Korean Insurance Market 2018 EAIC - Seoul City Report

Table of Contents Korean Economy Korean Insurance Market II Korean Insurance Market III Business Environment for Insurers

Table of Contents Korean Economy Korean Insurance Market II Korean Insurance Market III Business Environment for Insurers

I. Korean Economy Key Economic Indicators FY2017 : Economic growth rate has exceeded its initial outlook (2.7%) FY2018 : Expected to maintain the similar level of growth rate as the year before Classification 2016 2017 2018(E) Economic growth rate (%) 2.9 3.1 3.0 Nominal GDP per capital (USD) 27,535 29,730 - Consumer price inflation (%) 1.0 1.9 1.7 Current account surplus ($ BN) 99.2 78.5 Unemployment rate 3.7 3.8 Source : BOK (Mar. 2018), IMF (Apr. 2018)

Table of Contents Korean Economy Korean Insurance Market II Korean Insurance Market III Business Environment for Insurers

Korea in World Market (2016) II. Korean Insurance Market Korea in World Market (2016) Korea was the 7th largest insurance market in the world (world share : 3.61%) The market is in “mature stage,” with penetration rate of 12.1% Premium Volume Global Market Share Global No. 7 Global No. 7 12.1% 3.61% $ 171 BN Penetration Rate Global No. 5 ● Non-life : $ 67 bn (No. 7) ● Life : $ 104 bn (No. 7) ● Non-life : 3.15% ● Life : 3.98% Financial year : from 1 Apr. 2016 to 31 Mar. 2017 Source : Sigma Report No. 3/2017 (Swiss Re)

II. Korean Insurance Market Premium Income 55% increase in premium from 2010 Maintaining 4:6 (non-life : life) ratio over the years Premium Growth Trends Non-life vs Life (Unit : USD bn) (Unit : USD bn) Source : GIAK, KLIA (Apr. 2018) For all materials on this page and below, - Financial year: from 1 Jan. to 31 Dec. unless stated otherwise - Exchange rates for USD currency are fixed to Dec. 2017

Total Asset Growth Trends II. Korean Insurance Market Total Assets 115% growth in total assets since 2010 Notable growth in the proportion of Non-life assets Total Asset Growth Trends Non-life vs Life (Unit : USD bn) (Unit : USD bn) Source : GIAK, KLIA (Apr. 2018) For all materials on this page and below, - Financial year: from 1 Jan. to 31 Dec. unless stated otherwise - Exchange rates for USD currency are fixed to Dec. 2017

II. Korean Insurance Market Capital Requirement Insurers are steadily improving their financial strength, in preparation for higher capital requirements Classification RBC Minimum Requirement Relative to Dec. 2016 Dec. 2017 Non-life Insurers 227.9% 238.5% 100% 2.3 times Life Insurers 240.6% 267.6% 2.6 times Average 236.5% 257.8% 2.5 times RBC : Risk-Based Capital (Statutory minimum requirement: 100%) Source : FSS (Apr. 2018)

The Best Contents II. Korean Insurance Market Market Players Primary Classification Domestic Foreign Total Non-life Insurance Primary 13 9 22 Reinsurance 1 10 Sub-total 14 18 32 Life Insurance 16 25 30 27 57 Primary Non-life Insurers (22) The Best Contents Life Insurers (25) Reinsurers (10) Intermediaries (10) As of Jan. 2018 Source : GIAK, KLIA (Apr. 2018)

Non-Life Insurance Market (2017) II. Korean Insurance Market Non-Life Insurance Market (2017) Gross Premiums Written : USD 82.0 bn (3.3%↑) - Motor (2.8%↑), Long-term (2.8%↑), Casualty (3.7%↑), - Fire (-1.5%↓), Annuity (-4.5%↓) Net Income: USD 3.6 bn (ROE : 11.4%) [Non-life premium growth trends] (Unit : USD bn) Source : GIAK (Apr. 2018)

Non-life Insurance Market (2017) II. Korean Insurance Market Non-life Insurance Market (2017) [Premium by Type] [Market Share] Source : GIAK (Apr. 2018) Source : GIAK (Apr. 2018)

[Life premium growth trends] II. Korean Insurance Market Life Insurance Market (2017) Premium Income: USD 106.42 BN (-4.9%↓) - Protection (3.1%↑) - Savings (-12.2%↓), Annuity (-4.5%↓) Net Income: USD 3.7 BN (ROE : 5.7%) [Life premium growth trends] (Unit : USD bn) Source : FSS (Feb. 2018), KLIA (Apr. 2018)

Life Insurance Market (2017) II. Korean Insurance Market Life Insurance Market (2017) [Premium by Type] [Market Share] Foreign 18.1% Annuity 31.2% Protection 35.6% The Big Three 45.4% Small & Medium 36.4% Savings 27.5% Source : FSS (Feb. 2018) Source : KLIA (Apr. 2018)

Table of Contents Korean Economy Korean Insurance Market Facts II Korean Insurance Market Facts III Business Environment for Insurers

III. Business Environment ECONOMY ● Low level of Economic Growth - Requiring a shift from quantitative competition to new market exploration ● Uncertainties in Interest Rates - Calls for increase in P&C and protection-type products sales for stable profitability REGULATION ● Higher Capital Requirements - Risk evaluation becoming more crucial for sustainable management ● Preparations for IFRS 17 - Market valuation makes selling long-term products more risky ● Consumer Trust - Insurers putting efforts in reducing consumer complaints and disputes

III. Business Environment DEMOGRAPHY ● Aging Population - Role of Insurance’s role as a safety net will continue to increase TECHNOLOGY ● Industry 4.0 - New technologies, new risks, new insurance products ● FinTech - Regulators and Insurers co-working to provide adequate regulatory environment

Thank You Jae-Koo LEE Managing Director General Insurance Association of Korea