fy2009 2h review - meritzir.meritzfire.com/ir/eng/upload/fy2008_ev_material_eng.pdf · fy2009 2h...
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FY2009 2H ReviewFY2009 2H ReviewFY2009 2H ReviewFY2009 2H ReviewFY2009 2H ReviewFY2009 2H ReviewFY2009 2H ReviewFY2009 2H Review
September 24, September 24, September 24, September 24, September 24, September 24, September 24, September 24,
20092009200920092009200920092009
� FY2008 Embedded Value
� FY2009.April~August Review
� RG Insurance Update
1111
� FY2008 Embedded Value
2222
Certain of the statements contained herein are statements of future expectations
and other forward looking statements that are based on management's current views and
assumptions and involve known and unknown risks and uncertainties. In addition,
expressions and words which are forward-looking by reason of context identify forward-
looking statements. Actual results, performance or events may differ materially from those
in such statements due to (i) general economic conditions, (ii) performance of financial
markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity
levels and trends, (v) persistency levels, (vi) interest rate levels, (vii) general competitive
factors, (viii) changes in laws and regulations, (ix) changes in the policies of governments
and/or regulatory authorities. Meritz Insurance assumes no obligation to update any
forward-looking information contained in this report. We also have no obligation or
responsibility to investment made based on such forward looking statements.
DisclaimerDisclaimerDisclaimerDisclaimerDisclaimerDisclaimerDisclaimerDisclaimer
3333
1. Adjusted Net Worth1. Adjusted Net Worth1. Adjusted Net Worth1. Adjusted Net Worth
KRWKRWKRWKRW 100,000,000100,000,000100,000,000100,000,000
----2,7332,7332,7332,733
142
-6
-24
-1,881
7
-352
-22
-292
----2,4282,4282,4282,428
----305305305305
YoYYoYYoYYoY
• Accounting change (Real estate
revaluation) : 1,905
• reduced retained earnings : - 784
• Treasury share buy-back : - 617
• valuation loss of investment : -796
• others : -13
-1420Cash dividend payable
4,5614,5614,5614,5614,2564,2564,2564,256ShareholderShareholderShareholderShareholder’’’’s Equity (a)s Equity (a)s Equity (a)s Equity (a)
Adjusted Net Worth (Adjusted Net Worth (Adjusted Net Worth (Adjusted Net Worth (a+ba+ba+ba+b))))
Accounting change1,8810Real estate
-64-88Intangible asset
FY2008 closing price : 3,870837815Treasury share
Meritz Securities:975, Meritz
Investment Bank:735-58-410Equity-method stock
2330Bad debt allowance for
normal/precautionary
8,0828,0828,0828,082
-15
1,059
3,5213,5213,5213,521
FY2007FY2007FY2007FY2007
1,0931,0931,0931,093
Catastrophe reserve resersal 563767Catastrophe reserve
5,3495,3495,3495,349
-21Prepaid
RemarkRemarkRemarkRemarkFY2008FY2008FY2008FY2008CategoryCategoryCategoryCategory
Adjusted Capital (b)Adjusted Capital (b)Adjusted Capital (b)Adjusted Capital (b)
4444
2. Value of In2. Value of In2. Value of In2. Value of In----force Business force Business force Business force Business ---- AssumptionsAssumptionsAssumptionsAssumptions
▶▶▶▶▶▶▶▶ Operational AssumptionOperational AssumptionOperational AssumptionOperational AssumptionOperational AssumptionOperational AssumptionOperational AssumptionOperational Assumption
---- Categorized fixed/floating, floating type is applied by existinCategorized fixed/floating, floating type is applied by existinCategorized fixed/floating, floating type is applied by existinCategorized fixed/floating, floating type is applied by existing standardg standardg standardg standardAssumed interest Assumed interest Assumed interest Assumed interest
raterateraterate
---- Sales cost : applied existing sales commission schemeSales cost : applied existing sales commission schemeSales cost : applied existing sales commission schemeSales cost : applied existing sales commission scheme
- Administration cost : Per unit cost is decreasing due to economiAdministration cost : Per unit cost is decreasing due to economiAdministration cost : Per unit cost is decreasing due to economiAdministration cost : Per unit cost is decreasing due to economies of scale, es of scale, es of scale, es of scale,
buy conservatively appliedbuy conservatively appliedbuy conservatively appliedbuy conservatively applied FY08 resultFY08 resultFY08 resultFY08 result
- Accumulated E/R of InAccumulated E/R of InAccumulated E/R of InAccumulated E/R of In----force Business : FY2007 85%, FY2008 79%force Business : FY2007 85%, FY2008 79%force Business : FY2007 85%, FY2008 79%force Business : FY2007 85%, FY2008 79%
ExpensesExpensesExpensesExpenses
- Empirical data of past 6 years by 16Empirical data of past 6 years by 16Empirical data of past 6 years by 16Empirical data of past 6 years by 16 CategoryCategoryCategoryCategory
- Accumulated L/R of InAccumulated L/R of InAccumulated L/R of InAccumulated L/R of In----force Business : FY2007 87%, FY2008 90%force Business : FY2007 87%, FY2008 90%force Business : FY2007 87%, FY2008 90%force Business : FY2007 87%, FY2008 90%Risk premium L/RRisk premium L/RRisk premium L/RRisk premium L/R
---- Applied preceding 3 years dataApplied preceding 3 years dataApplied preceding 3 years dataApplied preceding 3 years data →→→→ detailed by each product type and channeldetailed by each product type and channeldetailed by each product type and channeldetailed by each product type and channelPersistency ratioPersistency ratioPersistency ratioPersistency ratio
5555
2. Value of In2. Value of In2. Value of In2. Value of In----force Business force Business force Business force Business ---- AssumptionsAssumptionsAssumptionsAssumptions
▶▶▶▶▶▶▶▶ Economic AssumptionEconomic AssumptionEconomic AssumptionEconomic AssumptionEconomic AssumptionEconomic AssumptionEconomic AssumptionEconomic Assumption
□□□□ Risk Discount Rate : 11.5%Risk Discount Rate : 11.5%Risk Discount Rate : 11.5%Risk Discount Rate : 11.5%
□□□□ Inflation Rate : 3.0%Inflation Rate : 3.0%Inflation Rate : 3.0%Inflation Rate : 3.0%
□□□□ Tax Tax Tax Tax
- Tax rate deduction applied by stages (FY08 : 27.5%, FY09 : 24.2%, after FY10(FY08 : 27.5%, FY09 : 24.2%, after FY10(FY08 : 27.5%, FY09 : 24.2%, after FY10(FY08 : 27.5%, FY09 : 24.2%, after FY10 : 22.0%): 22.0%): 22.0%): 22.0%)
□□□□ Required CapitalRequired CapitalRequired CapitalRequired Capital
- 150% of existing solvency margin requirement
□□□□ Investment yield : 5.0%Investment yield : 5.0%Investment yield : 5.0%Investment yield : 5.0%
-0.25%p5.255.00Investment yield
YoYYoYYoYYoYFY07FY07FY07FY07FY08FY08FY08FY08(Unit : %)
- Calculated by CAPM(Capital Asset Pricing Model)
6666
2. Value of In2. Value of In2. Value of In2. Value of In----force Businessforce Businessforce Businessforce Business
▶▶▶▶▶▶▶▶ VIB = Present Value of Future Profit VIB = Present Value of Future Profit VIB = Present Value of Future Profit VIB = Present Value of Future Profit VIB = Present Value of Future Profit VIB = Present Value of Future Profit VIB = Present Value of Future Profit VIB = Present Value of Future Profit –––––––– Cost of Capital = 5,562Cost of Capital = 5,562Cost of Capital = 5,562Cost of Capital = 5,562Cost of Capital = 5,562Cost of Capital = 5,562Cost of Capital = 5,562Cost of Capital = 5,562
KRWKRWKRWKRW 100,000,000100,000,000100,000,000100,000,000
33.6%33.6%33.6%33.6%1,3981,3981,3981,3984,1644,1644,1644,1645,5625,5625,5625,562Value of InValue of InValue of InValue of In----force Business (d)force Business (d)force Business (d)force Business (d)
( - )-2.6%-2.6%(c/a)
+0.7%p9.7%10.4%Margin (b/a)
-365
1,763
13,210
YoYYoYYoYYoY
0.7%p 0.7%p 0.7%p 0.7%p ↑↑↑↑7.1 %7.1 %7.1 %7.1 %7.8%7.8%7.8%7.8%Profit Margin (d/a)Profit Margin (d/a)Profit Margin (d/a)Profit Margin (d/a)
24.3%-1,501-1,866Cost of Capital (c)
31.1%5,6657,428PV of Future Profit (b)
22.6%58,34271,552PV of Future Premium (a)
FY2007FY2007FY2007FY2007FY2008FY2008FY2008FY2008CategoryCategoryCategoryCategory
7777
2. Value of In2. Value of In2. Value of In2. Value of In----force Businessforce Businessforce Businessforce Business
KRWKRWKRWKRW 100,000,000100,000,000100,000,000100,000,000
FY2007FY2007FY2007FY2007 FY2008FY2008FY2008FY2008
4,1644,1644,1644,164
ModelModelModelModel
ChangeChangeChangeChange
Risk Discount Risk Discount Risk Discount Risk Discount
RateRateRateRate
UnwindingUnwindingUnwindingUnwinding
131131131131
733733733733
ProfitProfitProfitProfit
On InOn InOn InOn In----forceforceforceforce
----1,3401,3401,3401,340
▶▶▶▶▶▶▶▶ Movement of VIBMovement of VIBMovement of VIBMovement of VIBMovement of VIBMovement of VIBMovement of VIBMovement of VIB
5,5625,5625,5625,562
OperationalOperationalOperationalOperational
AssumptionAssumptionAssumptionAssumptionEconomicEconomicEconomicEconomic
AssumptionAssumptionAssumptionAssumption
New BusinessNew BusinessNew BusinessNew Business
ImpactImpactImpactImpact
----480480480480
----37373737
2,3942,3942,3942,394
OthersOthersOthersOthers
----2222
【 Operational Assumption】
ㅁ Persistency ratio : slight drop of ratio (- 104)
ㅁ L/R : 87% → 90% (- 427)
ㅁ E/R : Unit Cost of maintenance cost decreased (62)
【 Economic Assumption】ㅁ Investment yield : 5.25% → 5.0% (- 384)
ㅁ Tax : tax rate deduction (346)
8888
3. Value of 13. Value of 13. Value of 13. Value of 1----year New Businessyear New Businessyear New Businessyear New Business
KRWKRWKRWKRW 100,000,000100,000,000100,000,000100,000,000
▶▶▶▶▶▶▶▶ Value of 1Value of 1Value of 1Value of 1Value of 1Value of 1Value of 1Value of 1--------year New Business : 1,849year New Business : 1,849year New Business : 1,849year New Business : 1,849year New Business : 1,849year New Business : 1,849year New Business : 1,849year New Business : 1,849
28.7%28.7%28.7%28.7%
28.4%
0.2%p ↑6.7%6.9%Profit Margin on PV of Future Premium
4124124124121,4371,4371,4371,4371,8491,8491,8491,849Value of 1Value of 1Value of 1Value of 1----year New Businessyear New Businessyear New Businessyear New Business
5101,7932,3031st year result & PV of Future Profit
-98
1,590
5,072
YoYYoYYoYYoY
1.2%p ↑19.3%20.5%Profit Margin on ANP
27.5%-356-454Cost of Capital
21.3%7,4489,038Annualized Premiums equivalent
23.5%21,56926,641PV of Future Premium
FY2007FY2007FY2007FY2007FY2008FY2008FY2008FY2008CategoryCategoryCategoryCategory
* Profit margin on ANP = Value of 1-year new Business ÷ Annualized premiums equivalent
ANP : Annualized premiums equivalent
9999
3. Value of 13. Value of 13. Value of 13. Value of 1----year New Businessyear New Businessyear New Businessyear New Business
KRWKRWKRWKRW 100,000,000100,000,000100,000,000100,000,000
▶▶▶▶▶▶▶▶ Movement of VNBMovement of VNBMovement of VNBMovement of VNBMovement of VNBMovement of VNBMovement of VNBMovement of VNB
28.7%
Value of 1-year
New Business
Future Value
Value of 1-year
New Business
Future Value
1st year result
0.9%p ↑8.2%9.1%
Profit Margin
31.4%5721,8222,394Value
0.2%p ↑6.7%6.9%
4121,4371,849
-160
YoYYoYYoYYoY
41.6%-385-545
FY2007FY2007FY2007FY2007FY2008FY2008FY2008FY2008CategoryCategoryCategoryCategory
* 1st year result : new business of the year’s realized profit in the corresponding year
Future Value : new business of the year’s expected value after the year
10101010
4. Embedded Value4. Embedded Value4. Embedded Value4. Embedded Value
KRWKRWKRWKRW 100,000,000100,000,000100,000,000100,000,000
▶▶▶▶▶▶▶▶ FY2008 Embedded Value : 10,911FY2008 Embedded Value : 10,911FY2008 Embedded Value : 10,911FY2008 Embedded Value : 10,911FY2008 Embedded Value : 10,911FY2008 Embedded Value : 10,911FY2008 Embedded Value : 10,911FY2008 Embedded Value : 10,911
ShareholderShareholderShareholderShareholder’’’’ssss
EquityEquityEquityEquity
Adjusted
Capital
Value of
In-force Biz
EmbeddedEmbeddedEmbeddedEmbedded
ValueValueValueValue
4,2564,2564,2564,256
1,0931,0931,0931,093
5,5625,5625,5625,562 10,91110,91110,91110,911
Value ofValue of
InforceInforce BizBiz
5,5625,562
AdjustedAdjusted
Net WorthNet Worth
5,3495,349
4,2564,2564,2564,256
5,3495,3495,3495,349
10,91110,91110,91110,911
11111111
4. Embedded Value4. Embedded Value4. Embedded Value4. Embedded Value
KRWKRWKRWKRW 100,000,000100,000,000100,000,000100,000,000
FY2007FY2007FY2007FY2007
Increase of VIBIncrease of VIBIncrease of VIBIncrease of VIB
1,3981,3981,3981,398
12,24612,24612,24612,246
Value ofValue ofValue ofValue ofValue ofValue ofValue ofValue of
InInInInInInInIn--------force Bizforce Bizforce Bizforce Bizforce Bizforce Bizforce Bizforce Biz
5,5625,5625,5625,5625,5625,5625,5625,562
AdjustedAdjustedAdjustedAdjusted
Net WorthNet WorthNet WorthNet Worth
8,0828,0828,0828,082
Value ofValue ofValue ofValue of
InInInIn----force Bizforce Bizforce Bizforce Biz
4,1644,1644,1644,164
FY2008FY2008FY2008FY2008
Decrease of Decrease of Decrease of Decrease of
AdjustedAdjustedAdjustedAdjusted
Net WorthNet WorthNet WorthNet Worth
---- 2,7332,7332,7332,733
10,91110,91110,91110,911
AdjustedAdjustedAdjustedAdjustedAdjustedAdjustedAdjustedAdjusted
Net WorthNet WorthNet WorthNet WorthNet WorthNet WorthNet WorthNet Worth
5,3495,3495,3495,3495,3495,3495,3495,349
---- Valuation gain/loss of Valuation gain/loss of Valuation gain/loss of Valuation gain/loss of
investment investment investment investment : : : : ---- 796796796796
- Reduced retained earningsReduced retained earningsReduced retained earningsReduced retained earnings::::
---- 784784784784
---- Treasury repurchaseTreasury repurchaseTreasury repurchaseTreasury repurchase : : : : ---- 617617617617
---- EquityEquityEquityEquity----method stock : method stock : method stock : method stock : ----352, 352, 352, 352,
etc.etc.etc.etc.
---- Model changeModel changeModel changeModel change : 131: 131: 131: 131
---- Assumption changeAssumption changeAssumption changeAssumption change : : : : ---- 518518518518
---- Roll Forwarding : Roll Forwarding : Roll Forwarding : Roll Forwarding : ---- 607607607607
---- New contract effect : 2,394, etc.New contract effect : 2,394, etc.New contract effect : 2,394, etc.New contract effect : 2,394, etc.
▶▶▶▶▶▶▶▶ Movement of EVMovement of EVMovement of EVMovement of EVMovement of EVMovement of EVMovement of EVMovement of EV
12121212
4. Embedded Value4. Embedded Value4. Embedded Value4. Embedded Value
FY2007FY2007FY2007FY2007 FY2008FY2008FY2008FY2008
0.910.910.910.91
PricePricePricePrice PricePricePricePriceEVPSEVPSEVPSEVPS EVPSEVPSEVPSEVPS
9,8929,8929,8929,892
8,8138,8138,8138,8139,0109,0109,0109,010
3,8703,8703,8703,870
0.440.440.440.44
P/ EVP/ EVP/ EVP/ EV
▶▶▶▶▶▶▶▶ Share price, Share price, Share price, Share price, Share price, Share price, Share price, Share price, EV per share, Price to EVEV per share, Price to EVEV per share, Price to EVEV per share, Price to EVEV per share, Price to EVEV per share, Price to EVEV per share, Price to EVEV per share, Price to EV
CurrentCurrentCurrentCurrent
(2009.9.23)(2009.9.23)(2009.9.23)(2009.9.23)
PricePricePricePrice EVPSEVPSEVPSEVPS
8,8138,8138,8138,813
8,0908,0908,0908,090
0.920.920.920.92
※※※※ EVPS : Issued share(123,800,000) basisEVPS : Issued share(123,800,000) basisEVPS : Issued share(123,800,000) basisEVPS : Issued share(123,800,000) basis
13131313
4. Embedded Value4. Embedded Value4. Embedded Value4. Embedded Value
KRWKRWKRWKRW 100,000,000100,000,000100,000,000100,000,000
10,28310,28310,28310,28310,91110,91110,91110,91111,64611,64611,64611,646Embedded ValueEmbedded ValueEmbedded ValueEmbedded Value
-2,003-1,866-1,699Cost of holding required capital
6,9377,4287,996Present Value of future profit
4,9344,9344,9344,9345,5625,5625,5625,5626,2976,2976,2976,297Value of InValue of InValue of InValue of In----force Businessforce Businessforce Businessforce Business
1,093Adjusted Capital
4,256Shareholder’s Equity
5,3495,3495,3495,349Adjusted Net WorthAdjusted Net WorthAdjusted Net WorthAdjusted Net Worth
RDR 13.0%RDR 13.0%RDR 13.0%RDR 13.0%RDR 11.5%RDR 11.5%RDR 11.5%RDR 11.5%RDR 10.0%RDR 10.0%RDR 10.0%RDR 10.0%CategoryCategoryCategoryCategory
※※※※※※※※ RDR : Risk Discount RateRDR : Risk Discount RateRDR : Risk Discount RateRDR : Risk Discount RateRDR : Risk Discount RateRDR : Risk Discount RateRDR : Risk Discount RateRDR : Risk Discount Rate
-472-454-428Cost of holding required capital
2,0982,3032,543Present Value of future profit
1,6261,6261,6261,6261,8491,8491,8491,8492,1152,1152,1152,115Value of 1Value of 1Value of 1Value of 1----year New Businessyear New Businessyear New Businessyear New Business
▶▶▶▶▶▶▶▶ EV per Risk Discount RateEV per Risk Discount RateEV per Risk Discount RateEV per Risk Discount RateEV per Risk Discount RateEV per Risk Discount RateEV per Risk Discount RateEV per Risk Discount Rate
14141414
5. Sensitivities5. Sensitivities5. Sensitivities5. Sensitivities
KRWKRWKRWKRW 100,000,000100,000,000100,000,000100,000,000
InterestInterestInterestInterest※※※※ Loss ratioLoss ratioLoss ratioLoss ratio
Persistency ratioPersistency ratioPersistency ratioPersistency ratio Expense ratioExpense ratioExpense ratioExpense ratio
※※※※ Market interest rateMarket interest rateMarket interest rateMarket interest rate’’’’s impact on investment yield and funding costs impact on investment yield and funding costs impact on investment yield and funding costs impact on investment yield and funding cost
+10%+10%+10%+10%
----10%10%10%10%
----10%10%10%10%
+10%+10%+10%+10%
----10%10%10%10%
+10%+10%+10%+10%
+50bp+50bp+50bp+50bp
----50bp50bp50bp50bp
334 (6%)334 (6%)334 (6%)334 (6%)
----311 (311 (311 (311 (----6%)6%)6%)6%)
164 (3%)164 (3%)164 (3%)164 (3%)
----164 (164 (164 (164 (----3%)3%)3%)3%)
807 (15%)807 (15%)807 (15%)807 (15%)
----801 (801 (801 (801 (----14%)14%)14%)14%)
1,399 (25%)1,399 (25%)1,399 (25%)1,399 (25%)
----1,394 (1,394 (1,394 (1,394 (----25%)25%)25%)25%)
▶▶▶▶▶▶▶▶ Value of InValue of InValue of InValue of InValue of InValue of InValue of InValue of In--------Force BusinessForce BusinessForce BusinessForce BusinessForce BusinessForce BusinessForce BusinessForce Business
15151515
5. Sensitivities5. Sensitivities5. Sensitivities5. Sensitivities
KRWKRWKRWKRW 100,000,000100,000,000100,000,000100,000,000
InterestInterestInterestInterest Loss ratioLoss ratioLoss ratioLoss ratio
Persistency ratioPersistency ratioPersistency ratioPersistency ratio Expense ratioExpense ratioExpense ratioExpense ratio
+10%+10%+10%+10%
----10%10%10%10%
----10%10%10%10%
+10%+10%+10%+10%
----10%10%10%10%
+10%+10%+10%+10%
+50bp+50bp+50bp+50bp
----50bp50bp50bp50bp
193 (10%)193 (10%)193 (10%)193 (10%)
----177 (177 (177 (177 (----10%)10%)10%)10%)
140 (8%)140 (8%)140 (8%)140 (8%)
----140 (140 (140 (140 (----8%)8%)8%)8%)
168 (9%)168 (9%)168 (9%)168 (9%)
----164 (164 (164 (164 (----9%)9%)9%)9%)
478 (26%)478 (26%)478 (26%)478 (26%)
----477 (477 (477 (477 (----26%)26%)26%)26%)
▶▶▶▶▶▶▶▶ Value of 1Value of 1Value of 1Value of 1Value of 1Value of 1Value of 1Value of 1--------year New Businessyear New Businessyear New Businessyear New Businessyear New Businessyear New Businessyear New Businessyear New Business
16161616
6. Review Statement 6. Review Statement 6. Review Statement 6. Review Statement ---- TowersperrinTowersperrinTowersperrinTowersperrin
� Towers Perrin has reviewed the methodology, assumptions and results of the Meritz Insurance Co., Ltd. (“Meritz”) Embedded Value as at 31 March 2009 and value of new business in respect of business written in the 12 months to 31 March 2009 for Long Term Insurance. Our review excluded the derivation of the new business multiplier and appraisal value.
� Towers Perrin has concluded that the methodology used is consistent with recent industry practice for traditional deterministic embedded value reporting in Asia. In particular:
� The values have been based on deterministic projections of future profits, with allowance for risk through the use of a risk discount rate specified by Meritz and an explicit adjustment for the cost of holding an amount of solvency capital;
� The operating assumptions have been set with appropriate regard to past, current and expected future experience;
� The economic assumptions used have made allowance for the company's current and future asset mix and investment strategy, are internally consistent and consistent with observable market data.
� Towers Perrin has reviewed the calculations made by Meritz, including a number of checks of the models and processes, and has verified that the results have been determined in a manner consistent with the methodology and assumptions described in this report and has confirmed that any issues discovered do not have a material impact on the disclosed embedded value as at 31 March 2009 or the disclosed value of new business in respect of business written in the 12 months to 31 March 2009 for Long Term Insurance.
� In arriving at these conclusions, Towers Perrin relied on data and information provided by Meritz. This opinion is made solely to Meritz in accordance with the terms of Towers Perrin's engagement letter. To the fullest extent permitted by applicable law, Towers Perrin does not accept or assume any responsibility, duty of care or liability to anyone other than Meritz for or in connection with its review work, the opinions it has formed, or for any statement set forth in this opinion.
17171717
[Reference] In[Reference] In[Reference] In[Reference] In----Force Business profitability comparisonForce Business profitability comparisonForce Business profitability comparisonForce Business profitability comparison
□□□□ Profit MarginProfit MarginProfit MarginProfit Margin
PV of Future PremiumPV of Future PremiumPV of Future PremiumPV of Future Premium
PV of Distributable EarningPV of Distributable EarningPV of Distributable EarningPV of Distributable Earning� Profit Margin =Profit Margin =Profit Margin =Profit Margin =
□□□□ Data for factors constituting Profit MarginData for factors constituting Profit MarginData for factors constituting Profit MarginData for factors constituting Profit Margin
①①①① L/R : Incurred losses of LT lineL/R : Incurred losses of LT lineL/R : Incurred losses of LT lineL/R : Incurred losses of LT line ÷÷÷÷ earned premium of LT lineearned premium of LT lineearned premium of LT lineearned premium of LT line
PremiumPremiumPremiumPremium====
� LT loss ratio trendLT loss ratio trendLT loss ratio trendLT loss ratio trend (data available from monthly report provided by each company)(data available from monthly report provided by each company)(data available from monthly report provided by each company)(data available from monthly report provided by each company)
79.8%81.3%83.9%86.3%86.7%DDDD
79.4%81.6%83.4%84.8%87.2%CCCC
79.6%81.4%84.8%88.2%90.9%BBBB
83.5%83.8%84.9%86.8%89.5%AAAA
75.8%75.8%75.8%75.8%78.8%78.8%78.8%78.8%82.5%82.5%82.5%82.5%85.0%85.0%85.0%85.0%89.6%89.6%89.6%89.6%MeritzMeritzMeritzMeritz
FY2009.7FY2009.7FY2009.7FY2009.7FY2008FY2008FY2008FY2008FY2007FY2007FY2007FY2007FY2006FY2006FY2006FY2006FY2005FY2005FY2005FY2005CompaniesCompaniesCompaniesCompanies
====
Tip. Companies with higher concentration on selling savings typeTip. Companies with higher concentration on selling savings typeTip. Companies with higher concentration on selling savings typeTip. Companies with higher concentration on selling savings type have higher loss ratiohave higher loss ratiohave higher loss ratiohave higher loss ratio
Premium Premium Premium Premium –––– Incurred lossesIncurred lossesIncurred lossesIncurred losses ---- Sales cost Sales cost Sales cost Sales cost –––– Administration costAdministration costAdministration costAdministration cost + Investment profit+ Investment profit+ Investment profit+ Investment profit ---- TaxTaxTaxTax –––– Cost of capitalCost of capitalCost of capitalCost of capital
1 1 1 1 –––– L/R L/R L/R L/R –––– Sales cost ratioSales cost ratioSales cost ratioSales cost ratio –––– Administration ratioAdministration ratioAdministration ratioAdministration ratio + Investment yield+ Investment yield+ Investment yield+ Investment yield –––– Tax rateTax rateTax rateTax rate –––– Cost of capital ratioCost of capital ratioCost of capital ratioCost of capital ratio
18181818
②②②② Sales cost ratioSales cost ratioSales cost ratioSales cost ratio : assumed acquisition cost: assumed acquisition cost: assumed acquisition cost: assumed acquisition cost ÷÷÷÷ gross premiumgross premiumgross premiumgross premium ×××× 85%85%85%85%
� Acquisition cost ratio trendAcquisition cost ratio trendAcquisition cost ratio trendAcquisition cost ratio trend (data available from monthly report provided by each company)(data available from monthly report provided by each company)(data available from monthly report provided by each company)(data available from monthly report provided by each company)
?6.9%8.1%2,25727,813DDDD
?6.6%7.8%2,48731,832CCCC
?6.8%8.0%2,53431,577BBBB
8.7%6.5%7.6%4,25455,755AAAA
8.5%8.5%8.5%8.5%7.9%7.9%7.9%7.9%9.3%9.3%9.3%9.3%1,7171,7171,7171,71718,49318,49318,49318,493MeritzMeritzMeritzMeritz
Assumed acquisition Assumed acquisition Assumed acquisition Assumed acquisition costcostcostcost÷÷÷÷
InInInIn----force Biz Premiumforce Biz Premiumforce Biz Premiumforce Biz Premium
Sales cost Sales cost Sales cost Sales cost ratioratioratioratio
(c(c(c(c××××0.85)0.85)0.85)0.85)
RatioRatioRatioRatio(c=b/a)(c=b/a)(c=b/a)(c=b/a)
Assumed Assumed Assumed Assumed acquisition costacquisition costacquisition costacquisition cost
(b)(b)(b)(b)
Gross premiumGross premiumGross premiumGross premium(a)(a)(a)(a)
CompanyCompanyCompanyCompany
(Unit : KRW 100mn)
③③③③ Administration cost ratio : Administration cost Administration cost ratio : Administration cost Administration cost ratio : Administration cost Administration cost ratio : Administration cost ÷÷÷÷ net premium writtennet premium writtennet premium writtennet premium written
� Administration costAdministration costAdministration costAdministration cost : Net expenses : Net expenses : Net expenses : Net expenses ---- Sales costSales costSales costSales cost
12.5%13.5%13.1%13.8%14.1%DDDD
9.7%10.0%10.6%10.5%11.1%CCCC
10.7%12.1%12.2%12.0%14.4%BBBB
11.4%12.3%12.1%12.3%12.1%AAAA
9.8%9.8%9.8%9.8%11.8%11.8%11.8%11.8%12.4%12.4%12.4%12.4%13.0%13.0%13.0%13.0%14.4%14.4%14.4%14.4%MeritzMeritzMeritzMeritz
FY2009.7FY2009.7FY2009.7FY2009.7FY2008FY2008FY2008FY2008FY2007FY2007FY2007FY2007FY2006FY2006FY2006FY2006FY2005FY2005FY2005FY2005CompanyCompanyCompanyCompany
※※※※ Most of administration cost is allocated to each line of businMost of administration cost is allocated to each line of businMost of administration cost is allocated to each line of businMost of administration cost is allocated to each line of business by # of policies or premium size. ess by # of policies or premium size. ess by # of policies or premium size. ess by # of policies or premium size. So longSo longSo longSo long----term administration ratio is adopted the companyterm administration ratio is adopted the companyterm administration ratio is adopted the companyterm administration ratio is adopted the company’’’’s ratios ratios ratios ratio
� Administration cost ratio trendAdministration cost ratio trendAdministration cost ratio trendAdministration cost ratio trend (data available from monthly report provided by each company)(data available from monthly report provided by each company)(data available from monthly report provided by each company)(data available from monthly report provided by each company)
� 85% means actual to assumed acquisition cost ratio. If portion o85% means actual to assumed acquisition cost ratio. If portion o85% means actual to assumed acquisition cost ratio. If portion o85% means actual to assumed acquisition cost ratio. If portion of GA sales cost higher in the company, the ratio becomes lowerf GA sales cost higher in the company, the ratio becomes lowerf GA sales cost higher in the company, the ratio becomes lowerf GA sales cost higher in the company, the ratio becomes lower
→→→→ Early execution of UpEarly execution of UpEarly execution of UpEarly execution of Up----front cost will lower future expenses in the coming yearfront cost will lower future expenses in the coming yearfront cost will lower future expenses in the coming yearfront cost will lower future expenses in the coming year
[Reference] In[Reference] In[Reference] In[Reference] In----Force Business profitability comparisonForce Business profitability comparisonForce Business profitability comparisonForce Business profitability comparison
19191919
④④④④ Investment yield : (LT savings reserveInvestment yield : (LT savings reserveInvestment yield : (LT savings reserveInvestment yield : (LT savings reserve×××× 5%) 5%) 5%) 5%) ÷÷÷÷ earned premium of LTearned premium of LTearned premium of LTearned premium of LT
� Assumed investment yield to be 5% of savings reserve, then transAssumed investment yield to be 5% of savings reserve, then transAssumed investment yield to be 5% of savings reserve, then transAssumed investment yield to be 5% of savings reserve, then translated it to earned premium basis yieldlated it to earned premium basis yieldlated it to earned premium basis yieldlated it to earned premium basis yield
8.7%2,409173%27,82248,185DDDD
8.7%2,771174%31,83455,427CCCC
8.9%2,812178%31,58556,230BBBB
11.4%6,332227%55,768126,643AAAA
8.8%8.8%8.8%8.8%1,6311,6311,6311,631176%176%176%176%18,49618,49618,49618,49632,62732,62732,62732,627MeritzMeritzMeritzMeritz
Investment yieldInvestment yieldInvestment yieldInvestment yieldInvestment profitInvestment profitInvestment profitInvestment profitReserve Reserve Reserve Reserve ÷÷÷÷ PremiumPremiumPremiumPremiumPremiumPremiumPremiumPremiumLT savings reserveLT savings reserveLT savings reserveLT savings reserveCompanyCompanyCompanyCompany
(Unit : KRW 100mn)
Tip. The greater reserve size is, the bigger the yieldTip. The greater reserve size is, the bigger the yieldTip. The greater reserve size is, the bigger the yieldTip. The greater reserve size is, the bigger the yield
⑤⑤⑤⑤ Discount Rate : Discount Rate : Discount Rate : Discount Rate : CAPM(CapitalCAPM(CapitalCAPM(CapitalCAPM(Capital Asset Pricing Model) methodAsset Pricing Model) methodAsset Pricing Model) methodAsset Pricing Model) method
� Discount Rate = Risk free rate + Risk premiumDiscount Rate = Risk free rate + Risk premiumDiscount Rate = Risk free rate + Risk premiumDiscount Rate = Risk free rate + Risk premium
10.0%6.5%0.98AAAA
12.4%8.9%1.35BBBB
12.8%9.3%1.41CCCC
11.5%11.5%11.5%11.5%8.0%8.0%8.0%8.0%1.211.211.211.21
6.6%6.6%6.6%6.6%3.5%3.5%3.5%3.5%
MeritzMeritzMeritzMeritz
11.8%8.3%1.26DDDD
Discount rateDiscount rateDiscount rateDiscount rateRisk premiumRisk premiumRisk premiumRisk premiumBetaBetaBetaBetaMarket risk premiumMarket risk premiumMarket risk premiumMarket risk premiumRisk free rateRisk free rateRisk free rateRisk free rateCompanyCompanyCompanyCompany
→→→→ Risk premium = Market risk premium Risk premium = Market risk premium Risk premium = Market risk premium Risk premium = Market risk premium ×××× volatility of each company compared to volatility of each company compared to volatility of each company compared to volatility of each company compared to market(market(market(market(ββββ) ) ) )
� Investment yield trend Investment yield trend Investment yield trend Investment yield trend (data available from monthly report provided by each company)(data available from monthly report provided by each company)(data available from monthly report provided by each company)(data available from monthly report provided by each company)
� Discount rate of companiesDiscount rate of companiesDiscount rate of companiesDiscount rate of companies
[Reference] In[Reference] In[Reference] In[Reference] In----Force Business profitability comparisonForce Business profitability comparisonForce Business profitability comparisonForce Business profitability comparison
20202020
� FY2009.April~August
Review
21212121
DisclaimerDisclaimerDisclaimerDisclaimerDisclaimerDisclaimerDisclaimerDisclaimer
This material has been prepared based on internally audited
figures and final figures may change due to the results of an
independent audit without notice.
This presentation includes forward-looking statements
regarding the company’s outlook for FY09 and beyond, including
projected premium and net income. These forecasts are subject to
unknown risks and uncertainties that may cause actual figures to
differ from those stated or implied by such statements. We have
no obligation or responsibility regarding investment made based
on such forward-looking statements.
22222222
Net Income TrendNet Income TrendNet Income TrendNet Income TrendNet Income TrendNet Income TrendNet Income TrendNet Income Trend
173
60
394
525
557
FY05 August FY06 August FY07 August FY08 August FY09 August
☞☞☞☞☞☞☞☞ Produced the biggest scale of profit since its founding (exceedProduced the biggest scale of profit since its founding (exceedProduced the biggest scale of profit since its founding (exceedProduced the biggest scale of profit since its founding (exceedProduced the biggest scale of profit since its founding (exceedProduced the biggest scale of profit since its founding (exceedProduced the biggest scale of profit since its founding (exceedProduced the biggest scale of profit since its founding (exceeds FY07)s FY07)s FY07)s FY07)s FY07)s FY07)s FY07)s FY07)
1. Net Income1. Net Income1. Net Income1. Net Income1. Net Income1. Net Income1. Net Income1. Net Income
Produced the biggest Produced the biggest Produced the biggest Produced the biggest Produced the biggest Produced the biggest Produced the biggest Produced the biggest scale of profit scale of profit scale of profit scale of profit scale of profit scale of profit scale of profit scale of profit
(Unit: KRW 100 mn)
23232323
Achievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to plan
1. Net Income1. Net Income1. Net Income1. Net Income1. Net Income1. Net Income1. Net Income1. Net Income
521521521521
PlanPlanPlanPlanPlanPlanPlanPlan
557557557557(+36(+36(+36(+36↑↑↑↑ compared to compared to compared to compared to
plan)plan)plan)plan)
Net IncomeNet IncomeNet IncomeNet IncomeNet IncomeNet IncomeNet IncomeNet Income
(Report)(Report)(Report)(Report)(Report)(Report)(Report)(Report)
731731731731(+210(+210(+210(+210↑↑↑↑ compared to compared to compared to compared to
plan)plan)plan)plan)
Practical profitPractical profitPractical profitPractical profitPractical profitPractical profitPractical profitPractical profit
(excluding one(excluding one(excluding one(excluding one(excluding one(excluding one(excluding one(excluding one--------off)off)off)off)off)off)off)off)
174174174174
OneOneOneOneOneOneOneOne--------off itemsoff itemsoff itemsoff itemsoff itemsoff itemsoff itemsoff items
RGRGRGRGRGRGRGRGAdditional Additional Additional Additional Additional Additional Additional Additional
amortization of DACamortization of DACamortization of DACamortization of DACamortization of DACamortization of DACamortization of DACamortization of DAC
--------403403403403403403403403
+174+174+174+174+174+174+174+174
NetNetNetNetNetNetNetNet
--------174174174174174174174174
OthersOthersOthersOthersOthersOthersOthersOthers
+55+55+55+55+55+55+55+55
Note) April~ August FY09 figures
(Unit: KRW 100 mn)
24242424
98.8%
103.4%
125.9%
104.4% 102.9%
Total LT new LT Auto Commercial
Achievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to plan
ResultResultResultResultResultResultResultResult 406406406406406406406406 8,8688,8688,8688,8688,8688,8688,8688,868 3,0503,0503,0503,0503,0503,0503,0503,050 1,3181,3181,3181,3181,3181,3181,3181,31813,23613,23613,23613,23613,23613,23613,23613,236
PlanPlanPlanPlanPlanPlanPlanPlan 322322322322322322322322 8,4988,4988,4988,4988,4988,4988,4988,498 2,9632,9632,9632,9632,9632,9632,9632,963 1,3351,3351,3351,3351,3351,3351,3351,33512,79512,79512,79512,79512,79512,79512,79512,795
7,622
8,731
13,236
11,635
10,069
8.3%
8.2%
7.9%
8.0%
8.0%
FY05 Aug FY06 Aug FY07 Aug FY08 Aug FY09 Aug
Gross premium
Market share
Peer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparison
☞☞☞☞☞☞☞☞ Sales exceeded business plan, market share improved to the previSales exceeded business plan, market share improved to the previSales exceeded business plan, market share improved to the previSales exceeded business plan, market share improved to the previSales exceeded business plan, market share improved to the previSales exceeded business plan, market share improved to the previSales exceeded business plan, market share improved to the previSales exceeded business plan, market share improved to the previous yearous yearous yearous yearous yearous yearous yearous year
2. Sales2. Sales2. Sales2. Sales2. Sales2. Sales2. Sales2. Sales
G/RG/RG/RG/RG/RG/RG/RG/R 14.6%14.6%14.6%14.6%14.6%14.6%14.6%14.6% 15.3%15.3%15.3%15.3%15.3%15.3%15.3%15.3% 15.6%15.6%15.6%15.6%15.6%15.6%15.6%15.6% 13.8%13.8%13.8%13.8%13.8%13.8%13.8%13.8%11.9%11.9%11.9%11.9%11.9%11.9%11.9%11.9%
Industry G/RIndustry G/RIndustry G/RIndustry G/RIndustry G/RIndustry G/RIndustry G/RIndustry G/R 13.5%13.5%13.5%13.5%13.5%13.5%13.5%13.5% 16.9%16.9%16.9%16.9%16.9%16.9%16.9%16.9% 11.7%11.7%11.7%11.7%11.7%11.7%11.7%11.7% 12.8%12.8%12.8%12.8%12.8%12.8%12.8%12.8%8.9%8.9%8.9%8.9%8.9%8.9%8.9%8.9%
Note) April~August FY09 Result
(Unit: KRW 100mn)(Unit: KRW 100mn)
25252525
82.0%
81.2% 78.9%
75.5%
71.8%
81.5%
81.8%
78.7%76.5%
76.0%
FY2005 FY2006 FY2007 FY2008 April~July
FY2009
Meritz Top 4
(74.0%)
74.3%
60.1%
69.4%
77.1%
72.2%72.7%
29.2%
75.8%
Total LT Auto Commercial
Plan ResultAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to plan
※ FY2008 excludes RG losses, number in the ( ) excludes RG effect-------- -------- 63.5%63.5%63.5%63.5%63.5%63.5%63.5%63.5%74.4%74.4%74.4%74.4%74.4%74.4%74.4%74.4%
Excluding oneExcluding oneExcluding oneExcluding oneExcluding oneExcluding oneExcluding oneExcluding one--------
off itemsoff itemsoff itemsoff itemsoff itemsoff itemsoff itemsoff items
3. Loss Ratio3. Loss Ratio3. Loss Ratio3. Loss Ratio3. Loss Ratio3. Loss Ratio3. Loss Ratio3. Loss Ratio
Peer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparison
☞☞☞☞☞☞☞☞ Loss ratio improved Loss ratio improved Loss ratio improved Loss ratio improved Loss ratio improved Loss ratio improved Loss ratio improved Loss ratio improved --------1.6%p, compared to plan1.6%p, compared to plan1.6%p, compared to plan1.6%p, compared to plan1.6%p, compared to plan1.6%p, compared to plan1.6%p, compared to plan1.6%p, compared to plan (without one(without one(without one(without one(without one(without one(without one(without one--------off items, 0.1%p higher than plan)off items, 0.1%p higher than plan)off items, 0.1%p higher than plan)off items, 0.1%p higher than plan)off items, 0.1%p higher than plan)off items, 0.1%p higher than plan)off items, 0.1%p higher than plan)off items, 0.1%p higher than plan)
-------- Better result compared to industry average, 2.0%p lower than toBetter result compared to industry average, 2.0%p lower than toBetter result compared to industry average, 2.0%p lower than toBetter result compared to industry average, 2.0%p lower than toBetter result compared to industry average, 2.0%p lower than toBetter result compared to industry average, 2.0%p lower than toBetter result compared to industry average, 2.0%p lower than toBetter result compared to industry average, 2.0%p lower than top 4 average even without RGp 4 average even without RGp 4 average even without RGp 4 average even without RGp 4 average even without RGp 4 average even without RGp 4 average even without RGp 4 average even without RG
Note) April~August FY09 Result
26262626
10.1%11.0%
11.4%
14.3%
19.2%
9.6%10.5% 10.2%
13.3%
15.9%
FY2005 FY2006 FY2007 FY2008 April~July
FY2009
Meritz 2nd tier
14.6%
4.5%
14.2%
15.4%14.2%
17.7%
4.8%
19.7%
Total LT Auto Commercial
Plan ResultAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to plan
※ 2nd tier : Hyundai, Dongbu, LIG15.0%15.0%15.0%15.0%15.0%15.0%15.0%15.0% -------- --------14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%
4. Sales Cost Ratio4. Sales Cost Ratio4. Sales Cost Ratio4. Sales Cost Ratio4. Sales Cost Ratio4. Sales Cost Ratio4. Sales Cost Ratio4. Sales Cost Ratio
Peer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparison
☞☞☞☞☞☞☞☞ Sales cost ratio is 3.1%p higher thanSales cost ratio is 3.1%p higher thanSales cost ratio is 3.1%p higher thanSales cost ratio is 3.1%p higher thanSales cost ratio is 3.1%p higher thanSales cost ratio is 3.1%p higher thanSales cost ratio is 3.1%p higher thanSales cost ratio is 3.1%p higher than planplanplanplanplanplanplanplan ((((((((--------0.2%p without one0.2%p without one0.2%p without one0.2%p without one0.2%p without one0.2%p without one0.2%p without one0.2%p without one--------off item)off item)off item)off item)off item)off item)off item)off item)
-------- Additional acquisition cost incurred in Additional acquisition cost incurred in Additional acquisition cost incurred in Additional acquisition cost incurred in Additional acquisition cost incurred in Additional acquisition cost incurred in Additional acquisition cost incurred in Additional acquisition cost incurred in April~AugustApril~AugustApril~AugustApril~AugustApril~AugustApril~AugustApril~AugustApril~August is 403 higher than planis 403 higher than planis 403 higher than planis 403 higher than planis 403 higher than planis 403 higher than planis 403 higher than planis 403 higher than plan →→→→→→→→ LT Sales cost ratioLT Sales cost ratioLT Sales cost ratioLT Sales cost ratioLT Sales cost ratioLT Sales cost ratioLT Sales cost ratioLT Sales cost ratio +4.6%p+4.6%p+4.6%p+4.6%p+4.6%p+4.6%p+4.6%p+4.6%p
Note) April~August FY09 Result
Excluding oneExcluding oneExcluding oneExcluding oneExcluding oneExcluding oneExcluding oneExcluding one--------
off itemsoff itemsoff itemsoff itemsoff itemsoff itemsoff itemsoff items
27272727
Note1) April~August FY09 Result
Note2) Administration cost : other than sales cost (acquisition cost and reinsurance commission)
5. Administration Cost Ratio5. Administration Cost Ratio5. Administration Cost Ratio5. Administration Cost Ratio5. Administration Cost Ratio5. Administration Cost Ratio5. Administration Cost Ratio5. Administration Cost Ratio
9.9%
11.9%
12.5%
13.3%
14.3%
11.1%12.1%12.4%
13.1%
FY2005 FY2006 FY2007 FY2008 April~July
FY2009
Meritz Top 4
※※※※ DongbuDongbuDongbuDongbu : 9.7%: 9.7%: 9.7%: 9.7%
☞☞☞☞☞☞☞☞ Constant effort to gain productivity and efficiency resulted heaConstant effort to gain productivity and efficiency resulted heaConstant effort to gain productivity and efficiency resulted heaConstant effort to gain productivity and efficiency resulted heaConstant effort to gain productivity and efficiency resulted heaConstant effort to gain productivity and efficiency resulted heaConstant effort to gain productivity and efficiency resulted heaConstant effort to gain productivity and efficiency resulted healthy administration cost ratiolthy administration cost ratiolthy administration cost ratiolthy administration cost ratiolthy administration cost ratiolthy administration cost ratiolthy administration cost ratiolthy administration cost ratio
-------- Administration cost decreased 75 compared to Administration cost decreased 75 compared to Administration cost decreased 75 compared to Administration cost decreased 75 compared to Administration cost decreased 75 compared to Administration cost decreased 75 compared to Administration cost decreased 75 compared to Administration cost decreased 75 compared to plan(ratioplan(ratioplan(ratioplan(ratioplan(ratioplan(ratioplan(ratioplan(ratio --------1.0%p)1.0%p)1.0%p)1.0%p)1.0%p)1.0%p)1.0%p)1.0%p)
660
633617
602
1,293
1,218
Wages General administrative Total administration
Plan Result
Administration ratioAdministration ratioAdministration ratioAdministration ratioAdministration ratioAdministration ratioAdministration ratioAdministration ratio
(compared to plan)(compared to plan)(compared to plan)(compared to plan)(compared to plan)(compared to plan)(compared to plan)(compared to plan)10.0%10.0%10.0%10.0%10.0%10.0%10.0%10.0%
((((((((--------1.0%p1.0%p1.0%p1.0%p1.0%p1.0%p1.0%p1.0%p↓↓↓↓↓↓↓↓))))))))
Achievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to plan Peer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparison
(Unit: KRW 100mn)
28282828
106.3%105.5%
102.8%
101.7%
101.0%
103.7%
104.4%
100.9%
101.4%
102.4%
FY2005 FY2006 FY2007 FY2008 April~July
FY2009
Meritz Top 4
(99.0%)
99.9%
25.5%
74.3%
27.7%
100.4%
72.7%
Combinded ratio Loss ratio Expense ratio
PlanResult
Combined ratioCombined ratioCombined ratioCombined ratioCombined ratioCombined ratioCombined ratioCombined ratio
74.4%74.4%74.4%74.4%74.4%74.4%74.4%74.4% 24.4%24.4%24.4%24.4%24.4%24.4%24.4%24.4%98.7%98.7%98.7%98.7%98.7%98.7%98.7%98.7%
6. Underwriting Overview6. Underwriting Overview6. Underwriting Overview6. Underwriting Overview6. Underwriting Overview6. Underwriting Overview6. Underwriting Overview6. Underwriting Overview
☞☞☞☞☞☞☞☞ Combined ratio beat plan by 0.5%p (without oneCombined ratio beat plan by 0.5%p (without oneCombined ratio beat plan by 0.5%p (without oneCombined ratio beat plan by 0.5%p (without oneCombined ratio beat plan by 0.5%p (without oneCombined ratio beat plan by 0.5%p (without oneCombined ratio beat plan by 0.5%p (without oneCombined ratio beat plan by 0.5%p (without one--------off item, off item, off item, off item, off item, off item, off item, off item, --------1.2%p improvement)1.2%p improvement)1.2%p improvement)1.2%p improvement)1.2%p improvement)1.2%p improvement)1.2%p improvement)1.2%p improvement)
-------- Underwriting profitability improved further, compared to top 4Underwriting profitability improved further, compared to top 4Underwriting profitability improved further, compared to top 4Underwriting profitability improved further, compared to top 4Underwriting profitability improved further, compared to top 4Underwriting profitability improved further, compared to top 4Underwriting profitability improved further, compared to top 4Underwriting profitability improved further, compared to top 4
Peer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparison
Excluding oneExcluding oneExcluding oneExcluding oneExcluding oneExcluding oneExcluding oneExcluding one--------
off itemsoff itemsoff itemsoff itemsoff itemsoff itemsoff itemsoff items
Note) April~August FY09 Result
※ FY2008 excludes RG losses, number in the ( ) excludes RG effect
29292929
Plan Result
749749749749749749749749
+68+68+68+68
883883883883883883883883
+43+43+43+43+19+19+19+19 +4+4+4+4
Yield: 4.3%Yield: 4.3%Yield: 4.3%Yield: 4.3%Yield: 4.3%Yield: 4.3%Yield: 4.3%Yield: 4.3%
StockStockStockStockStockStockStockStock
Overseas Overseas Overseas Overseas Overseas Overseas Overseas Overseas securitiessecuritiessecuritiessecuritiessecuritiessecuritiessecuritiessecurities
Domestic Domestic Domestic Domestic Domestic Domestic Domestic Domestic bond, etcbond, etcbond, etcbond, etcbond, etcbond, etcbond, etcbond, etc
OthersOthersOthersOthersOthersOthersOthersOthers
yield : 5.1%yield : 5.1%yield : 5.1%yield : 5.1%yield : 5.1%yield : 5.1%yield : 5.1%yield : 5.1%
5.9%
3.2%
5.7%
6.4%
7.1%
5.8%
5.4%
6.2%
6.3%6.1%
FY2005 FY2006 FY2007 FY2008 April~July
FY2009
Meritz Top 4
※ Excluding real estate and equity-method stock
7. Investment7. Investment7. Investment7. Investment7. Investment7. Investment7. Investment7. Investment
※ Gain & loss from foreign currency for RG(-23.5) excluded
☞☞☞☞☞☞☞☞ Investment incomeInvestment incomeInvestment incomeInvestment incomeInvestment incomeInvestment incomeInvestment incomeInvestment income 883883883883883883883883 (+134 compared to plan) (+134 compared to plan) (+134 compared to plan) (+134 compared to plan) (+134 compared to plan) (+134 compared to plan) (+134 compared to plan) (+134 compared to plan)
-------- investment yield exceeded plan byinvestment yield exceeded plan byinvestment yield exceeded plan byinvestment yield exceeded plan byinvestment yield exceeded plan byinvestment yield exceeded plan byinvestment yield exceeded plan byinvestment yield exceeded plan by 0.8%p0.8%p0.8%p0.8%p0.8%p0.8%p0.8%p0.8%p
Achievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to planAchievement compared to plan Peer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparisonPeer group comparison
(Unit: KRW 100mn)
Note) April~August FY09 Result
30303030
8. Solvency ratio8. Solvency ratio8. Solvency ratio8. Solvency ratio8. Solvency ratio8. Solvency ratio8. Solvency ratio8. Solvency ratio
☞☞☞☞ August 2009August 2009August 2009August 2009 Solvency ratio is 211.2% (+21.3%p Solvency ratio is 211.2% (+21.3%p Solvency ratio is 211.2% (+21.3%p Solvency ratio is 211.2% (+21.3%p qoqqoqqoqqoq))))
- Valuation loss of available-for-sales securities decreased, net income boosted � solvency margin increased 1,088
4,0034,269
6,6256,139
7,227
3,4223,2332,816
2,5052,072
2006.3 2007.3 2008.3 2009.3 2009.8
Solvency margin
Solvency requirementSolvency ratioSolvency ratioSolvency ratioSolvency ratioSolvency ratioSolvency ratioSolvency ratioSolvency ratio
211.2%
189.9%
235.3%
170.4%
193.1%
IncreasedIncreasedIncreasedIncreasedIncreasedIncreasedIncreasedIncreased 21.3%p 21.3%p 21.3%p 21.3%p 21.3%p 21.3%p 21.3%p 21.3%p qoqqoqqoqqoqqoqqoqqoqqoq
----10.1%p10.1%p10.1%p10.1%p↓↓↓↓OthersOthersOthersOthers
211.2%211.2%211.2%211.2%August 2009 Solvency ratioAugust 2009 Solvency ratioAugust 2009 Solvency ratioAugust 2009 Solvency ratio
IncomeIncomeIncomeIncome
Valuation loss from Valuation loss from Valuation loss from Valuation loss from
availableavailableavailableavailable----forforforfor----sales sales sales sales
securitiessecuritiessecuritiessecurities
189.9%189.9%189.9%189.9%Mar 2009 Solvency ratioMar 2009 Solvency ratioMar 2009 Solvency ratioMar 2009 Solvency ratio
18.2%p18.2%p18.2%p18.2%p↑↑↑↑
13.2%p13.2%p13.2%p13.2%p↑↑↑↑
DifferDifferDifferDiffer----
enceenceenceence
CategoryCategoryCategoryCategory Solvency ratioSolvency ratioSolvency ratioSolvency ratio
(Unit: KRW 100mn)
31313131
9. FY20099. FY20099. FY20099. FY2009
32323232
� RG Insurance Update
33333333
1. RG Exposure 1. RG Exposure 1. RG Exposure 1. RG Exposure
☞☞☞☞ Total guarantee amounts in Sep. 2009 : 205,421(000 US$)Total guarantee amounts in Sep. 2009 : 205,421(000 US$)Total guarantee amounts in Sep. 2009 : 205,421(000 US$)Total guarantee amounts in Sep. 2009 : 205,421(000 US$)
- -323,271(000 US$) reduction compared with Sep. 2008
(Unit : US$1,000)(Unit : US$1,000)(Unit : US$1,000)(Unit : US$1,000)
* Total Guarantee : Total amounts that we guaranteed irrespective of installment payment
** Incurred Exposure : Our share of actual paid installment
Total guarantee Total guarantee Total guarantee Total guarantee Total guarantee Total guarantee Total guarantee Total guarantee
in Sep. 2008in Sep. 2008in Sep. 2008in Sep. 2008in Sep. 2008in Sep. 2008in Sep. 2008in Sep. 2008
528,692528,692528,692528,692528,692528,692528,692528,692 ----172,425172,425172,425172,425
205,421205,421205,421205,421205,421205,421205,421205,421
Total guarantee in Total guarantee in Total guarantee in Total guarantee in Total guarantee in Total guarantee in Total guarantee in Total guarantee in
Sep 2009Sep 2009Sep 2009Sep 2009Sep 2009Sep 2009Sep 2009Sep 2009
----48,43248,43248,43248,432
----102,414102,414102,414102,414DeliveredDeliveredDeliveredDeliveredDeliveredDeliveredDeliveredDelivered
(17 vessels)(17 vessels)(17 vessels)(17 vessels)(17 vessels)(17 vessels)(17 vessels)(17 vessels)
3 Insolvent 3 Insolvent 3 Insolvent 3 Insolvent 3 Insolvent 3 Insolvent 3 Insolvent 3 Insolvent
builders :builders :builders :builders :builders :builders :builders :builders :
Exposure FixedExposure FixedExposure FixedExposure FixedExposure FixedExposure FixedExposure FixedExposure Fixed
(Total(Total(Total(Total(Total(Total(Total(Total→→→→→→→→Incurred)Incurred)Incurred)Incurred)Incurred)Incurred)Incurred)Incurred)
Claim paymentClaim paymentClaim paymentClaim paymentClaim paymentClaim paymentClaim paymentClaim payment
(3 vessels)(3 vessels)(3 vessels)(3 vessels)(3 vessels)(3 vessels)(3 vessels)(3 vessels)
Risk changes until Sep FY2009 : Risk changes until Sep FY2009 : Risk changes until Sep FY2009 : Risk changes until Sep FY2009 : Risk changes until Sep FY2009 : Risk changes until Sep FY2009 : Risk changes until Sep FY2009 : Risk changes until Sep FY2009 : --------323,271323,271323,271323,271323,271323,271323,271323,271
(48 (48 (48 (48 (48 (48 (48 (48
vessels)vessels)vessels)vessels)vessels)vessels)vessels)vessels)(28 (28 (28 (28 (28 (28 (28 (28
vessels)vessels)vessels)vessels)vessels)vessels)vessels)vessels)
34343434
2. RG Risk Changes2. RG Risk Changes2. RG Risk Changes2. RG Risk Changes
☞☞☞☞ The amounts having loss probability of total guarantee : 40,531(The amounts having loss probability of total guarantee : 40,531(The amounts having loss probability of total guarantee : 40,531(The amounts having loss probability of total guarantee : 40,531(000 US$)000 US$)000 US$)000 US$)
- Risk reduction of -164,890(000 US$)
(Unit : US$1,000)(Unit : US$1,000)(Unit : US$1,000)(Unit : US$1,000)
* RG risks terminates when the vessel is delivered to ship-owner but we can consider the risks terminated when the vessel is launched
Total guarantee in Total guarantee in Total guarantee in Total guarantee in Total guarantee in Total guarantee in Total guarantee in Total guarantee in
Sep. 2009Sep. 2009Sep. 2009Sep. 2009Sep. 2009Sep. 2009Sep. 2009Sep. 2009
205,421205,421205,421205,421205,421205,421205,421205,421 ----110,404110,404110,404110,404
40,53140,53140,53140,53140,53140,53140,53140,531
Maximum probable Maximum probable Maximum probable Maximum probable Maximum probable Maximum probable Maximum probable Maximum probable
losses in Sep. 2009losses in Sep. 2009losses in Sep. 2009losses in Sep. 2009losses in Sep. 2009losses in Sep. 2009losses in Sep. 2009losses in Sep. 2009
(Actual Exposure)(Actual Exposure)(Actual Exposure)(Actual Exposure)(Actual Exposure)(Actual Exposure)(Actual Exposure)(Actual Exposure)
----18,22118,22118,22118,221
----36,26536,26536,26536,2653 insolvent 3 insolvent 3 insolvent 3 insolvent 3 insolvent 3 insolvent 3 insolvent 3 insolvent
builders : builders : builders : builders : builders : builders : builders : builders :
Outstanding Outstanding Outstanding Outstanding Outstanding Outstanding Outstanding Outstanding
reservereservereservereservereservereservereservereserve
(14 vessels)(14 vessels)(14 vessels)(14 vessels)(14 vessels)(14 vessels)(14 vessels)(14 vessels)Unpaid Unpaid Unpaid Unpaid Unpaid Unpaid Unpaid Unpaid
installmentsinstallmentsinstallmentsinstallmentsinstallmentsinstallmentsinstallmentsinstallments
Launched vesselLaunched vesselLaunched vesselLaunched vesselLaunched vesselLaunched vesselLaunched vesselLaunched vessel
(2)(2)(2)(2)(2)(2)(2)(2)
Risk reduction : Risk reduction : Risk reduction : Risk reduction : Risk reduction : Risk reduction : Risk reduction : Risk reduction : ----------------164,890164,890164,890164,890164,890164,890164,890164,890
(28 vessels)(28 vessels)(28 vessels)(28 vessels)(28 vessels)(28 vessels)(28 vessels)(28 vessels)(12 vessels)(12 vessels)(12 vessels)(12 vessels)(12 vessels)(12 vessels)(12 vessels)(12 vessels)
35353535
3. Actual Exposure in FY20093. Actual Exposure in FY20093. Actual Exposure in FY20093. Actual Exposure in FY2009
☞☞☞☞ Actual Exposure of 40,531(000 US$) in Sep. 2009 will be mostly dActual Exposure of 40,531(000 US$) in Sep. 2009 will be mostly dActual Exposure of 40,531(000 US$) in Sep. 2009 will be mostly dActual Exposure of 40,531(000 US$) in Sep. 2009 will be mostly decreased in the end of 2009ecreased in the end of 2009ecreased in the end of 2009ecreased in the end of 2009
- Remaining exposure in the end of 2009 : 2,100(000 US$)
2,1002,1002,1002,1002,1002,1002,1002,100
----54,48654,48654,48654,486----2,1412,1412,1412,141----28,99428,99428,99428,994----23,35123,35123,35123,351TotalTotalTotalTotal
2,1002,1002,1002,1002,1002,1002,1002,1000000000000000000Actual Exposure in the Actual Exposure in the Actual Exposure in the Actual Exposure in the Actual Exposure in the Actual Exposure in the Actual Exposure in the Actual Exposure in the
end of FY2009 end of FY2009 end of FY2009 end of FY2009 end of FY2009 end of FY2009 end of FY2009 end of FY2009
-36,265-2,141-14,498-19,626Unpaid
installment
40,53140,53140,53140,53140,53140,53140,53140,531
-18,221
95,017
TotalTotalTotalTotal
2,1002,1002,1002,1002,1002,1002,1002,10028,99028,99028,99028,99028,99028,99028,99028,9909,4419,4419,4419,4419,4419,4419,4419,441Actual Exposure in Actual Exposure in Actual Exposure in Actual Exposure in Actual Exposure in Actual Exposure in Actual Exposure in Actual Exposure in
Sep. 2009Sep. 2009Sep. 2009Sep. 2009Sep. 2009Sep. 2009Sep. 2009Sep. 2009
0-14,496-3,725Launched
Risk
reduc
tion
4,24157,98432,792Total Guarantee in
Sep. 2009
OrientOrientOrientOrient
Sekwang Sekwang Sekwang Sekwang
ShipbuildiShipbuildiShipbuildiShipbuildi
ngngngng
Sekwang Sekwang Sekwang Sekwang
HeavyHeavyHeavyHeavy(Unit : US$1,000)(Unit : US$1,000)(Unit : US$1,000)(Unit : US$1,000)
Risk exposure for 3 Risk exposure for 3 Risk exposure for 3 Risk exposure for 3 Risk exposure for 3 Risk exposure for 3 Risk exposure for 3 Risk exposure for 3 nomalnomalnomalnomalnomalnomalnomalnomal builders builders builders builders builders builders builders builders (Unit : US$1,000)(Unit : US$1,000)(Unit : US$1,000)(Unit : US$1,000)
Actual exposure in Actual exposure in Actual exposure in Actual exposure in Actual exposure in Actual exposure in Actual exposure in Actual exposure in
Sep. 2009Sep. 2009Sep. 2009Sep. 2009Sep. 2009Sep. 2009Sep. 2009Sep. 2009
40,53140,53140,53140,53140,53140,53140,53140,531 ----9,4419,4419,4419,441
Actual exposure in the Actual exposure in the Actual exposure in the Actual exposure in the Actual exposure in the Actual exposure in the Actual exposure in the Actual exposure in the
end of 2009end of 2009end of 2009end of 2009end of 2009end of 2009end of 2009end of 2009
Actual Exposure in FY2009Actual Exposure in FY2009Actual Exposure in FY2009Actual Exposure in FY2009Actual Exposure in FY2009Actual Exposure in FY2009Actual Exposure in FY2009Actual Exposure in FY2009
----28,99028,99028,99028,990
Sekwang Sekwang Sekwang Sekwang Sekwang Sekwang Sekwang Sekwang
HeavyHeavyHeavyHeavyHeavyHeavyHeavyHeavy
(7)(7)(7)(7)(7)(7)(7)(7)
Sekwang Sekwang Sekwang Sekwang Sekwang Sekwang Sekwang Sekwang
ShipbuildingShipbuildingShipbuildingShipbuildingShipbuildingShipbuildingShipbuildingShipbuilding
(3)(3)(3)(3)(3)(3)(3)(3)2,100 (12,100 (12,100 (12,100 (12,100 (12,100 (12,100 (12,100 (1))))))))
Risk reduction in FY2009 : Risk reduction in FY2009 : Risk reduction in FY2009 : Risk reduction in FY2009 : Risk reduction in FY2009 : Risk reduction in FY2009 : Risk reduction in FY2009 : Risk reduction in FY2009 :
--------38,43138,43138,43138,43138,43138,43138,43138,431
(12 (12 (12 (12 (12 (12 (12 (12
Vessels)Vessels)Vessels)Vessels)Vessels)Vessels)Vessels)Vessels)
* Orient Shipyard : 1 of 2 vessel will be delivered
36363636
Thank youThank youThank youThank you
Investor Relations Contacts:
Jae-Hyoung Kim (General Manager)
822-3786-1150, [email protected]
Pil-Soo Kim (Manager)
822-3786-1155, [email protected]
Ji-Yon Park (Manager)
822-3786-1156, [email protected]
http://ir.meritzfire.com