829 85,021

Other receivables 104,673 7 - 2,990 1,041 108,711

Accrued income 15,754 103 - 1 33 15,891

Notes receivable 1,476 - - - - 1,476

Other assets (**) - - 398 - - 398

195,943 4,686 1,401 5,564 3,903 211,497

Total -----W 3,174,315 -----W 9,098 -----W 20,050 -----W 10,478 -----W 12,547 -----W 3,226,488

Translation into

U.S. Dollars (In thousands) (Note 2) $ 3,375,853 $ 9,676 $ 21,323 $ 11,143 $ 13,344 $ 3,431,339

Normal Precautionary Loss TotalDoubtfulSubstandard

(In millions)2006

(*) Deducting the Net of insurance payables that correspond to insurance receivables. (**) The Company reserves allowance for doubtful accounts for Credit provisional payment.


64



FINANCIAL SECTION

Loans -----W 7,363 -----W 7,363 -----W 8,644 -----W 8,644

Insurance receivables 3,315 2,190 2,829 1,798

Other receivables 1,191 397 1,041 231

Accrued income - - 33 33

-----W 11,869 -----W 9,950 -----W 12,547 -----W 10,706


Loans Claim Loans Claim

2007 2006

(5) Loans classified as loss but haven’t met its extinctive prescription or lost its claim are as follows:(In millions)

10. PROPERTY AND EQUIPMENT

(1) The details of property and equipment as of March 31, 2007 and 2006 are as follows:

2007 2006 2007 2006

Land -----W 347,872 -----W 344,486 $ 369,959 $ 366,358

Buildings 688,345 642,645 732,048 683,447

Structures 2,825 2,551 3,004 2,713

Furniture and other equipment 362,130 352,878 385,122 375,282

Vehicles 2,143 2,347 2,279 2,496

Construction in progress 26,490 28,611 28,172 30,427

1,429,805 1,373,518 1,520,584 1,460,723

Accumulated depreciation (402,311) (383,511) (427,854) (407,860)

-----W 1,027,494 -----W 990,007 $ 1,092,730 $ 1,052,863



As of March 31, 2007 and 2006, the published value of land is -----W412,285 million ($438,461 thousand) and -----W346,659 million ($368,669 thousand),

respectively, based on the disclosed public land price announced by the government pursuant to the Laws on Disclosure of Land Price and Valuation

of Land.

(2) The change in property and equipment for the year ended March 31, 2007 is as follows:

In addition, depreciation for the year amounting to -----W42,562 million ($45,264 thousand), -----W9,052 million ($9,627 thousand) and -----W7,034 million

($7,480 thousand) is charged in selling and general operating expenses, investment administrative expenses and depreciation expense on

investments, respectively.

Land -----W 344,486 -----W 5,012 -----W 1,629 -----W - -----W 3 -----W 347,872

Buildings 552,877 6,004 811 15,997 40,719 582,792

Structures 2,040 275 - 89 - 2,226

Furniture and other equipment 61,588 51,119 2,636 42,277 - 67,794

Vehicles 405 217 17 285 - 320

Construction in progress 28,611 38,601 - - (40,722) 26,490

-----W 990,007 -----W 101,228 -----W 5,093 -----W 58,648 -----W - -----W 1,027,494

Translation into U.S. Dollars (In thousands) (Note 2) $ 1,052,863 $ 107,655 $ 5,417 $ 62,371 $ - $ 1,092,730

BeginningBook value Acquisition Transfer from

other accountsEnding

book valueDepreciationDisposal

(Won in millions)

65ANNUAL

REPORT

2006


Marine Insurance

11. INTANGIBLE ASSETS

The details of intangible assets as of March 31, 2007 and 2006 are as follows:

2007 2006 2007 2006

Goodwill -----W 213 -----W 293 $ 227 $ 312

Development cost 65,051 40,571 69,181 43,147

Software 14,818 12,979 15,759 13,803

Others 68 42 72 44

-----W 80,150 -----W 53,885 $ 85,239 $ 57,306



12. INSURANCE RECEIVABLES AND INSURANCE PAYABLES

Insurance receivables and insurance payables as of March 31, 2007 and 2006 are as follows:

2007 2006 2007 2006

Insurance receivables:

Insurance receivables -----W 73,601 -----W 67,894 $ 78,274 $ 72,205

Due to agents 364 432 387 459

Co-insurance payable 795 190 845 202

Receivables related to agency business 15,372 14,273 16,348 15,179

Reinsurance accounts receivable 59,847 64,504 63,647 68,599

Overseas reinsurance premiums receivable 24,089 28,342 25,618 30,141

Deposits on reinsurance treaty ceded 3,870 3,568 4,116 3,796

177,938 179,203 189,235 190,581

Less: Allowance for doubtful accounts (4,756) (4,778) (5,058) (5,082)

-----W 173,182 -----W 174,425 $ 184,177 $ 185,499

Insurance payables:

Claims payable -----W 99,606 -----W 117,371 $ 105,930 $ 124,823

Due to agents 36,070 30,862 38,360 32,821

Premiums refund payable 2,174 2,216 2,312 2,357

Co-insurance payable - 91 - 97

Payables related to agency business 20,641 17,457 21,952 18,565

Reinsurance accounts payable 82,737 77,281 87,990 82,188

Overseas reinsurance premiums payable 33,536 30,183 35,665 32,099

Deposits on reinsurance treaty ceded 12,119 6,549 12,888 6,965

-----W 286,883 -----W 282,010 $ 305,097 $ 299,915




66



FINANCIAL SECTION

13. COMPENSATION RECEIVABLES

Compensation receivables as of March 31, 2007 and 2006 are as follows:

14. INSURED ASSETS

Insured assets of the Company as of March 31, 2007 are as follows:

In addition, the Company is insured against various indemnity liabilities.

15. POLICY RESERVES

(1) Policy reserves as of March 31, 2007 are summarized as follows:

2007 2006 2007 2006

Fire insurance -----W 348 -----W 245 $ 370 $ 261

Marine insurance 3,735 2,179 3,972 2,317

Automobile insurance 89,957 89,239 95,668 94,905

Special insurance 1,602 1,415 1,704 1,505

Guarantee insurance 861 884 916 940

Overseas insurance 83 52 88 55

Long-term insurance 818 360 870 383

Pension insurance (23) (12) (24) (13)

-----W 97,381 -----W 94,362 $ 103,564 $ 100,353



Type Insured assets Insured amount Insured amount

Package insurance Office building -----W 926,380 $ 985,196



Outstanding claims -----W 330,722 -----W 547,975 -----W 287,046 -----W 11,480 -----W 1,177,223

Long-term insurance - - 7,408,072 2,258,489 9,666,561

Unearned premiums 455,114 1,372,247 14,931 6,674 1,848,966

Participating policyholders’ dividends - - 5,539 124,372 129,911

Excess participating policyholders’ dividends - - 2,462 34,533 36,995

Reserve for reinsurance premiums (380,260) (934) (10,092) (186) (391,472)

-----W 405,576 -----W 1,919,288 -----W 7,707,958 -----W 2,435,362 -----W 12,468,184

General Automobile Long-term Pension Total


Outstanding claims $ 351,720 $ 582,766 $ 305,271 $ 12,208 $ 1,251,965






$ 431,326 $ 2,041,144 $ 8,197,339 $ 2,589,985 $ 13,259,794



67ANNUAL

REPORT

2006


Marine Insurance

(2) Policy reserves as of March 31, 2006 are summarized as follows:

Outstanding claims -----W 274,516 -----W 522,215 -----W 231,118 -----W 13,277 -----W 1,041,126






-----W 332,177 -----W 1,665,950 -----W 6,568,682 -----W 2,144,418 -----W 10,711,227



Outstanding claims $ 291,945 $ 555,371 $ 245,792 $ 14,120 $ 1,107,228


Unearned premiums 441,060 1,217,112 15,378 6,,884 1,680,434




$ 353,267 $ 1,771,723 $ 6,985,730 $ 2,280,567 $ 11,391,287



16. CATASTROPHE RESERVES

Catastrophe reserves as of March 31, 2007 and 2006 are summarized as follows:

2007 2006 2007 2006

Beginning balance -----W 896,982 -----W 833,749 $ 953,932 $ 886,684

Net increase:

Fire insurance 905 1,094 962 1,163

Marine insurance (1,978) - (2,104) -

Automobile insurance 24,479 46,611 26,033 49,570

Special insurance 14,399 14,642 15,313 15,572

Guarantee insurance 1 - 1 -

Overseas insurance 549 886 584 943

Sub total 38,355 63,233 40,789 67,248

Ending balance -----W 935,337 -----W 896,982 $ 994,722 $ 953,932




68



FINANCIAL SECTION

17. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCY

Assets and liabilities denominated in foreign currency as of March 31, 2007 and 2006 are summarized as follows :

Assets:

Bank deposits $ 3,702 -----W 3,481 $ 3,898 -----W 3,804

Overseas securities 32,158 30,238 34,625 33,791

Structured securities 26,588 25,000 48,456 47,288

Insurance receivables 11,806 11,101 15,684 15,306

Liabilities:

Insurance payables $ 27,853 -----W 26,190 $ 20,673 -----W 20,175

2007 2006

U.S. Dollars Korean Won equivalent (*) U.S. Dollars Korean Won

equivalent (*)

(*) The Korean Won equivalent of assets and liabilities denominated in foreign currency are translated in these financial statements based on the basic rate (-----W940.30 and -----W975.90 toUS$1.00 at March 31, 2007 and 2006, respectively) or cross rates for other currencies announced by Seoul Money Brokerage Services Ltd. at the balance sheet dates.

18. BORROWINGS

Borrowings as of March 31, 2007 and 2006 consist of the following:

Type Bank interest rate 2007 2006

Call money Korea Investment Trust Management 4.69% -----W 100 -----W -

Call money Goodmorning Shinhan Securities 4.10% - 400

Call money Korea Investment & Securities 4.10% - 12,700

-----W 100 -----W 13,100

Translation into

U.S. Dollars(Note 2) $ 106 $ 13,932


19. PREMIUM INCOME

(1) Premium income for the year ended March 31, 2007 is as follows:

Fire insurance -----W 52,952 -----W - -----W (418) -----W - -----W 52,534

Marine insurance 181,602 253 (1,342) - 180,513

Automobile insurance 2,760,456 - (122,028) - 2,638,428

Special insurance 692,075 2,167 (4,248) - 689,994

Guarantee insurance - 10 - - 10

Overseas insurance 9,495 41,694 - (5) 51,184

Long term insurance 4,188,526 - - - 4,188,526

Pension insurance 357,376 - - - 357,376

Incidental business 90 23,193 - - 23,283

-----W 8,242,572 -----W 67,317 -----W (128,036) -----W (5) -----W 8,181,848

Translation into U.S. Dollars (In thousands) (Note 2) $ 8,765,896 $ 71,591 $ (136,165) $ (5) $ 8,701,317

Primary premiumAssumed

reinsurance premium

Refund of surrender

value

Assumedreinsurance’s refundof surrender value

Premium income


(Won in millions, Dollars In thousands)

69ANNUAL

REPORT

2006


Marine Insurance

(2) Premium income for the year ended March 31, 2006 is as follows:

Fire insurance -----W 54,885 -----W - -----W (432) -----W - -----W 54,453

Marine insurance 134,007 221 (855) - 133,373

Automobile insurance 2,457,518 - (123,633) - 2,333,885

Special insurance 639,897 2,817 (6,233) - 636,481

Guarantee insurance - 6 - - 6

Overseas insurance 13,117 49,270 - (1,331) 61,056

Long term insurance 3,653,947 - - - 3,653,947

Pension insurance 302,848 - - - 302,848

Incidental business - 23,027 - - 23,027

-----W 7,256,219 -----W 75,341 -----W (131,153) -----W (1,331) -----W 7,199,076

Translation into U.S. Dollars (In thousands) (Note 2) $ 7,716,920 $ 80,124 $ (139,480) $ (1,416) $ 7,656,148

Primary premiumAssumed

reinsurance premium

Refund of surrender

value

Assumedreinsurance’s refundof surrender value

Premium income


20. REINSURANCE

(1) Reinsurance income for the years ended March 31, 2007 and 2006 are as follows:

2007 2006 2007 2006

Reinsurance claims -----W 280,567 -----W 291,674 $ 298,381 $ 310,192

Reinsurance refund paid (5,595) (4,760) (5,950) (5,062)

Reinsurance income -----W 274,972 -----W 286,914 $ 292,431 $ 305,130



21. DEFERRED ACQUISITION COSTS

Changes in deferred acquisition costs for the years ended March 31, 2007 and 2006 are as follows:

2007 2006 2007 2006


Increase 621,266 524,691 660,711 558,003

Amortization (343,098) (210,668) (364,882) (224,043)

Ending balance -----W 955,451 -----W 677,283 $ 1,016,113 $ 720,284



(2) Reinsurance premium expenses for the years ended March 31, 2007 and 2006 are as follows:

2007 2006 2007 2006

Reinsurance premium -----W 667,352 -----W 635,498 $ 709,722 $ 675,846

Cancellation refund received (4,416) (6,209) (4,696) (6,603)

Reinsurance premium expenses -----W 662,936 -----W 629,289 $ 705,026 $ 669,243




70



FINANCIAL SECTION

22. RETIREMENT AND SEVERANCE BENEFITS

Changes in the liabilities for retirement and severance benefits for the years ended March 31, 2007 and 2006 are as follows:

The Company has transfer adopted a defined benefit retirement pension plan, maintaining previous retirement and severance benefits system. The

Company records as a pension plan assets in the balance sheets amounting to -----W77,776 million ($82,714 thousand) that was placed to reserve in

Samsung Life Insurance Co., Ltd.. From October 4, 2007, paid-in retirement pension plan assets were transferred from “floating interest rate related

instruments (minimum guaranteed rate 2.0%)” into “fixed interest rate instruments (4.8%)”. In addition, provision for the year amounted to -----W29,582

million ($31,460 thousand) and -----W858 million ($912 thousand) in selling and general operating expenses and investment administrative expenses,

respectively.

Retirement pension plan assets as of March 31, 2007 consist of the following:

2007 2006 2007 2006


Payment during the year (25,655) (19,576) (27,283) (20,819)

Provision for the year 30,440 29,548 32,373 31,424

Ending balance 120,678 115,893 128,341 123,251

Severance insurance deposits - (68,013) - (72,331)

National pension payments (1,298) (1,597) (1,380) (1,698)

Retirement pension plan assets (77,776) - (82,716) -

-----W 41,604 -----W 46,283 $ 44,245 $ 49,222



23. INCOME TAX

(1) The components of income tax expense for the years ended March 31, 2007 and 2006 are summarized as follows:

2007 2006 2007 2006

Income tax to be paid -----W 138,073 -----W 105,785 $ 146,840 $ 112,502

Tax effect on changes in cumulative temporary differences (*) (707) (6,781) (752) (7,212)

Income tax due to gains on sale of treasury stock (702) (878) (747) (934)

Income tax -----W 136,664 -----W 98,126 $ 145,341 $ 104,356



Description Amount Amount

Cash and bank deposits -----W 71,227 $ 75,749

Investment securities 716 761

Other assets 5,833 6,206

-----W 77,776 $ 82,716



(*)Tax effect on changes in cumulative temporary differences

71ANNUAL

REPORT

2006


Marine Insurance

(2) The difference between net income and taxable income for the years ended March 31, 2007 and 2006 consists of the following:

2007 2006 2007 2006

Beginning balance -----W (36,805) -----W (43,596) $ (39,142) $ (46,364)

Changes due to tax reconciliation 13 10 14 11

Ending balance (36,085) (36,805) (38,376) (39,142)

Tax effect on changes in cumulative temporary differences -----W (707) -----W (6,781) $ (752) $ (7,212)



2007 2006 2007 2006

Income before income tax -----W 477,838 -----W 360,168 $ 508,175 $ 383,035

Permanent differences (22,809) 6,576 (24,257) 6,994

Temporary differences 47,319 19,518 50,323 20,757

Taxable income -----W 502,348 -----W 386,262 $ 534,241 $ 410,786



(3) Deferred income tax assets (liabilities) directly adjusted to capital directly as of March 31, 2007 are summarized as follows:

(4) Changes in significant cumulative temporary differences and deferred income tax assets (liabilities) are as follows:

(5) The Company’s effective tax rate (Income tax expense/Net income before income tax) is 28.60% and 27.24% in 2007 and 2006, respectively.

Gain on valuation of available-for- sale securities -----W 1,230,317 -----W 338,337 -----W 891,980

Gain on valuation of securities accounted for using the equity method 36 10 26

Loss on valuation of securities accounted for using the equity method (10,580) (894) (9,686)

Gain on valuation of derivatives 8,297 2,282 6,015

-----W 1,228,070 -----W 339,735 -----W 888,335

Translation into U.S. Dollars (In thousands) (Note 2) $ 1,306,041 $ 361,305 $ 944,736

Before adjustmentDescription Deferred income taxassets (liabilities)

After adjustment


Cumulative temporary differences Deferred income tax assets (liabilities)

Temporary difference, net -----W (169,111) -----W 3,897 -----W (165,214) -----W (36,805) -----W 720 -----W 36,085

Capital adjustment (1,303,358) 75,288 (1,228,070) (363,841) 24,106 (339,735)

-----W(1,472,469) -----W 79,185 -----W(1,393,284) -----W (400,646) -----W 24,826 -----W (375,820)

2006 Increase(decrease)

Increase(decrease) 200720062007


72



FINANCIAL SECTION

24. SHAREHOLDERS’ EQUITY

(1) Capital stock as of March 31, 2007 is as follows:

Preferred shareholders have no voting rights but may receive accumulative dividends and liquidation proceeds. Preferred shareholders normally

receive additional cash dividends of 1% on par value. Upon liquidation, preferred shareholders are entitled to receive liquidation proceeds prior to

the common shareholders.

(2) Capital surplus

Capital surplus as of March 31, 2007 and 2006 is summarized as follows:

(3) Revaluation surplus

The Company revalued its property on January 1, 1999 in accordance with the Assets Revaluation Law. Details of the asset revaluation and

revaluation surplus are summarized as follows:

Description

Number of the authorized shares 100,000,000

Value per share -----W 500

Number of the issued stock

- Common shares 48,874,837

- Preferred shares 3,292,000

(Won)

(Won in millions, dollars in thousands)

2007 2006 2007 2006

Additional paid-in capital -----W 593,429 -----W 593,429 $ 631,106 $ 631,106

Asset revaluation surplus 132,209 132,209 140,603 140,603

Other capital surplus 7,702 5,853 8,191 6,225

-----W 733,340 -----W 731,491 $ 779,900 $ 777,934



The movements in the revaluation surplus for the period from January 1, 1999 to March 31, 2007 are summarized as follows:

Asset revaluation surplus carried forward before January 1, 1999 -----W 1,506 $ 1,602

Asset revaluation surplus on January 1, 1999 134,048 142,559

Revaluation taxes (3,345) (3,557)

Revaluation surplus as of March 31, 2005 -----W 132,209 $ 140,603



Net book value Revalued amount Revaluation surplus

Land -----W 172,180 $ 183,112 -----W 262,061 $ 278,699 -----W 89,881 $ 95,588

Buildings 289,443 307,820 333,410 354,578 43,967 46,758

Structures 345 367 545 580 200 213

-----W 461,968 $ 491,299 -----W 596,016 $ 633,857 -----W 134,048 $ 142,559

Korean Won U.S. dollars Korean Won U.S. dollars U.S. dollars Korean Won

73ANNUAL

REPORT

2006


Marine Insurance

(4) Retained earnings

Retained earnings as of March 31, 2007 and 2006 are summarized as follows:

The Korean Commercial Code requires the Company to appropriate as legal reserve an amount equal to at least 10% of the cash dividends for each

accounting period until the reserve equals 50% of stated capital. The legal reserve may be used to reduce a deficit or it may be transferred to stated

capital by a shareholders’ resolution.

As of March 31, 2007, the Company holds its common and preferred stock in treasury for 3,841,596 shares and 300,780 shares, respectively.

Acquisition cost of treasury stock is included in the capital adjustment account. Gains on reissue of treasury stock are recorded as other capital

surplus. As of March 31, 2007, gains on reissue of treasury stock amount to -----W7,702 million ($8,191 thousand).

For presentation in the accompanying financial statements, assets and liabilities in financial statements of the overseas branch are translated into

Korean won at the current exchange rate, shareholders’ equity at historical exchange rate and income and expense at the weighted average exchange

rate for the year. Translation losses of -----W8,451 million ($8,988 thousand) resulting from the translation of financial statements of the overseas branch

are debited to overseas operation translation debit as a capital adjustment account.

2007 2006 2007 2006

Legal reserve -----W 13,237 -----W 13,237 $ 14,077 $ 14,077

Reserve for business rationalization 1,852 1,852 1,970 1,970

Voluntary reserve 1,299,159 1,109,159 1,381,644 1,179,580

Retained earnings before appropriations 341,927 262,628 363,635 279,302

-----W 1,656,175 -----W 1,386,876 $ 1,761,326 $ 1,474,929



25. CAPITAL ADJUSTMENTS

Capital adjustments as of March 31, 2007 and 2006 are summarized as follows:

2007 2006 2007 2006

Treasury stock -----W (98,875) -----W (101,796) $ (105,153) $ (108,259)

Gain on valuation of available-for- sale securities 891,980 944,054 948,612 1,003,992

Gain on valuation of securities accounted for using the equity method 26 - 28 -

Loss on valuation of securities accounted for using the equity method (9,686) (11,003) (10,301) (11,702)

Overseas operations translation debit (8,451) (6,937) (8,988) (7,377)

Gain on valuation of derivatives 6,015 6,466 6,397 6,877

Stock options 5,993 7,883 6,374 8,383

-----W 787,002 -----W 838,667 $ 836,969 $ 891,914




74



FINANCIAL SECTION

26. STOCK OPTIONS

The Company granted stock options to certain employees according to a resolution of the shareholders’ meeting and the board of directors’ meeting.

Details of the stock options are summarized as follows:

The Company estimated compensation cost associated with the stock options using Black-Sholes Model. Details of assumptions used are summarized

as follows:

Number of shares granted 80,459 120,152 8,267 24,019 35,190

Stock Common stock Common stock Common stock Common stock Common stock

Exercise price -----W 23,800 -----W 38,900 -----W 82,500 -----W 62,600 -----W 74,900

Exercisable period May 31, 2003 Sep 7, 2003 May 31, 2004 Jun 12, 2005 May 29, 2006

~May 30, 2010 ~Sep 6, 2011 ~May 30, 2012 ~Jun 11, 2013 ~May 28, 2014

Service period 3 years 2 years 2 years 2 years 2 years

May 30, 2000 Sep 6, 2001 May 28, 2004 Jun 11, 2003 May 30, 2002

Risk free rate 9.22% 5.39% 6.57% 4.14% 4.54%

Expected excisable period 5 years 5 years 5 years 5 years 5 years

Expected volatility of stock price 65.47% 66.24% 66.30% 59.78% 52.68%

Expected dividend rate 1.05% 1.30% 1.22% 1.57% 1.35%

Expected rate of rights expiration 0.00% 0.00% 0.00% 0.00% 0.00%


Details on the compensation cost for stock options are summarized as follows:

Valuation amount for stock options -----W 2,391 -----W 3,017 -----W 508 -----W 860 -----W 1,208

Compensation costs for the year ended Mar 31, 2007 - - - - 101

Accumulated compensation costs 2,391 3,017 508 860 1,208

Additional compensation costs to be incurred - - - - -


27. DIVIDENDS

The Company has proposed to appropriate retained earnings for cash dividends as follows:

2007 2006 2007 2006

Common stock -----W 67,550 -----W 67,373 $ 71,838 $ 71,650

Preferred stock 4,502 4,502 4,788 4,788

-----W 72,052 -----W 71,875 $ 76,626 $ 76,438

Net earnings -----W 341,174 -----W 262,042 $ 362,834 $ 278,679

Dividends as a percentage of net earnings 21.12% 27.43% 21.12% 27.43%



(Won in millions)

75ANNUAL

REPORT

2006


Marine Insurance

28. TRANSACTIONS AND BALANCES WITH RELATED PARTIES

(1) The Company is the ultimate holding company and its subsidiaries as of March 31, 2007 are as follow:

In addition, other related parties are Samsung Fire & Marine Insurance Claim Adjustment Service and others.

(2) Major balances and significant transactions with affiliates as of and for the years ended March 31, 2007 and 2006 are as follows:

P.T Asuransi Samsung Tugu 10,500 70.0 -----W 5,373 ($5,714) Insurance Indonesia

Samsung Vina Insurance (*) - 100.0 32,594 ($34,663) Insurance China

Samsung Fire & Marine Insurance of China Limited (*) - 50.0 6,063 ($6,448) Insurance Vietnam

SharesSubsidiaries Ownership Ratio (%) Shareholder’s’ Equity Business Location


(*) Number of shares is not presented since it is stock is with out par value.

2007 2006 2007 2006

Revenues and expenses:

Premiums income -----W 331,036 -----W 296,476 $ 352,054 $ 315,299

Claims paid 9,896 66,487 10,524 70,708

Receivables and payables:

Leasehold and other deposits 76,514 83,906 81,372 89,233

Rental deposits received 8,366 7,926 8,897 8,429



(3) The compensations for the key management of the Company for the year ended March 31, 2007 are as follows:

(4) The Company provides an allowance for doubtful accounts amounting to -----W213 million ($227 thousand) on insurance receivables amounting to

-----W40,105 million ($42,651 thousand), and allowance for doubtful accounts provided this fiscal year decreasesd by -----W705 million ($750 thousand)

compared to prior fiscal year. In addition, this fiscal year, the Company has disposed property and equipment of -----W2,281 million ($2,426 thousand),

of which book value is -----W1,786 million ($1,899 thousand).

Description Amount Amount

Short-term salaries -----W 1,553 $ 1,652

Long-term salaries 1,888 2,008

Provision for salaries 677 720




76



FINANCIAL SECTION

29. EARNINGS PER SHARE

(1) Earnings per common share for the years ended March 31, 2007 and 2006 is calculated as follows:

30. COMMITMENTS AND CONTINGENCIES

(1) Promissory Note

As of March 31, 2007, the Company has provided Samsung Life Insurance Company and others with 4 promissory notes with total face value

amounting to -----W1,685 million ($1,792 thousand), as collateral for rental deposits.

(2) Reinsurance Contract

Non-life insurance companies (including the Company) assume and cede certain portions of the total insurance premium with Korean Reinsurance

Company and the remaining portion is covered by foreign reinsurers. The Company utilizes reinsurance arrangements to limit its maximum loss, to

provide greater diversification of risks and to minimize exposure to large risks.

(3) Bank Overdraft Agreement

The Company has general bank overdraft agreements and daily bank overdraft agreements with Korea First Bank and other banks up to -----W15,000

million ($15,952 thousand) and -----W340,000 million ($361,587 thousand), respectively, of which no amounts were drawn as of March 31, 2007.

(4) Lawsuits

The Company is a defendant in 2,944 lawsuits for insurance claims aggregating -----W229,880 million ($244,475 thousand). The Company has set up a

policy reserve for estimated losses amounting to -----W138,741 million ($147,550 thousand) in relation to the above lawsuits as policy reserves.

(2) Diluted net income per common share for the years ended March 31, 2007 and 2006 is calculated as follows:

Diluted net income per common share are computed by diluted net income for the years ended March 31, 2007 and 2006 divided by weighted-

average number of diluted shares plus common shares, assuming all stock options are exercised at the beginning.

2007 2006 2007 2006

Net income -----W 341,174 -----W 262,042 $ 362,834 $ 278,679

Dividends on preferred stock 4,502 4,502 4,788 4,788

Earnings available for common stock 336,672 257,540 358,046 273,891

Weighted-average number of shares of common stock 44,963,760 44,876,482 44,963,760 44,876,482

Earnings per common share (Won, U.S. dollars) -----W 7,488 -----W 5,739 $ 7.96 $ 6.10



2007 2006 2007 2006

Earnings available for common stock -----W 336,672 -----W 257,540 $ 358,046 $ 273,891

Compensation cost, net of tax 73 - 78 -

Diluted net income 336,745 257,540 358,124 273,891

Weighted-average number of diluted share 45,207,944 45,094,242 45,207,944 45,094,242

Diluted net income per common share (Won, U.S. dollars) -----W 7,449 -----W 5,711 $ 7.92 $ 6.07



77ANNUAL

REPORT

2006


Marine Insurance

In connection with the financial derivative instruments, the Company recognized gain and loss on valuation amounting to -----W525 million ($558

thousand) and -----W362 million ($385 thousand), respectively, for the year ended March 31, 2007. In addition, gain on valuation of the financial

derivative instruments amounting to -----W8,297 million ($8,824 thousand), the amount before income tax directly deducted from capital adjustment, is

accounted for and reflected as capital adjustment as of March 31, 2007.

(6) Credit Linked Notes

The Company has credit-linked notes amounting to -----W75,224 million ($80,000,000) at face value. The Company is taking risk to undertake goods or

pay cash equivalent to Reference Obligation on demand of a person related to transaction in case of occurring credit event occurred on Reference

Obligation.

31. SEPARATE ACCOUNT

The Company has recorded corporate retirement insurance and corporate pension insurance as a separate account independently from ordinary

accounts in accordance with the Insurance Supervisory Regulation as established by the Financial Supervisory Commission of the Republic of Korea.

Separate account is stated at fair value and the Company properly presents the financial status and operating results of the separate account.

The financial statements of the separate account of corporate retirement insurance as of and for the years ended March 31, 2007 and 2006 are as

follows:

(5) Derivatives Instruments

As of March 31, 2007, the Company entered into contracts of financial derivative instruments as follows:

2007 2006 2007 2006

Separate account assets:

Cash and deposits -----W 273,351 -----W 81,586 $ 290,706 $ 86,766

Securities -----W 487,604 -----W 669,127 $ 518,562 $ 711,610

Others 11,955 4,401 12,714 4,680

Due from ordinary account 10,848 23,441 11,536 24,929

-----W 783,758 -----W 778,555 $ 833,518 $ 827,985

Separate account liabilities:

Policy reserves -----W 759,990 -----W 763,716 $ 808,242 $ 812,204

Others 20,758 3,022 22,074 3,214

Due to ordinary account 3,010 11,817 3,202 12,567

-----W 783,758 -----W 778,555 $ 833,518 $ 827,985

Korean Won(In millions)Balance sheets


Total Trading Hedging

Foreign currency forward -----W 54,740 $ 58,215 -----W - $ - -----W 54,740 $ 58,215

Foreign currency swap 427,788 454,948 - - 427,788 454,958

-----W 482,528 $ 513,163 -----W - $ - -----W 482,528 $ 513,163

Korean Won Translation Into U.S. Dollars (Note 2)

Korean Won Translation Into U.S. Dollars (Note 2)

Translation Into U.S. Dollars (Note 2)Korean Won



78



FINANCIAL SECTION

2007 2006 2007 2006

Separate account income:

Premiums earned -----W 214,412 -----W 362,127 $ 228,025 $ 385,119

Interest income 35,247 28,438 37,485 30,243

Others 5,156 4,727 5,483 5,027

-----W 254,815 -----W 395,292 $ 270,993 $ 420,389

Separate account expenses:

Provision for policy reserves -----W (3,725) -----W 103,338 $ (3,962) $ 109,899

Claims paid 249,574 283,101 265,420 301,075

Others 8,966 8,853 9,535 9,415

-----W 254,815 -----W 395,292 $ 270,993 $ 420,389

Korean Won(In millions)Statements of Earnings


The financial statements of the separate account of corporate pension insurance as of and for the years ended March 31, 2007 and 2006 are as

follows:

2007 2006 2007 2006

Separate account assets:

Cash and deposits -----W 75,219 -----W 88 $ 79,995 $ 94

Securities 25,323 5,181 26,931 5,510

Loans 700 200 744 213

Others 2,480 125 2,638 132

Due from ordinary account 5,853 8 6,225 9

-----W 109,575 -----W 5,602 $ 116,533 $ 5,958

Separate account liabilities:

Policy reserves 104,062 580 110,669 617

Others -----W 5,475 -----W 5,022 $ 5,824 $ 5,341

Due to ordinary account 38 - 40 -

-----W 109,575 -----W 5,602 $ 116,533 $ 5,958



2007 2006 2007 2006

Separate account income:

Premiums earned -----W 114,447 -----W 601 $ 121,713 $ 639

Interest income 2,618 46 2,784 49

Others 640 11 681 12

-----W 117,705 -----W 658 $ 125,178 $ 700

Separate account expenses:

Provision for policy reserves -----W 103,482 -----W 580 $ 110,052 $ 617

Claims paid 13,065 26 13,895 28

Others 1,158 52 1,231 55

-----W 117,705 -----W 658 $ 125,178 $ 700

Korean Won(In millions)Statements of Earnings


79ANNUAL

REPORT

2006


Marine Insurance

32. SELLING AND GENERAL OPERATING EXPENSES

The Company has recorded corporate retirement insurance and corporate pension insurance as a separate account independently from Selling and

general operating expenses for the years ended March 31, 2007 and 2006 are as follows:

2007 2006 2007 2006

Salaries -----W 311,293 -----W 272,611 $ 331,057 $ 289,919

Provision for retirement and severance benefits 29,582 28,443 31,460 30,249

Other employee benefits 44,101 40,908 46,901 43,505

Taxes and due 48,552 47,241 51,635 50,240

Rent 54,981 49,736 58,472 52,894

Depreciation 42,562 34,124 45,264 36,291

Commissions 77,682 66,254 82,614 70,460

Advertising 43,886 35,978 46,672 38,262

Computer related expenses 47,773 45,238 50,806 48,110

Deferred acquisition cost & collection cost 190,429 183,197 202,519 194,828

Agency fee 251,464 224,898 267,430 239,177

Investigation expense for claim paid 119,117 96,410 126,680 102,531

Others 122,439 108,159 130,213 115,027

-----W 1,383,861 -----W 1,233,197 $ 1,471,723 $ 1,311,493



33. OTHER ASSETS AND OTHER LIABILITIES

(1) Other assets as of March 31, 2007 and 2006 are summarized as follows:

2007 2006 2007 2006

Development costs and other intangible assets -----W 80,150 -----W 53,885 $ 85,239 $ 57,306

Other account receivables 151,728 108,711 161,360 115,612

Prepaid expenses 8,675 8,671 9,226 9,222

Advanced payments 9,416 20,569 10,014 21,875

Note receivables 2,399 1,476 2,551 1,570

Prepaid value added tax 590 566 627 602

Securities deposit 2,426 2,844 2,580 3,025

Financial derivative assets 21,354 22,435 22,710 23,859

Others 1,142 1,065 1,215 1,133

Allowance for doubtful accounts (4,241) (3,992) (4,510) (4,245)

-----W 273,639 -----W 216,230 $ 291,012 $ 229,959




80



FINANCIAL SECTION

(2) Other liabilities as of March 31, 2007 and 2006 are summarized as follows:

2007 2006 2007 2006

Other account payables -----W 28,389 -----W 33,934 $ 30,192 $ 36,088

Retirement and severance benefits 41,604 46,283 44,245 49,222

Premiums received in suspense 1,357 679 1,443 722

Note payables 636 507 676 539

Advanced receipts 12,648 18,127 13,451 19,278

Withholdings 5,754 5,342 6,119 5,681

Unearned income 1,735 1,168 1,845 1,242

Accrued value added tax -----W 1,042 -----W 859 $ 1,108 $ 914

Financial derivatives liabilities 6,725 48 7,151 51

Other 24,879 22,660 26,462 24,099

-----W 124,769 -----W 129,607 $ 132,692 $ 137,836



2007 2006 2007 2006

Salaries -----W 321,346 -----W 281,980 $ 341,748 $ 299,883

Provision for severance and retirement benefits 30,440 29,548 32,373 31,424

Employee benefits 45,154 41,994 48,021 44,660

Taxes and dues 79,327 72,992 84,364 77,626

Rental expenses 54,990 49,741 58,481 52,899

Depreciation 58,648 48,772 62,371 51,869

Total -----W 589,905 -----W 525,027 $ 627,358 $ 558,361



34. EMPLOYEES’ WELFARE AND DONATIONS

(1) Supporting educational expenses

In order to mitigate the burden of the educational expenses of employees’ children, the Company supports portion of tuition of pre-school, and

entrance fee and tuition of middle school to college.

(2) Medical examination

The Company provides regular annual medical examination service for its employees.

(3) Others

The Company executes paid vacation, such as congratulations and condolences vacation, long service vacations and vacation for training.

(4) Donation to the public

The Company donated to college development funds and others amounting to -----W20,000 million ($21,269 thousand) and -----W22,943 million ($24,400

thousand) for the years ended March 31, 2007 and 2006, respectively.

35. VALUE-ADDED

Information needed for calculation of value-added for the years ended March 31, 2007 and 2006 is as follows:

81ANNUAL

REPORT

2006


Marine Insurance

(2) Significant transactions with no effects to the cash flows for the years ended March 31, 2007 and 2006 are as follows:

2007 2006 2007 2006

Transfer from construction in-progress to buildings -----W 40,719 -----W 47,152 $ 43,304 $ 50,146

Transfer from other securities to equity securities 181 - 192 -

Transfer from loans secured by real estate to other loans 7,000 - 7,444 -

Transfer from assets (liabilities) of branch to securities using

equity method due to conversion to subsidiary - 27,369 - 29,107

Transfer from prepaid accounts to intangible assets 41,183 13,116 43,798 13,949



36. CASH FLOW STATEMENTS

(1) Cash in the cash flow statements consist of cash and bank deposits exclusive of short-term financial instruments, which do not meet the

requirements of cash equivalents on the balance sheets as follows:

37. PREMIUM DEFICIENCY

(1) The objects of insurance contracts for calculating premium deficiency

From the valid insurance contracts as of February 28, 2007, the Company included for premium deficiency, the individual pension insurance products

and long-term insurance against loss products with fixed interest rate and floating interest rate. In addition, general insurance against loss and

retirement insurance with less than one year insurance term were excluded.

(2) The basis of calculating premium deficiency is as follows:

Discount rate:

The discount rate is 5.29% (Rate of return on assets management for recent 3 years from April 1, 2004 to March 31, 2007).

2007 2006 2007 2006

Cash and bank deposits

Cash -----W 16 -----W 24 $ 17 $ 26

Passbook deposits 1,657 388 1,762 413

Ordinary deposits 24,180 16,976 25,715 18,054

Time deposits 212,477 54,580 225,967 58,045

Deposits in overseas countries 1,067 1,033 1,135 1,099

Other deposits 71,694 57,608 76,246 61,265

Sub total 311,091 130,609 330,842 138,902

Deposits for future transactions - 89 - 95

311,091 130,698 330,842 138,996

Less:

Short-term financial instruments (212,477) (54,580) (225,967) (58,045)

Restricted bank deposits (11) (8) (12) (9)

-----W 98,603 -----W 76,110 $ 104,863 $ 80,943



1


82



FINANCIAL SECTION

Rate of operating expenses:

The rate of operating expenses is 84.8% (Ratio of actual operating expenses to anticipated operating expenses for recent 1 year from March 1, 2006

to February 28, 2007).

Rate of claim payment

The rate of claim payment is 74.4% (Ratio of claim payment to the anticipated risk of the insurer for recent 3 years from March 1, 2004 to February

28, 2007).

Rate of changes on condition

Rate of changes on condition on long-term insurance (fixed interest rate and floating interest rate) and individual pension insurance for the recent 14

years.

Rate of changes on condition was reflected by 6 types of ratio (cancellation rate on holding, effectiveness rate, resurrection rate, non-resurrection

rate, cancellation rate on effectiveness and cancellation rate on non-resurrection) , and the rate of maintenance caused by reflection is as follows:.

Long-term with dividend 83.7% 71.4% 46.4% 41.2% 23.7%

Long-term without dividend 70.3% 54.9% 41.2% 35.9% 25.5%

Individual pension 76.5% 62.4% 53.2% 44.7% 40.6%

Total 71.2% 55.9% 43.0% 37.5% 27.2%

Description 13th 25th 37th 49th 61st

(3) The calculation and accounting principle of reserve for claims by type of insurance contract, anticipated interest rate and premium surplus

(premium deficiency) as of March 31, 2007 are summarized as follows:

Long-term with dividend 390 2.50~6.50 (5)

Long-term without dividend 64,862 3.25~8.00 8,851

Individual pension 22,197 2.50~7.50 5,377

Total 87,449 14,223

(Fixed interest rate) 39,086 (4,096)

(Floating interest rate) 48,363 18,319

Description Reserve for claims Anticipated interest rate(*) Premium surplus (deficiency)

(*) The anticipated interest rate is based on a guaranteed portion.

(In millions)

2

3

4

83ANNUAL

REPORT

2006


Marine Insurance

38. MAJOR INDICATORS FOR THE FINAL INTERIM PERIOD

The major indicators of management performance for the final interim period (unaudited) are as follows (Unit: Won in millions, dollars in thousands,

except net income per share):

2007 2006 2007 2006

Operating revenues (*) -----W 2,462,233 -----W 2,123,012 $ 2,618,561 $ 2,257,803

Operating expenses (*) 2,319,451 2,036,088 2,466,714 2,165,360

Operating income 142,782 86,924 151,847 92,443

Other income 75,839 35,043 80,654 37,268

Other expenses 13,230 14,747 14,070 15,683

Net income 145,940 78,863 155,206 83,870

Net income per common share 3,242 1,656 3,448 1,761



(*) In accordance with Article No.6-23 of the Regulation on Supervision of Insurance Business, The Company reflected the revenue and expense of the capital guaranteed separate accounton operating revenues and operating expenses, respectively. As a result, the operating revenues and operating expenses of prior year’s 4th quarters have increased by -----W56,026 million($59,583 thousand) respectively.

39. SUBSEQUENT CONVERSION OF SHANGHAI BRANCH

(1) The Company was sanctioned by the Chinese Insurance Supervisory Commission on March 23, 2005 and completed registration of the corporation

on April 25, 2005. Therefore, the Company’s Shanghai branch was converted into a corporation.

(2) Transferred Assets and Liabilities

The Company recognized the transferred net assets amounting to -----W27,369 million ($29,107 thousand) at fair value as securities using the equity

method. Also, translation losses of -----W6,395 million ($6,801 thousand) resulting from the translation of financial statements of the Shanghai branch is

transferred to fluctuation of negative capital variation of equity method.

40. APPROVAL OF FINANCIAL STATEMENTS

The 2007 financial statements prepared for the regular shareholders’ meeting are subject to approval by the board of directors, which is tabled at

their meeting on May 9, 2007.

Description Book value Fair value Book value Fair value

Transferred Assets -----W 34,267 -----W 34,269 $ 36,443 $ 36,445

Transferred Liabilities 6,900 6,900 7,338 7,338



Independent Accountant’s Review Report on Internal Accounting Control System (“IACS”)English Translation of a Report Originally Issued in Korean

84



FINANCIAL SECTION

To the Representative Director ofSamsung Fire & Marine Insurance Co., Ltd.:

We have reviewed the accompanying Report on the Management’s Assessment of IACS (the “Management’s Report”) of Samsung Fire & Marine

Insurance Co., Ltd. Company (the “Company”) as of March 31, 2007. The Management’s Report, and the design and operation of IACS are the

responsibility of the Company’s management. Our responsibility is to review the Management’s Report and issue a review report based on our

procedures. The Company’s management stated in the accompanying Management’s Report that “based on our assessment of the IACS as of March

31, 2007, the Company’s IACS has been appropriately designed and is operating effectively as of March 31, 2007, in all material respects, in

accordance with the IACS Framework established by the Korea Listed Companies Association.”

We conducted our review in accordance with the IACS Review Standards established by the Korean Institute of Certified Public Accountants. Those

standards require that we plan and perform a review, objective of which is to obtain a lower level of assurance than an audit, of the Management’s

Report in all material respects. A review includes obtaining an understanding of a company’s IACS and making inquiries regarding the

Management’s Report and, when deemed necessary, performing a limited inspection of underlying documents and other limited procedures.

Deloitte Anjin LLC14Fl., Hanwha Securities Bldg., 23-5 Yoido-dong,

Youngdeungpo-gu, Seoul 150-717, Korea

Tel:+82.2.6676 1000, 1114 Fax:+82.2.6674 2114www.deloitteanjin.co.kr

Audit.Tax.Consulting.Financial Advisory. Member of Deloitte Touche Tohmatsu

85ANNUAL

REPORT

2006


Marine Insurance

A company’s IACS represents internal accounting policies and a system to manage and operate such policies to provide reasonable assurance

regarding the reliability of financial statements prepared, in accordance with accounting principles generally accepted in the Republic of Korea, for the

purpose of preparing and disclosing reliable accounting information. Because of its inherent limitations, IACS may not prevent or detect a material

misstatement of the financial statements. Also, projections of any evaluation of effectiveness of IACS to future periods are subject to the risk that

controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on our review, nothing has come to our attention that causes us to believe that the Management’s Report referred to above is not fairly stated,

in all material respects, in accordance with the IACS Framework established by the Korea Listed Companies Association.

Our review is based on the Company’s IACS as of March 31, 2007, and we did not review its IACS subsequent to March 31, 2007. This report has

been prepared pursuant to the Acts on External Audit for Stock Companies in the Republic of Korea and may not be appropriate for other purposes or

for other users.

Notice to Readers

This report is annexed in relation to the audit of the financial statements as of March 31, 2007 and the review of internal accounting control system pursuant to Article 2-3 of the Act on External Audit for Stock Companies of the Republic of Korea.

86



WORLDWIDE NETWORK

WORLDWIDE NETWORK

HEAD OFFICE SAMSUNG FIRE & MARINE INSURANCE CO., LTD. Samsung Insurance Building 87, Euljiro 1-ga, Jung-gu,Seoul, Korea 100-191Telephone : 82-2-1588-5114 Facsimile : 82-2-758-4320www.samsungfire.com

OVERSEAS NETWORK

SUBSIDIARY & JOINT VENTURE

Indonesia

P.T. ASURANSI SAMSUNG TUGUPlaza Dm Bldg. 23rd Floor, Suite # 2301 Jl. Jend.Sudirman Kav.25 Jakarta Selatan Indonesia - 12920Telephone : 62-21-520-5511 Facsimile : 62-21-520-5522

Vietnam

SAMSUNG VINA INSURANCE CO., LTD.9th Floor, Diamond Plaza Bldg., 34 Le Duan St., Dist 1,Ho Chi Minh, VietnamTelephone : 84-8-823-7812~3 Facsimile : 84-8-823-7811

SAMSUNG VINA INSURANCE CO., LTD. HANOI BRANCH8th Floor, VinaRe Building, No.141, Le Duan St.Hoan Kiem District, Hanoi, VietnamTelephone : 84-4-942-5251, 5253-4 Facsimile : 84-4-942-5250

China

SAMSUNG FIRE & MARINE INS. (CHINA) COMPANYRM 812 Shanghai International Trade Center No 2200 Yan an(W) RD Shanghai, China P. R. C. 200335Telephone : 86-21-6209-0498~9 Facsimile : 86-21-6295-5280

SAMSUNG FIRE & MARINE INS. (CHINA) COMPANY BEIJING BRANCH25F China Merchants Tower No.2, Dong Huan Nan Lu, Chao Yang District, Beijing, China 100022Telephone : 86-10-6566-8100~6200 Facsimile : 86-10-6566-8149

BRANCH OFFICES

U.S.A.

SAMSUNG FIRE & MARINE INS.CO., LTD. U.S. BRANCH105 Challenger Road 5th Floor Ridgefield Park,New Jersey 07660-0511, U.S.A.Telephone : 1-201-229-6011~4 Facsimile : 1-201-229-6015

SAMSUNG FIRE & MARINE INS.CO., LTD. U.S. BRANCH, LA OFFICE14251e. Firestone Blvd. La Mirada, CA 90638, U.S.A.Telephone : 1-562-229-0411 Facsimile : 1-562-229-0620

LIAISON OFFICES

Japan (Tokyo)

SAMSUNG FIRE & MARINE INSURANCE CO., LTD.TOKYO LIAISON OFFICERoppong-T-CUBE 3-1-1, Roppongi, Minato-Ku, Tokyo 106-8352, JapanTelephone : 81-3-6234-2208 Facsimile : 81-3-3360-5122

China (Beijing)

SAMSUNG FIRE & MARINE INSURANCE CO., LTD.BEIJING REPRESENTATIVE OFFICE25F China Merchants Tower No.2, Dong Huan Nan Lu, Chao Yang District, Beijing, China 100022Telephone : 86-10-6566-8100~6212 Facsimile : 86-10-6566-9408

China (Qingdao)

SAMSUNG FIRE & MARINE INSURANCE CO., LTD.QINGDAO REPRESENTATIVE OFFICERm B 205, Fenghe Large Building No 12, Hongkong Rd.Qingdao, ChinaTelephone : 86-532-8502-7271 Facsimilie : 86-532-8502-8248

U.K. (London)

SAMSUNG FIRE & MARINE INSURANCE CO., LTD.LONDON REPRESENTATIVE OFFICE21th Floor, Tower 42, 25 Old Broad Street, EC2N 1HP,London, UNITED KINGDOMTelephone : 44-207-786-7851~4 Facsimile : 44-207-786-7866

87ANNUAL

REPORT

2006

SAMSUNG AFFILIATES Samsung Fire &

Marine Insurance

SAMSUNG AFFILIATES Samsung Fire & Marine Insurance Co., Ltd. has affiliates in the Samsung Group which includes the below companies.

Finance

Samsung Fire & Marine Insurance Co., Ltd.

Samsung Life Insurance Co., Ltd.

Samsung Card Co., Ltd.

Samsung Securities Co., Ltd.

Samsung Investment Trust Management Co., Ltd.

Samsung Venture Investment Corporation

Other Samsung Companies

Samsung Corporation

Samsung Engineering Co., Ltd.

Cheil Industries Inc.

Samsung Everland Inc.

The Shilla Hotels & Resorts

Cheil Communications Inc.

S1 Corporation

Samsung Lions

Samsung Medical Center

Samsung Economic Research Institute

Samsung Advanced Institute of Technology

Samsung Foundation of Culture

Samsung Welfare Foundation

Chemicals

Samsung Total Petrochemicals Co., Ltd.

Samsung Petrochemical Co., Ltd.

Samsung Fine Chemicals Co., Ltd.

Samsung BP Chemicals Co., Ltd.

Electronics

Samsung Electronics Co., Ltd.

Samsung SDI Co., Ltd.

Samsung Electro-Mechanics Co., Ltd.

Samsung Corning Co., Ltd.

Samsung Corning Precision Glass Co., Ltd.

Samsung SDS Co., Ltd.

Samsung Networks Inc.

Machinery

Samsung Heavy Industries Co., Ltd.

Samsung Techwin Co., Ltd.

88



CORPORATE HISTORY

CORPORATE HISTORY

1950sJanuary 26, 1952Founded as Anbo Fire & Marine Insurance Co., Ltd.

1960sJanuary 31, 1963Acquired Ankuk Fire & Marine Insurance Co., Ltd.

February 25Company name changed to Ankuk Fire & Marine Insurance

Co., Ltd.

1970sJune 1, 1975Initial public offering

February 4, 1979Established a risk management institute--the first among

Korean non-life insurers

1980sOctober 1Launched auto insurance operation

September 1, 1985Opened New York office

October 17Completed Head office building

May 26, 1989Increased capital to KRW 8.4 billion

1990sFebruary 10, 1990Increased capital to KRW 10.0 billion

March 17Increased capital to KRW 11.7 billion

April 1Opened U.S. branch

May 29, 1992Increased capital to KRW 12.8 billion

April 1Opened Seoul Customer Service Center

March 26, 1993Selected as domestic lead manager for Koreasat Insurance

November 29Opened Jakarta office

December 6Company name changed to Samsung Fire and Marine

Insurance Co., Ltd.

January 10, 1994Opened Tokyo office

May 9Opened Yuseong Training Center

April 20, 1995Opened Beijing office

July 15Opened Ho Chi Minh office

August 28, 1996Opened Hanoi office

September 20Opened Shanghai office

November 7Established a local subsidiary in Indonesia

April 4, 1998Increased capital to KRW 14.8 billion

October 15Established Samsung Fire & Marine Insurance

Claim Adjustment Service Co., Ltd.

January 19, 1999Increased capital to KRW20.0 billion

July 3Stock split to KRW 500 (par value price)

2000sJanuary 29, 2000Increased capital to KRW 25.0 billion

May 30Paid dividend (increased capital)

April 24, 2001Opened Shanghai branch--the first among domestic insurance

companies

July 1Established Samsung Traffic Safety Research Institute

December 31Selected as one of Asia's “Top 200 Companies” by the Far

Eastern Economic Review, a Hong Kong-based political and

economic weekly magazine

January 18, 2002Made commitment to ethical management, declaring 2002

the first year for “Samsung Fire and Marine Insurance

Ethical Management”

January 26Unveiled time capsule in commemoration of 50th anniversary

April 2Launched “Samsung Anycar,” a leading auto insurance brand

April 26Named the most respected company in the non-life insurance

sector by Korea Minting and Security Printing Corporation

November 14Established a local subsidiary in Vietnam

March 26, 2003Selected as “excellent company for autonomous observance

of fair trade” by Korea Fair Trade Commission

September 25Opened Qingdao office

December 10Launched “Samsung Super Insurance,” the first-ever

integrated insurance product in the non-life insurance industry

March 3, 2004Received “KRW 100 Billion Tax Tower” award from the

National Tax Service

August 19Introduced “Keep Kids safe”, the first social contribution

brand and industry

February 2, 2005Established Samsung Loss Control Center, a first among

domestic private companies

April 25Established Samsung Fire and Marine Insurance (China),

the first local subsidiary there to be established by a

foreign-invested insurance company

July 2Opened London office

July 13Awarded Gold Prize and named “Respected Company” in

contest sponsored by Dong-Ah Daily and Korean IBM BCS

September 30Launched “Allife,” a long-term insurance brand

INVESTORRELATIONS

Corporate Planning Division, Samsung Fire & Marine Ins. Co., Ltd., Samsung Insurance Building, 87, Euljiro 1-ga, Jung-gu, Seoul, Korea 100-191E-mail : [email protected] : 82-2-758-7535Facsimile : 82-2-758-7831

Visit our interactive on-line annual report at ir.samsungfire.com

November 1Moved Samsung Traffic Safety Research Institute to

Cheongnyangni

February 27, 2006Launched the “2006 Samsung Anycar Volunteer Group.”

April 4Introduced the “Allife - living care insurance” slogan for our

long-term insurance product

August 23Opened Beijing branch of Samsung Fire and Marine

Insurance (China)

November 27Unveiled the “Metro Pole 50,” a neon sculpture

November 29Received Grand Prize at the Korea Brand Award Ceremony

December 12Received a Presidential Citation at the “First and Foremost

Movement for Persons with Disabilities” Awards Ceremony

December 12Received Ministry of Culture and Tourism Award at the

Corporate Communication Awards Ceremony

December 12Opened Gwangju call center

December 20Received the President’s Award at the Digital Innovative

Enterprise Award Ceremony

January 9, 2007Samsung Traffic Safety Research Institute received “Samsung

Award of Honor”

January 18Named one of “Asian Fab 50” companies in the Asia-Pacific

region by Forbes

We always consider customers and shareholders.www.samsungfire.com http://ir.samsungfire.com

annual report 2006 · kim, eui hyeon bae, ho kyung yeon, je hoon hwang, seong tae park, hyun jung...

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