1. Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including tAnalysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including tAnalysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including tAnalysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the U.S.he U.S.he U.S.he U.S.
PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
Insurance
Insurers facing two obstacles as they
transition into dividend plays
Positive policy changes expected next year; Earnings to remain flat
In 2014, the insurance sector has deviated from the pattern seen in previous years. While
non-life insurers have lost investment appeal due to their sluggish earnings, life insurers
have regained the spotlight.
Amid the overall slowdown in earnings growth, a sharp decline in bond yields has
weakened investment sentiment. The turnarounds of banks and securities firms have also
depressed the sector’s relative attractiveness.
Although the current slow growth trend is unlikely to reverse soon, insurers should
benefit—albeit temporarily—from some positive policy changes next year, including a cut
in the statutory rate and changes to the life table. Life insurers are seeing
improvements in both loss and expense ratios, as their efforts to offset the impact of
negative spreads are paying off. In contrast, non-life insurers are suffering from the
double whammy of tepid new business growth and rising loss ratios. Meanwhile, we are
not sure if adjustments to medical reimbursement policy premiums will be approved by
the authorities, as: 1) premiums for other insurance types are also scheduled to be raised
next year and 2) medical reimbursement policies are considered public goods.
Two obstacles on the road to becoming dividend plays
Amid a secular slowdown in the insurance industry, insurance plays are beginning to
resemble utilities, which are characterized by maturing demand, declining capex
requirements, and substantial retained earnings. For utilities, the most common
investment theme is the return of cash to shareholders, and, in the insurance sector,
investors’ focus has been shifting to profits and dividend yield.
In the financial industry, however, sizable retained earnings do not directly lead to higher
dividends as firms' dividend policies must conform to regulatory restrictions. Accordingly,
we believe insurers with good capital adequacy and profit-generating ability are better
positioned to raise their dividend payouts.
We believe insurers’ dividend payout ratios will generally trend upward thanks to the
improved visibility of RBC regulations. However, two hurdles still stand in the way of their
becoming dividend plays. First, regulatory authorities are expected to set an RBC ratio
level at which insurers will be allowed to pay out higher dividends. Second, authorities are
strengthening the liability adequacy test (LAT) ahead of the implementation of IFRS 4
phase II. As for RBC regulations, authorities are expected to adopt regulations similar to
the ones applied to banks. In an effort to strengthen the LAT, authorities are adjusting
the discount rate used in the calculation of liability adequacy, which should put pressure
on insurers (life insurers, in particular) to increase their legal reserves.
Top picks: Samsung F&M and Dongbu Insurance
We advise investors to pay attention to companies that: 1) have healthy capital adequacy
and room to raise dividend payouts and 2) are capable of maintaining stable earnings.
Some top-tier players, including Samsung Life and Samsung F&M, satisfy both criteria.
Among second-tier players, Hanwha Life and Dongbu Insurance fulfill the latter
requirement. Hanwha Life is expected to display improving mortality profits and expense
ratio. Dongbu Insurance has been outstanding among second-tier firms in terms of
defending earnings.
We present Samsung F&M and Dongbu Insurance as our top picks, as the stocks are not
expected to be heavily affected by the potential hurdles that are likely to materialize. We
maintain our Overweight rating on the insurance sector.
Overweight (Maintain)
2015 Outlook
November 28, 2014
Daewoo Securities co., Ltd.Daewoo Securities co., Ltd.Daewoo Securities co., Ltd.Daewoo Securities co., Ltd.
[Securities/Insurance]
Gil-won Jeong
+822-768-3256
gilwon.jeong@dwsec.com
Ju-hyun Kim
+822-768-4149
juhyun.kim@dwsec.com
2. Insurance
2
November 28, 2014
KDB Daewoo Securities Research
New business growth expected tNew business growth expected tNew business growth expected tNew business growth expected thanks tohanks tohanks tohanks to decline indecline indecline indecline in statutorystatutorystatutorystatutory raterateraterate
Source: Korea Insurance Development Institute, KDB Daewoo Securities Research
DiscussionDiscussionDiscussionDiscussionssss regardingregardingregardingregarding newnewnewnew capital regulations willcapital regulations willcapital regulations willcapital regulations will kick off in 20kick off in 20kick off in 20kick off in 2016161616
Source: FSS, KDB Daewoo Securities Research
Keep an eye onKeep an eye onKeep an eye onKeep an eye on regulatory hurdlesregulatory hurdlesregulatory hurdlesregulatory hurdles after payout ratios rise in 2014after payout ratios rise in 2014after payout ratios rise in 2014after payout ratios rise in 2014----15151515
Source: Company data, KDB Daewoo Securities Research
RBC
IFRS
LATstrengthening
Implementation
(forecast)
Credit risk(2016)
Setting of standards
(1H15)
Actualpreparatoryperiod
Public announcement of
impact oneachcompany
Lengtheningof liability durations(2017)
Introductionof capital buffer system(2016)
Establishment of measuresto
improvesupervisorysystem
201820152014 20172016
Interest raterisk
(2014)
Longevityrisk
(2018)
10
20
30
40
FY02 FY04 FY06 FY08 FY10 FY12 FY14 FY16
Payout ratio- non-life
Payout ratio- life
(%) - Weestimatea5%priseinpayout
ratioduring2014-15
- Tworegulatoryhurdlestoemerge
in2016
3.0
3.5
4.0
4.5
5.0
5.5
0
50
100
150
200
4/09 4/10 4/11 4/12 4/13 4/14
Initial premiums - protection-typelife/non-lifepolicies (L)
Statutory rate(R)
(Wbn) (%)
3. Insurance
3
November 28, 2014
KDB Daewoo Securities Research
C O N T E N T S
I. 2014 review 4
Life insurers take center stage 4
II. 2015 outlook 5
Life insurance: Widening of negative spreads slowing down 5
Non-life insurance: Samsung F&M and Dongbu to continue to outperform 9
III. Three-year outlook 13
Low growth over the medium to long term 13
Two obstacles on the path to becoming dividend stocks 15
IV. Valuation and investment strategies 18
Choose stocks that are insensitive to regulatory issues 18
Top picks: Samsung F&M and Dongbu Insurance 19
Key recommendations and stocks to watch 21
Samsung Life (032830 KS) 22
Hanwha Life (088350 KS) 24
Samsung F&M (000810 KS) 26
Dongbu Insurance (005830 KS) 28
4. Insurance
4
November 28, 2014
KDB Daewoo Securities Research
I. 2014 review
Life insurers take center stage
In 2014, the insurance sector has deviated from the pattern seen in previous years. While non-life
insurers have lost investment appeal due to their sluggish earnings, life insurers have regained the
spotlight.
Amid the overall slowdown in earnings growth, a sharp decline in bond yields has weakened
investment sentiment. The turnarounds of banking and securities companies have also depressed
the sector’s relative attractiveness.
Non-life insurers have displayed diverging performances. Second-tier firms have suffered from
deterioration in risk loss ratios and low investment yields. In contrast, Samsung F&M has beaten
its earnings guidance on the back of stabilizing risk and auto loss ratios. Dongbu Insurance has
reported solid net profit equivalent to the combined figure of other second-tier players under our
coverage.
Life insurers have shown efficiency improvements as their efforts to offset negative spreads have
begun to pay off. And expense ratios are anticipated to improve next year as insurers’
restructuring efforts progress.
Meanwhile, the regulatory environment remains confusing. On the one hand, the announcement
of the road map for RBC rule tightening has removed some uncertainties, and the Financial
Services Commission (FSC) has accepted the industry’s long-standing calls to improve the
methodology for calculating the statutory rate and allow for further downward adjustments to
crediting rates (rates offered on annuities and savings-type policies). However, revisions to the
discount and surcharge calculation methods for auto insurance policies failed to meet insurers’
expectations, confirming our belief that auto insurance policies are widely considered public
goods.
Amid growing concerns over lethargic economic growth, insurers are faced with changes to the
retail environment. Investors’ focus is also shifting from growth to insurers’ ability to maintain
profits and dividend yields. We believe these shifts will further accelerate in 2015.
FigureFigureFigureFigure 1111.... RelativeRelativeRelativeRelative performanceperformanceperformanceperformancessss ofofofof life and nonlife and nonlife and nonlife and non----life insurancelife insurancelife insurancelife insurance
segmentssegmentssegmentssegments
FigureFigureFigureFigure 2222.... YTD share performancesYTD share performancesYTD share performancesYTD share performances
Source: KDB Daewoo Securities Research Source: QuantiWise, KDB Daewoo Securities Research
80
90
100
110
120
1/14 4/14 7/14 10/14
KOSPI
Lifeinsurance
Non-lifeinsurance
(1/2/14=100)
-30
-20
-10
0
10
20
30
(%)
5. Insurance
5
November 28, 2014
KDB Daewoo Securities Research
II. 2015 outlook
Life insurance: Widening of negative spreads slowing down
To enjoy temporary benefits from positive regulatory changes
Life insurers’ (Samsung Life and Hanwha Life) FY2014 protection-type new business growth is
estimated at 10% YoY, in line with their full-year targets.
In our view, growth has been driven by supply factors. While annuity products and savings-type
policies are steadily losing attractiveness amid a protracted low interest rate environment,
insurers are facing pressure to reduce negative spreads and keep RBC ratios at appropriate levels.
Thus, insurers are increasingly focusing on the sale of protection-type and whole life policies via
exclusive channels.
We believe this situation will continue through 2015. While insurers are concentrating on selling
protection-type insurance products to offset contracting savings-type and annuity product sales,
they will likely enjoy temporary benefits from regulatory changes. In particular, we anticipate
solid new business growth in 1Q ahead of premium hikes resulting from a cut in the statutory rate.
The FSC decided to revise the calculation method for the statutory rate (which is used to
determine minimum legal reserves). A lower statutory rate typically yields higher premiums. The
fact that the current statutory rate (3.5%) is higher than bond yields is heightening negative
spread risks for insurers. Another problem is that changes in bond yields are not appropriately
reflected in the statutory rate because of the lack of flexibility in the government’s calculation
formula. The 3.5% statutory rate is fixed, and there are only two safety factors (based on just one
criterion: whether the policy term is 15 years or longer). Going forward, the 3.5% base rate will no
longer be applied, and multiple interest rate benchmarks (five-year, 10-year, and 20-year KTB
yields) as well as safety factors will be used to determine the statutory rate. As such, we expect
the statutory rate to become slightly more flexible in line with changes in bond yields.
The statutory rate is anticipated to be lowered by 25bps from 3.5% to 3.25% in 2015, which is
projected to push up protection-type insurance premiums by 4-5% and whole life and critical
illness insurance premiums by 5-6%.
Meanwhile, the life table is scheduled to be revised in 2015. With population aging progressing,
insurers need to raise annuity policy premiums in line with growing annuity payment burdens.
FigureFigureFigureFigure 3333.... ProtectionProtectionProtectionProtection----type new business trendstype new business trendstype new business trendstype new business trends FigureFigureFigureFigure 4444.... Annuity APE trendsAnnuity APE trendsAnnuity APE trendsAnnuity APE trends
Source: Company data, KDB Daewoo Securities Research Source: Company data, KDB Daewoo Securities Research
0
100
200
300
400
500
600
700
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q 1Q2Q3Q4Q1Q2Q3Q1Q2Q3Q
FY09 FY10 FY11 FY12 FY13 FY14
SamsungLife
HanwhaLife
(Wbn)
0
100
200
300
400
500
600
700
800
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q 1Q2Q3Q4Q1Q2Q3Q1Q2Q3Q
FY09 FY10 FY11 FY12 FY13 FY14
SamsungLife
HanwhaLife
(Wbn)
6. Insurance
6
November 28, 2014
KDB Daewoo Securities Research
Widening of negative spreads to slow
Negative spread problems are unlikely to fade away until interest rates start to rise. Currently, the
spreads between interest income and financing costs for top-tier life insurers range between
-40bps and -60bps. Although interest rates have further declined recently, insurers should still be
able to prevent spreads from widening quickly on the back of aggressive asset management.
1) As expected, the percentage of fixed-rate liabilities with an interest rate of 6.0% or higher as a
percentage of total reserves has declined. Indeed, the figures of Samsung Life and Hanwha Life
now stand at 46.6% and 54.6%, respectively, after falling roughly 3%p per year (in line with the
long-term downtrend).
2) Insurers will be able to adjust their crediting rates by up to 20% (up from 10%). The broader
adjustment limit should allow insurers to lower their crediting rates further, helping ease negative
spread problems to some extent.
3) Insurers are investing more heavily in risky assets. Thus far in 2014, Hanwha Life has delivered
yields of around 4.8-5% on new investments; this level of return was made possible by active
investments in overseas bonds and loan growth. Last year, the company focused on accumulating
long-term bonds to meet the RBC ratio.
The above changes will likely be structural, as they were in Japan and Taiwan, where insurers also
faced negative spread issues.
FigureFigureFigureFigure 5555.... Negative spread trend ofNegative spread trend ofNegative spread trend ofNegative spread trend of Samsung LifeSamsung LifeSamsung LifeSamsung Life FigureFigureFigureFigure 6666.... FFFFixedixedixedixed----raterateraterate liabilitiesliabilitiesliabilitiesliabilities as a % of total reservesas a % of total reservesas a % of total reservesas a % of total reserves
Source: Company data, KDB Daewoo Securities Research Source: Company data, KDB Daewoo Securities Research
FigureFigureFigureFigure 7777.... NNNNew money yieldew money yieldew money yieldew money yield ofofofof Hanwha LifeHanwha LifeHanwha LifeHanwha Life FigureFigureFigureFigure 8888.... Cathay LifeCathay LifeCathay LifeCathay Life’’’’ssss overseas investmentoverseas investmentoverseas investmentoverseas investment exposureexposureexposureexposure
Source: Company data, KDB Daewoo Securities Research Source: Company data, KDB Daewoo Securities Research
4.6 4.5 4.3
5.7
3.9 4.1
4.9
5.4 5.3
4.8
0
1
2
3
4
5
6
7
1Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q
FY12 FY13 FY14
Newmoneyyield
(%)
-80
-60
-40
-20
0
4.0
4.5
5.0
5.5
6.0
6.5
7.0
FY08
FY09
FY10
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
1Q
2Q
3Q
FY11 FY12 FY13 FY14
Negativespread(R)
Yieldoninterest-earningassets(L)
Averagereserveinterest rate(L)
(%) (bp)
40
50
60
70
80
FY8
FY9
FY10
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
1Q
2Q
3Q
FY11 FY12 FY13 FY14
SamsungLife
HanwhaLife
(%)
0.0
0.5
1.0
1.5
2.0
2.5
20
30
40
50
FY07 FY08 FY09 FY10 FY11 FY12 FY13 1H14
Proportionof overseasinvestment (L)
10YTGByield(R)
(%) (%)
7. Insurance
7
November 28, 2014
KDB Daewoo Securities Research
FigureFigureFigureFigure 9999.... JGBJGBJGBJGB andandandand Japanese life insurersJapanese life insurersJapanese life insurersJapanese life insurers’’’’ overseasoverseasoverseasoverseas investment exposureinvestment exposureinvestment exposureinvestment exposure
Source: Japan Life Insurance Association, Bloomberg, KDB Daewoo Securities Research
FigureFigureFigureFigure 10101010.... Overview ofOverview ofOverview ofOverview of Hanwha LifeHanwha LifeHanwha LifeHanwha Life’’’’s negative spread situations negative spread situations negative spread situations negative spread situation
Source: KDB Daewoo Securities Research
Measures aimed at easing negative spreads
It is undisputable that life insurers are faced with a structural widening of negative spreads
caused by years of sharp yield declines and the maturation of high-yield subordinate debt
(purchased from banks around 2008) this year. Assuming additional yield declines of around
50bps in 2015 and various efforts to narrow negative spreads, we expect negative spreads to
increase by only 5-6bps at end-2015.
Excluding favorable external factors (i.e., interest rate hikes, etc.), there are only two ways to ease
negative spreads: 1) the achievement of higher mortality profits via loss ratio improvements and
2) operating expense reductions. Insurers have been ramping up their efforts in these areas for
years, and positive results are expected to emerge gradually.
In terms of loss ratios, Samsung Life has shown notable improvement, following in the footsteps
of Hanwha Life. 1) Risk premium income has begun to expand, aided by growth in protection-type
new business, while 2) insurance claims have been well managed.
Hanwha’s sales focus over the past several years has been on protection-type policies. Prior to its
2011 listing, the insurer’s mortality profit level was only W60bn, but the number has almost
doubled. At Samsung Life, protection-type sales declined in 2012, as the company’s focus was on
annuity product sales; however, we have seen a recovery in 2013-14. As the insurer saw: 1) an
increase in risk premiums collected from cancer insurance policies sold last year and 2) healthy
new growth and persistency rates for other protection-type policies, we expect ratio stabilization
amid continued risk premium growth.
0.0
0.5
1.0
1.5
2.0
0
5
10
15
20
25
30
1995 1997 1999 2001 2003 2008 2010 2012 2014
Proportionof overseas investment (L)
5YJGByield(R)
(%) (%)
8. Insurance
8
November 28, 2014
KDB Daewoo Securities Research
Claims are also anticipated to be kept under control at both Samsung Life and Hanwha Life. The
insurers’ unprofitable policies have finally started to expire. Although it remains to be seen
whether the recent decline in thyroid cancer claims is structural, we think that both the
numerator and the denominator of the loss ratio formula are stabilizing.
FigureFigureFigureFigure 11111111.... Hanwha Life: Rising risk premiums and loading charges offsetting negative spreadHanwha Life: Rising risk premiums and loading charges offsetting negative spreadHanwha Life: Rising risk premiums and loading charges offsetting negative spreadHanwha Life: Rising risk premiums and loading charges offsetting negative spread
Source: Company data, KDB Daewoo Securities Research
FigureFigureFigureFigure 12121212.... Risk loss ratios are improving markedlyRisk loss ratios are improving markedlyRisk loss ratios are improving markedlyRisk loss ratios are improving markedly
FigureFigureFigureFigure 13131313.... Sharp decline in thyroid surgerySharp decline in thyroid surgerySharp decline in thyroid surgerySharp decline in thyroid surgery casescasescasescases hashashashas
contributed to an improvement in loss ratioscontributed to an improvement in loss ratioscontributed to an improvement in loss ratioscontributed to an improvement in loss ratios
Note: Calculation of Samsung Life’s risk loss ratio in 2Q14 did not account for
IBNR reserves of W110bn
Source: Company data, KDB Daewoo Securities Research
Source: Local media, Health Insurance Review & Assessment Service, KDB
Daewoo Securities Research
-100
-50
0
50
100
150
200
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q
FY11 FY12 FY13 FY14
Investment spread
Riskpremiums
Loadingcharges
(Wbn)
70
75
80
85
90
95
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q
FY11 FY12 FY13 FY14
SamsungLife
HanwhaLife
(%)
4,059
3,836
3,754
3,671
4,320
3,814
3,101
2,647
2,734
2,000
3,000
4,000
5,000
03 04 05 06 07
2013 2014
(no.)
(mo.)
9. Insurance
9
November 28, 2014
KDB Daewoo Securities Research
Non-life insurance: Samsung F&M and Dongbu to continue to outperform
Modest growth in FY2015
For FY2015, we expect non-life insurers’ combined net profit to jump 17.5% YoY, driven by a low
base effect (large IBNR provisions set aside in 2014 due to regulatory changes and proactive bad
debt write-offs). In terms of loss ratio and investment yield, Samsung F&M and Dongbu Insurance
are projected to continue to outperform their peers, on the back of their steady income streams.
New business growth has visibly slowed after years of double-digit growth (-3.5% YoY in 2014).
Non-life insurers have mostly met their earnings guidance estimates, but investors should note
that their targets have been adjusted lower. The industry-wide slowdown is likely to continue
next year, as: 1) the markets for existing products are saturated, and 2) insurers are lacking
blockbuster products that can spark mega trends. Only critical illness insurance is posting new
business growth above 1QCY13 levels, but this outperformance is likely to be only temporary
(increased sales ahead of regulatory changes). Meanwhile, sales of other policies bearing relatively
decent loss ratios and margins are staying flat. Insurers have released several products targeting
niche markets (e.g., cancer insurance, medical reimbursement insurance, etc.), but these new
policies have failed to gain traction. Moreover, their margins are lower than those of existing
protection-type policies.
But the statutory rate cut should be positive, causing a temporary hike in new business. Assuming
a 25bp rate cut, insurance premiums on non-life protection-type policies will rise by
approximately 1.5%. Sales may increase ahead of the premium increase, but momentum should
be weak relative to in the life insurance segment (as the premium hike will be smaller for non-life).
FigureFigureFigureFigure 14141414.... New business growth trendNew business growth trendNew business growth trendNew business growth trend
Source: Company data, KDB Daewoo Securities Research
FigureFigureFigureFigure 15151515.... Top five nonTop five nonTop five nonTop five non----life insurerslife insurerslife insurerslife insurers’’’’ protectionprotectionprotectionprotection----type newtype newtype newtype new
business targets vs. actual achievementbusiness targets vs. actual achievementbusiness targets vs. actual achievementbusiness targets vs. actual achievement
FigureFigureFigureFigure 16161616.... New business growth to improve temporarilyNew business growth to improve temporarilyNew business growth to improve temporarilyNew business growth to improve temporarily
thanks to athanks to athanks to athanks to a statutorystatutorystatutorystatutory rate cutrate cutrate cutrate cut
Source: Company data, KDB Daewoo Securities Research
Source: Korea Insurance Development Institute, KDB Daewoo Securities
Research
-60
-40
-20
0
20
40
60
80
100
0
50
100
150
200
07 08 09 10 11 12 13 14
Protection-typenewbusiness (L)
Rateof increase(R)
(Wbn) (%, YoY)
0
2
4
6
8
10
12
SamsungF&MDongbuInsuranceHyundai M&F LIGInsurance MeritzF&M
CY13protection-typenewbusiness
FY14protection-typenewbusiness(target)
FY14protection-typenewbusiness(actual)
(Wbn)
FY14
achievement rate:
99%
105% 104%
96%
95%
3.0
3.5
4.0
4.5
5.0
5.5
0
20
40
60
80
100
120
4/09 4/10 4/11 4/12 4/13 4/14
Initial premiumsonprotection-typenon-lifepolicies(L)
Statutoryrate(R)
(Wbn) (%)
10. Insurance
10
November 28, 2014
KDB Daewoo Securities Research
Samsung F&M to continue to post better risk loss/auto loss ratios than second-tiers
Amid slowing new business growth, the ability to manage profits on existing policies has become
important. However, there is only limited room for ramping up profits from existing policies, as
their coverage structures are fixed.
With regard to risk loss ratio, the gap between Samsung F&M and second-tier non-life insurers
has not narrowed. Indeed, the risk loss ratio divergence appears structural and will likely remain
intact for the time being, given second-tier insurers’ high proportion of pure endowment in risk
premiums. In order for the gap to narrow, second-tier insurers would have to display: 1) robust
growth of new business bearing high risk premiums and/or 2) high retention rates. However,
second-tier insurers are currently experiencing the opposite situation.
Long-term earnings improvement at second-tier non-life insurers will hinge on declines in risk loss
and auto loss ratios, both of which are subject to regulations. One of the major drivers behind risk
loss ratio deterioration is the uptick in medical reimbursement policy loss ratio, which has reached
120%. As the renewal date for medical reimbursement product policies purchased after
standardization in 2009 is approaching (January 2015), there are mounting expectations for a
premium hike (leading to gradual loss ratio decline). Insurers, which are expecting a hike of 20%
or more, are currently adjusting their risk rates.
However, we are not sure that the risk rate adjustments will be approved by the authorities, as: 1)
recent regulations on auto insurance signal that the government is unlikely to fully meet insurers’
demands, and 2) medical reimbursement policies are considered public goods. Furthermore, a risk
rate hike could be delayed, given the likelihood of a premium hike arising from the statutory rate
cut set to be implemented next year.
FigureFigureFigureFigure 17171717.... Risk loss ratio gap between Samsung F&M and topRisk loss ratio gap between Samsung F&M and topRisk loss ratio gap between Samsung F&M and topRisk loss ratio gap between Samsung F&M and top----
tier firms remains unchangedtier firms remains unchangedtier firms remains unchangedtier firms remains unchanged
FigureFigureFigureFigure 18181818.... Risk premium breakdownRisk premium breakdownRisk premium breakdownRisk premium breakdown
Note: As of September 2014
Source: KDB Daewoo Securities Research
Source: Company data, KDB Daewoo Securities Research
FigureFigureFigureFigure 19191919.... Estimated loss ratios for longEstimated loss ratios for longEstimated loss ratios for longEstimated loss ratios for long----term insuranceterm insuranceterm insuranceterm insurance bybybyby
type of coveragetype of coveragetype of coveragetype of coverage
FigureFigureFigureFigure 20202020.... MMMMedical reimbursement policedical reimbursement policedical reimbursement policedical reimbursement policiesiesiesies’’’’ risk premium andrisk premium andrisk premium andrisk premium and
loss ratio trendloss ratio trendloss ratio trendloss ratio trendssss
Source: KDB Daewoo Securities Research Source: KDB Daewoo Securities Research
74.1 74.1
72.6
77.0
81.1
80.2
81.8
85.9
70
75
80
85
90
FY11 FY12 FY13 FY14
SamsungF&M
Second-tiers
(%)
8.9%p
53.1
60.4
29.6
25.2
17.3 14.4
0
20
40
60
80
100
SamsungF&M Second-tier non-lifeinsurers
P&C Lifeinsurance Pureendowment(%)
0
30
60
90
120
150
Life
Pureendowment-
general
Pureendowment-
variable
Pureendowment-fixed
Other
(%)
105
110
115
120
125
0
1
2
3
FY08 FY09 FY10 FY11 FY12
Riskpremium(L)
Risklossratio(R)
(Wtr) (%)
11. Insurance
11
November 28, 2014
KDB Daewoo Securities Research
In the first nine months of 2014, cumulative auto loss ratio stood at around 85%, which is similar
to the level in 2013 and 6-7%p higher than the break-even point. We expect the ratio to remain
at this level in 2015. Both loss severity (total losses incurred divided by the number of accidents)
and accident rates have been stable. With regard to bodily injury liability insurance coverage,
total losses incurred have been gradually falling since the Health Insurance Review & Assessment
Service started to review medical fees. For property damage liability insurance coverage, however,
losses have been on the rise. In early 2011, losses arising from property damage coverage were
equivalent to only 80% of losses from bodily injury coverage; however, the percentage has risen
to 110% due to higher vehicle prices and the rising proportion of foreign cars. In addition, the
recent regulatory change regarding auto insurance premium hikes/discounts failed to meet
expectations, with implementation being delayed to 2018.
As such, a premium hike appears the only viable way to lower loss ratios, which are hovering
above the break-even point. Thus, loss ratio improvements will likely be driven by premium hikes
for now (particularly for top-tier insurers). In 2014, second-tier insurers, including online firms,
were allowed to raise premiums for personal vehicle coverage only (which account for more than
80% of all auto policies) by 2-3%, while top-tier insurers were allowed to hike premiums for
commercial vehicle coverage only. This differentiation appears to have been aimed at propping up
second-tier insurers, which suffer from lower profitability on long-term insurance products.
Auto loss ratios have recently been hovering above 90%. If ratios rise further during the winter,
premium hike talks could emerge. But, even if hikes emerge, they would lower loss ratios only
marginally in 2015, as it would take some time for the hikes to be reflected in earned premiums.
FigureFigureFigureFigure 21212121.... Auto insuranceAuto insuranceAuto insuranceAuto insurance losslosslossloss severity andseverity andseverity andseverity and incident rateincident rateincident rateincident rate FigureFigureFigureFigure 22222222.... Top five nonTop five nonTop five nonTop five non----life insurerslife insurerslife insurerslife insurers’’’’ auto loss ratio trendauto loss ratio trendauto loss ratio trendauto loss ratio trend
Notes: Incident rate = number of accidents/average number of active vehicles;
severity = total auto claims paid /number of accidents
Source: Korea Insurance Development Institute , KDB Daewoo Securities
Research
Source: Korea Insurance Development Institute , KDB Daewoo Securities
Research
FigureFigureFigureFigure 23232323.... Loss trends by type of coverageLoss trends by type of coverageLoss trends by type of coverageLoss trends by type of coverage
FigureFigureFigureFigure 24242424.... Losses fromLosses fromLosses fromLosses from propertypropertypropertyproperty damage outpaced losses fromdamage outpaced losses fromdamage outpaced losses fromdamage outpaced losses from
bodily injurybodily injurybodily injurybodily injury
Note: Bodily injury losses are sum of mandatory auto insurance and bodily injury
insurance losses
Source: Korea Insurance Development Institute, KDB Daewoo Securities
Research
Note: Property damage losses as a percentage of bodily injury losses
Source: Korea Insurance Development Institute, KDB Daewoo Securities
Research
0.0
0.5
1.0
1.5
2.0
2.5
3.0
10
12
14
16
18
20
03 04 05 06 07 08 09 10 11 12 13 14
Severity(R)
Incident rate(L)
(%) (Wmn)
60
70
80
90
100
110
4/11 10/11 4/12 10/12 4/13 10/13 4/14
Autolossratio
(%)
Break-evenpointofautoinsurance
60
70
80
90
100
110
120
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q
FY11 FY12 FY13 FY14
(%)
0
200
400
600
800
1,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q
FY11 FY12 FY13 FY14
Bodilyinjury Propertydamage
Self-inflictedinjury Vehicledamage
(Wbn)
12. Insurance
12
November 28, 2014
KDB Daewoo Securities Research
Investment yield gaps to persist
The investment yields of non-life insurers will likely undergo further differentiation going forward.
The investment yield gap between the best and worst performing insurers stands at around
55bps.
Given the global low interest rate environment and weak domestic economic conditions, another
base rate cut cannot be ruled out. (Our fixed income analyst projects that the Bank of Korea (BOK)
will push through a cut in 1Q and then freeze the rate at 1.75% through 2016.) With financial
markets much more volatile than before, we believe it makes more sense to seek high returns
through active asset management than to focus on asset-liability matching.
However, since insurers’ conservative asset management stance is unlikely to change overnight, it
will probably take a long time for them to rebalance their asset portfolios. Furthermore, given
that insurers have reduced their exposure to risky assets to comply with the new RBC ratio
guidelines (which are scheduled to take effect in 2016), they will likely find it difficult to increase
the risky assets in their portfolios just to raise investment yields. Of note, insurers with low RBC
ratios, which tend to see lower investment yields, have limitations in asset management.
Therefore, the current investment yield gaps will likely persist for the time being.
FigureFigureFigureFigure 25252525.... VVVVolatilityolatilityolatilityolatility trendtrendtrendtrendssss for key indicatorsfor key indicatorsfor key indicatorsfor key indicators
Source: BOK, KDB Daewoo Securities Research
FigureFigureFigureFigure 26262626.... Investment yieldInvestment yieldInvestment yieldInvestment yield ofofofof Dongbu IDongbu IDongbu IDongbu Innnnsurancesurancesurancesurance FigureFigureFigureFigure 27272727.... Investment yieldInvestment yieldInvestment yieldInvestment yield ofofofof Hyundai M&FHyundai M&FHyundai M&FHyundai M&F
Note: FY14 data is based on cumulative investment profit as of 3Q14
Source: Company data, KDB Daewoo Securities Research
Note: FY14 data is based on cumulative investment profit as of 3Q14
Source: Company data, KDB Daewoo Securities Research
0
1
2
3
4
5
6
08 09 10 11 12 13 14
Interest rate(3YKTByeild) Shareperformance(KOSPI)
F/X(US$/W)
(%)
-0.5
0.0
0.5
1.0
1.5
2.0
0
2
4
6
8
FY05 FY07 FY09 FY11 FY13
Investment spreadover 5YKTB(R)
Investment yield(L)
(%) (%)
-0.5
0.0
0.5
1.0
1.5
2.0
0
2
4
6
8
FY05 FY07 FY09 FY11 FY13
Investment spreadover 5YKTB(R)
Investment yield(L)
(%) (%)
13. Insurance
13
November 28, 2014
KDB Daewoo Securities Research
III. Three-year outlook
Low growth over the medium to long term
New business growth, particularly at life insurers, is forecast to remain solid next year thanks to a
cut in the statutory rate and revisions to the life table. However, over the medium to long term,
we believe that the insurance industry will experience low growth in light of socioeconomic
structural factors.
Generally speaking, new business growth largely hinges on: 1) households’ overall consumption
capacity and 2) a balanced income distribution system.
With regard to the first determinant, we note that Korea’s household income growth has slowed
to the single-digit level. Consumption has stagnated, and growth of protection-type insurance has
also slowed. Meanwhile, income/job inequality does not appear to be easing. Those working at
large corporations are not particularly incentivized to purchase personal insurance policies, as
they have access to employer-provided pension plans, while the self-employed and unemployed
cannot afford insurance premiums.
FigureFigureFigureFigure 28282828.... Growth inGrowth inGrowth inGrowth in initial premiuminitial premiuminitial premiuminitial premiumssss and private consumptionand private consumptionand private consumptionand private consumption
Source: BOK, KDB Daewoo Securities Research
FigureFigureFigureFigure 29292929.... Household income growth is on the declineHousehold income growth is on the declineHousehold income growth is on the declineHousehold income growth is on the decline FigureFigureFigureFigure 30303030.... HHHHoooousehold consumption is on the declineusehold consumption is on the declineusehold consumption is on the declineusehold consumption is on the decline
Source: BOK, KDB Daewoo Securities Research Notes: Household surplus rate = (total surplus/disposable income) x 100; average
propensity to consume = (total consumption/disposable income) x 100
Source: Statistics Korea, KDB Daewoo Securities Research
-60
-40
-20
0
20
40
60
80
-6
-4
-2
0
2
4
6
8
04 05 06 07 08 09 10 11 12 13 14
Initial premiumgrowth(R)
Privateconsumptiongrowth(L)
(%, YoY) (%, YoY)
0
5
10
15
20
25
30
35
40
80 85 90 95 00 05 10
Householdincome(5Ymovingaverage)
Corporateincome(5Ymovingaverage)
(%, YoY)
20
22
24
26
28
30
70
72
74
76
78
80
04 05 06 07 08 09 10 11 12 13 1Q 2Q 3Q
2014
Averagepropensitytoconsume(L)
Householdsurplusrate(R)
(%) (%)
14. Insurance
14
November 28, 2014
KDB Daewoo Securities Research
Also, it should be noted that fixed household expenses (e.g., housing costs) are growing.
The transition from jeonse contracts to monthly rents is accelerating. Indeed, the proportion of
households living under monthly rent agreements has increased from 17.2% in 2006 to 22% in
2012, and to 25% as of now. This trend is leading to a sharp increase in housing costs for tenants
(meaning an increase in rental cost-to-income ratio), dampening overall consumption. At the root
of this situation lie low interest rates (which make jeonse contracts unattractive for landlords).
We anticipate interest rates to stay low, taking into account current household debt structures
(as well as the economic cycle). The debt burdens of households headed by individuals in their 40s
and 50s, key consumer brackets, remain heavy. If their income levels plunge (due to retirement,
etc.), debt repayment would become more difficult. Over the medium to long term, authorities
might need to keep interest rates low to ensure smooth debt repayment.
FigureFigureFigureFigure 31313131.... HouseholdsHouseholdsHouseholdsHouseholds’’’’ housing costs are on the risehousing costs are on the risehousing costs are on the risehousing costs are on the rise FigureFigureFigureFigure 32323232.... AverageAverageAverageAverage jeonsejeonsejeonsejeonse price trend in Seoul andprice trend in Seoul andprice trend in Seoul andprice trend in Seoul and thethethethe SCASCASCASCA
Source: Real Estate 114, CEIC, KDB Daewoo Securities Research Source: Real Estate 114, CEIC, KDB Daewoo Securities Research
FigureFigureFigureFigure 33333333.... SingleSingleSingleSingle----person households are increasing steadilyperson households are increasing steadilyperson households are increasing steadilyperson households are increasing steadily FigureFigureFigureFigure 34343434.... % of self% of self% of self% of self----employed individuals is high in Koreaemployed individuals is high in Koreaemployed individuals is high in Koreaemployed individuals is high in Korea
Source: Statistics Korea, KDB Daewoo Securities Research Source: OECD, KDB Daewoo Securities Research
14
16
18
20
22
24
1
1.1
1.2
1.3
1.4
1.5
06 08 10 12 14
Rent expenses/nominal income(L)
Proportionof monthlyrent contracts(R)
(%) (%)
0
2,000
4,000
6,000
8,000
10,000
12,000
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Seoul
Seoul capital area
(W'000/3.3m2)
0
1,000
2,000
3,000
4,000
5,000
0
5
10
15
20
25
30
85 90 95 00 05 10
Number of single-personhouseholds(R)
Proportionof single-personhouseholds(L)
('000households)(%)
Australia
Estonia
Greece
Hungary
Italy
KoreaMexico
Norway
Poland
Switzerland
Turkey
USA
0
5
10
15
20
25
30
35
40
0 20 40 60 80 100 120
(%, self-employedindividuals)
GDPper capita(US$'000, 2012)
15. Insurance
15
November 28, 2014
KDB Daewoo Securities Research
Two obstacles on the path to becoming dividend stocks
As industry growth slows, insurance stocks are increasingly resembling utilities, which are
characterized by maturing demand, declining capex requirements, and substantial retained
earnings. Thus, we believe it makes sense that investors are evaluating insurers based on their
ability to return cash to shareholders. Unsurprisingly, in the insurance sector, investors’ focus has
been shifting to profits and dividend yield.
Meanwhile, for the financial industry, significant retained earnings do not directly lead to dividend
expansion because of capital restrictions. Thus, in our view, insurers with good capital adequacy
and profit-generating ability are better positioned to raise their dividend payouts.
Luckily, amid improved RBC ratio visibility, the environment should be ripe for higher dividend
payouts. However, only firms with sufficient RBC ratios will be allowed to make higher payouts
when the new RBC ratio guidelines take effect in 2016.
Then the key question is: what RBC ratio level will be considered sufficient?
We believe that restrictions on banks could serve as a rough guide. When financial authorities
released a road map for tighter supervision of the financial soundness of insurers, they cited a
capital requirement for banks under Basel III as a reference. Under Basel III, banks are required to
keep 2.5% of tier one capital as a capital conservation buffer until end-2019 (in addition to 4.5%
of common equity). Any banks that fail to meet this requirement will face restrictions in terms of
dividend payouts and share buyback programs. Banks with common equity ratios of 5.125-5.75%
are required to reserve a minimum of 80% of earnings.
As for insurers, if RBC ratio requirements ease, floor levels will likely be lowered to 120-150%.
Taking into account the requirements on banks, we estimate that insurers with RBC ratio levels of
190-200% will be allowed to pay out dividends without restrictions. However, given the complex
nature of the insurance industry (e.g., risk-free asset-oriented asset management, insensitivity to
economic conditions relative to banks, lower proportion of subordinated debts), some variance
should be expected. In our view, a clear picture will emerge next year.
TableTableTableTable 1111.... CapitalCapitalCapitalCapital conservationconservationconservationconservation buffer criteria for banks underbuffer criteria for banks underbuffer criteria for banks underbuffer criteria for banks under BaselBaselBaselBaselⅢⅢⅢⅢ,,,,
Common equity ratioCommon equity ratioCommon equity ratioCommon equity ratio
(Including other capital that(Including other capital that(Including other capital that(Including other capital that
cancancancan bebebebe used to absorbused to absorbused to absorbused to absorb risksrisksrisksrisks))))
Capital conservationCapital conservationCapital conservationCapital conservation buffer ratiobuffer ratiobuffer ratiobuffer ratio
4.5% - under 5.125% 100%
5.125% - under 5.75% 80%
5.75% - under 6.375% 60%
6.375 - under 7.0% 40%
7.0% or higher 0%
Note: Capital conservation buffer ratio: required level of capital reserves as a percentage of net profit during the fiscal year
Source: FSC, FSS, BOK, KDB Daewoo Securities Research
16. Insurance
16
November 28, 2014
KDB Daewoo Securities Research
Nonetheless, visibility on RBC ratios has improved greatly after years of confusion. We do not
expect that other regulatory capital issues will emerge until end-2016. However, we think
regulatory issues are likely to persist for life insurers ahead of the implementation of IFRS 4 phase
II.
While weighing potential changes to the regulatory capital framework, financial authorities look
for consistency and congruity with international standards—to better deal with increased global
market volatility and risk of financial contagion since 2008.The regulatory environment has a
significant impact on the valuations of assets and liabilities for insurers. Thus, capital regulations
encourage insurers to take a conservative stance in assessing assets and liabilities by: 1) forcing
the application of fair (mark to market) values, 2) reducing subjective valuations, and 3) cutting
down on exceptional allowances..
Most of all, it should be noted that IFRS 4 phase II will provide guidance on assessing liabilities
based on their fair market values.
Currently, domestic insurers’ legal reserves are not based on market values. Instead, they are
calculated based on risk/discount rates at the time of policy purchase. Furthermore, insurers use
LAT to adjust the value of reserves. (If reserves seem insufficient, additional reserves are set aside
after adjusting discount rates.)
The discount rate is a key variable in the valuation of reserves. Under IFRS 4 phase II, a stricter
standard will apply to discount rates. Under the existing LAT methodology, discount rates are
based on future returns on asset management; this does not allow for separate valuations of
assets and liabilities. For example, higher returns resulting from a greater proportion of risky
assets would also lead to a higher discount rate for liabilities (meaning undervaluation of
liabilities).
Going forward, the discount rate will be based on risk-free returns plus a liquidity premium. In
other words, as the discount rate should be near KTB yield levels, we expect a decline in the
discount rate. If returns on assets are linked to the valuation of liabilities (e.g., interest rate-linked
products and variable insurance products), the discount rate would not be affected. However, for
high-interest fixed-rate liabilities, higher reserves are inevitable.
FigureFigureFigureFigure 35353535.... LATLATLATLAT IFRSIFRSIFRSIFRS 4 phase II4 phase II4 phase II4 phase II
Source: KDB Daewoo Securities Research
One major remaining concern is whether the FSC will ban the practice of offsetting a reserve
shortfall in one area with a surplus in another. Currently, insurers appear to be using surplus
reserves for floating-rate and variable insurance products to keep reserves at adequate levels for
fixed-rate liabilities. We do not foresee any issues for non-life insurers with significant variable
products. However, life-insurers with significant guaranteed benefits might need to increase
reserves.
• Liabilities:basedonbookvalue
• Applicationof LAT
• Discount rate: investment yield
• Liabilities:basedonmarket value
• Discount rate: risk-freerate+
liquiditypremium
- Fall indiscount ratewouldleadto
increaseinliabilities
Current IFRS4phaseII
17. Insurance
17
November 28, 2014
KDB Daewoo Securities Research
Given that these concerns are likely to become a greater issue in 2016, we expect regulatory
authorities to strengthen the LAT in order to reduce the impact of mark-to-market accounting for
liabilities.
However, capital regulations are typically introduced with an ample grace period and buffers.
Since regulatory authorities have not yet presented detailed guidelines on the introduction of
mark-to-market accounting for liabilities, insurers now need to monitor the pace of LAT
tightening..
FigureFigureFigureFigure 36363636.... Discussions regarding new capital regulations will kick off in 2016Discussions regarding new capital regulations will kick off in 2016Discussions regarding new capital regulations will kick off in 2016Discussions regarding new capital regulations will kick off in 2016
Source: FSC, KDB Daewoo Securities Research reorganize
FigureFigureFigureFigure 37373737.... InsurersInsurersInsurersInsurers’’’’ reservesreservesreservesreserves forforforfor fixedfixedfixedfixed----raterateraterate and variableand variableand variableand variable
liabilitiesliabilitiesliabilitiesliabilities
FigureFigureFigureFigure 38383838.... Hanwha LHanwha LHanwha LHanwha Liiiife: Trend of discount rate under thefe: Trend of discount rate under thefe: Trend of discount rate under thefe: Trend of discount rate under the
current LATcurrent LATcurrent LATcurrent LAT methodologymethodologymethodologymethodology
Source: Company data, KDB Daewoo Securities Research Source: KDB Daewoo Securities Research
RBC
IFRS
LATstrengthening
Implementation
(forecast)
Credit risk(2016)
Setting of standards
(1H15)
Actualpreparatoryperiod
Public announcement of
impact oneachcompany
Lengtheningof liability durations(2017)
Introductionof capital buffer system(2016)
Establishment of measuresto
improvesupervisorysystem
201820152014 20172016
Interest raterisk
(2014)
Longevityrisk
(2018)
0
2
4
6
8
FY04 FY06 FY08 FY10 FY12
Riskspread(estimate)
10YKTByield
Discount rate
(%)
-30
-20
-10
0
10
20
30
Fixed Variable
SamsungLife HanwhaLife KyoboLife SamsungF&M(Wtr)
18. Insurance
18
November 28, 2014
KDB Daewoo Securities Research
IV. Valuation and investment strategies
Choose stocks that are insensitive to regulatory issues
Amid the economic slowdown, investors are increasingly paying attention to stocks with
favorable shareholder return policies. As interest rates are expected to remain low for a
protracted period of time, the gap between interest rates and dividend yield should continue
narrowing. Some stocks are even delivering dividend yields that exceed interest rates. In our view,
expectations for dividends will likely serve as one of the major drivers of differentiation in share
valuation.
For insurance stocks, earnings stability and the scale of retained earnings should determine
performance. However, it is important to always keep in mind that insurance stocks are subject to
regulatory risks. Thanks to the eased uncertainty over RBC regulations, top-tier firms’ dividend
payout ratios are anticipated to rise through end-2015. However, they could be weighed down by
the emergence of other issues, including: 1) authorities’ announcement of dividend payout
guidelines based on RBC ratios and 2) potential mandatory additional provisioning ahead of the
implementation of IFRS 4 phase II. In our view, investors should choose stocks that will be
relatively insensitive to these issues.
FigureFigureFigureFigure 39393939.... InsurersInsurersInsurersInsurers’’’’ payout ratio trendspayout ratio trendspayout ratio trendspayout ratio trends
Source: Company data, KDB Daewoo Securities Research
FigureFigureFigureFigure 40404040.... TheTheTheThe gap between dividend and bond yields will keepgap between dividend and bond yields will keepgap between dividend and bond yields will keepgap between dividend and bond yields will keep
narrowingnarrowingnarrowingnarrowing
FigureFigureFigureFigure 41414141.... SKSKSKSK TTTTelecomelecomelecomelecom:::: Payout risingPayout risingPayout risingPayout rising amidamidamidamid market saturationmarket saturationmarket saturationmarket saturation
.
Source: QuantiWise, KDB Daewoo Securities Research Source: SKT, ICT Statistics, KDB Daewoo Securities Research
10
20
30
40
FY02 FY04 FY06 FY08 FY10 FY12 FY14 FY16
Payout ratio- non-life
Payout ratio- life
(%) - Weestimatea5%priseinpayout
ratioduring2014-15
- Tworegulatoryhurdlestoemerge
in2016
0
20
40
60
80
100
120
140
0
10
20
30
40
50
60
93 95 97 99 01 03 05 07 09 11
Mobileservicesubscriber growth(R)
Payout ratioof SKTelecom(L)
(%) (%, YoY)
19. Insurance
19
November 28, 2014
KDB Daewoo Securities Research
Top picks: Samsung F&M and Dongbu Insurance
We advise investors to turn some of their attention to life insurers, which are likely to show solid
new contract growth in 2015 on the back of a cut in the statutory rate and changes to the life
table. In our view, the investment appeal of insurers will hinge on: 1) sound capital adequacy and
potential expansion of dividend payouts as well as 2) earnings stability. All in all, we do not expect
to see a clear dichotomy between non-life and life plays going forward.
Top-tier firms (e.g., Samsung Life and Samsung F&M) boast robust capital ratios. Insurers with
strong earnings stability include Hanwha Life, which is forecast to see an increase in mortality
profit and an increase in loading charges, as well as Dongbu Insurance, which shows strong
earnings stability. Notably, among second-tier firms, only Dongbu Insurance is likely to increase its
dividend payout.
With regard to other second-tier non-life firms, we advise investors to keep tabs on issues such as
premium increases resulting from policy renewals and auto premium hikes.
We maintain our Overweight rating for the insurance sector, keeping Samsung F&M and Dongbu
Insurance as our top picks.
We maintain our Buy rating and target price of W355,000 on Samsung F&M. Amid wide
uncertainties related to premiums, the company has kept its loss ratio stable. Samsung F&M’s loss
ratio will remain below the levels of second-tier insurers thanks to its low exposure to living
benefits (which make loss ratios harder to manage) and expanding online auto insurance market
share. Most of all, the company boasts the highest RBC ratio among insurers (both life and non-
life). Samsung F&M is also free from risks related to IFRS 4 phase II, unlike major life insurers, as
the company has very low reserves against fixed-rate liabilities and is less exposed to risks of
liability valuation fluctuations (owing to a lower discount rate). Furthermore, the insurer could
also turn to dividends as a means to avoid the drawbacks of share repurchases (e.g., share dilution
and speculative trading by short-term investors).
We reiterate our Buy call and target price of W77,000 on Dongbu Insurance.
Despite the recent earnings slowdown, we believe Donbgu Insurance remains the most attractive
play among second-tier non-life insurers in terms of profit management and dividend yield. We
see upside to its dividend payout ratio, considering the insurer’s: 1) healthy earnings, 2) industry-
low payout ratio, and 3) high RBC. We also think it is likely that members of Dongbu Group’s
controlling family, the largest shareholders of Dongbu Insurance, will seek higher dividends from
the insurer, as their control on manufacturing subsidiaries has weakened significantly. In our view,
the stock’s latest correction—triggered by group-related risks—presents a compelling value-
buying opportunity. The insurer no longer has ties to Dongbu Steel due to the steelmaker’s
capital reduction. In other words, group-related risks that have weighed on Dongbu Insurance
have largely dissipated.
FigureFigureFigureFigure 42424242.... RBC ratios and payout ratioRBC ratios and payout ratioRBC ratios and payout ratioRBC ratios and payout ratiossss
Notes: RBC ratios are as of 3Q14; payout ratios are as of FY13
Source: Company data, KDB Daewoo Securities Research
15
20
25
30
100
200
300
400
SamsungLife SamsungF&M HanwhaLife TongyangLife Dongbu
Insurance
MeritzF&M Hyundai M&F LIGInsurance
RBCratio(L)
Dividendpayout ratio(R)
(%) (%)
21. Insurance
21
November 28, 2014
KDB Daewoo Securities Research
Key recommendations and stocks to watch
Samsung Life (032830 KS/Buy) A triple play on growth, profits, and dividends
Efforts to offset negative spreads are paying off
Dividend payout to gradually rise
Maintain Buy and Raise TP to W140,000
Hanwha Life (088350 KS /Trading Buy) Hanwha Corp.’s acquisition points to potential dividend hike
Hanwha Corp.’s acquisition points to potential dividend hike
Countermeasures against negative spreads
Hanwha Corp.’s acquisition of Samsung Techwin points to dividend hike
Samsung F&M (000810 KS/Buy) The top dividend growth play in insurance
The top dividend growth play in the insurance sector
Robust profit management ability
Key investment theme shifting from share repurchases to dividends
Dongbu Insurance (005830 KS/Buy) A compelling value play
Strongest profit management ability among second-tiers
An attractive dividend play
Correction owing to group-related concerns offers value-buying opportunity
22. Insurance
22
November 28, 2014
KDB Daewoo Securities Research
Efforts to offset negative spreads are paying off
Samsung Life’s efforts to offset the impact of negative spreads are starting to pay off.
With protection-type new business growth of 12% so far this year, Samsung Life is on
track to meet its aggressive full-year guidance. We expect solid new business growth to
continue in 2015. In particular, the expected reduction of the crediting rate and
subsequent revision to the life table should boost protection-type and annuity sales in
2015.
In addition to robust new business growth, Samsung Life’s loss ratio has also been
improving. This is partly attributable to the accelerated recognition of risk premiums
from cancer policies underwritten in 2013. We believe loss ratio will remain stable in
2015, supported by the expiration of unprofitable plans and a decline in living benefit
payouts. This, combined with improving expense ratios due to restructuring, should
cushion against the impact of widening negative spreads.
Dividend payout to gradually rise
In assessing the dividend appeal of financial stocks, it is important to take into account
the overall direction of regulations. We believe insurers will be required to meet certain
conditions in order to distribute dividends above a certain level (similar to the mandatory
capital conservation buffer imposed under Basel III). We also cannot rule out the impact
of more stringent LAT rules ahead of the implementation of IFRS 4 phase II. However,
we believe Samsung Life will have little trouble raising its dividend payout over the long
term, given its near-400% RBC ratio.
Maintain Buy and Raise TP to W140,000
We reiterate our Buy rating on Samsung Life and raise our target price to W140,000
(from W135,000), reflecting: 1) a higher book value following the recent rebound in
Samsung Electronics (SEC) shares and 2) our upward revision to our 2015 dividend
payout ratio estimate (to 29.3% from 26.7%).
In deriving our target price, we used an equally-weighted average of an embedded value
(EV) calculation and a sum-of-the-parts (SOTP) valuation. Our SOTP valuation represents
the sum of: 1) the insurer’s operating value (which implies a target P/B of 1.05x, based
on an ROE of 9.4% divided by a COE of 9.0%) and 2) the value of its equity stakes in
affiliates (based on a 4.2% investment yield). For our EV valuation, we applied 1.0x to the
insurer’s 12-month forward EV per share.
Samsung Life (032830 KS)
A triple play on growth, profits, and dividends
FY (Dec.) 03/12 03/13 12/13 12/14F 12/15F 12/16F
Earned premium s(Wbn) 22,864 30,755 19,601 26,935 28,747 30,607
OP (Wbn) 556 532 134 744 706 784
NP (Wbn) 948 984 586 1,418 1,298 1,355
EPS (W) 4,742 4,922 2,932 7,092 6,490 6,776
BPS (W) 90,566 108,652 98,183 109,963 119,123 128,700
P/E (x) 20.9 21.2 35.5 17.3 19.0 18.2
P/B (x) 1.1 1.0 1.1 1.1 1.0 1.0
ROE (%) 5.7 4.9 2.8 6.5 6.0 5.6
Dividend yield (%) 2.0 1.4 0.8 1.8 1.8 2.0
Stockholders’ equity (Wbn) 18,113 21,730 19,637 21,993 23,825 25,740
Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests, 12/13
figures are based on 9-month period due to changes in accounting standards
Source: Company data, KDB Daewoo Securities Research estimates
Life Insurance
(Maintain) Buy
Target Price(12M,W) 140,000
SharePrice(11/27/14,W) 123,000
ExpectedReturn 14%
OP (14F, Wbn) 744
Consensus OP (14F, Wbn) 722
EPS Growth (14F, %) 81.4
Market EPS Growth (14F, %) 1.2
P/E (14F, x) 17.3
Market P/E (14F, x) 13.1
KOSPI 1,982.09
Market Cap (Wbn) 24,600
Shares Outstanding (mn) 200
Free Float (%) 45.5
Foreign Ownership (%) 15.4
Beta (12M) 1.44
52-Week Low 92,100
52-Week High 124,000
(%)(%)(%)(%) 1M1M1M1M 6M6M6M6M 12M12M12M12M
Absolute 15.0 23.0 20.6
Relative 12.0 24.0 23.4
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Samsung Life Insurance
KOSPI
24. Insurance
24
November 28, 2014
KDB Daewoo Securities Research
Efforts to offset negative spreads are bearing fruit
Negative spreads are a chronic problem facing many life insurers, including Hanwha Life,
and the issue is unlikely to be resolved unless bond yields enter a secular uptrend. The
only thing insurers can do is offset the impact of negative spreads by: 1) increasing their
mortality profits through loss ratio improvements, and 2) reducing their expense ratios.
Hanwha Life’s efforts to counterbalance the impact of negative spreads are starting to
bear fruit. The insurer’s quarterly mortality profit has sharply increased to W100bn (up
from W64bn post-IPO), driven by: 1) strong inflows of risk premiums after years of
focusing on protection-type sales, 2) an improving persistency rate, and 3) stable
payouts as a result of more disciplined underwriting. Although the insurer has already
completed a restructuring program, it could implement additional cost-saving measures
in 2015, which would markedly improve its expense ratio.
Countermeasures against negative spreads
The continued fall in bond yields is likely to prevent Hanwha Life’s negative spread from
improving. But at the same time, any further deterioration should be limited, thanks to:
1) crediting rate adjustments and 2) the maturation of high-interest policies.
Another positive is the sharp rise in the insurer’s RBC ratio. Previously, Hanwha Life
focused on buying long-term bonds to prepare for the tightening of RBC regulations,
which inadvertently put pressure on its negative spread. But now that its RBC ratio has
risen to 272%, the insurer has more room to breathe. It is also encouraging that the
insurer is aggressively raising its new money yield by increasing allocations to overseas
investments and loan bonds.
Hanwha Corp.’s acquisition of Samsung Techwin points to dividend hike
We believe Hanwha Life could increase its dividend payout from 2015, given its relatively
high RBC ratio and expected earnings improvement. More importantly, we think the
insurer will face increasing pressure to raise its dividend distributions in order for
Hanwha Corp. to finance its acquisition of Samsung Techwin.
One downside risk is the expected sale of Korea Deposit Insurance Corporation’s stake in
the insurer (24.8%). Still, we expect Hanwha Life shares to trade in a narrow range for
the time being, given the insurer’s sizable share buyback program (which will last until
January).
We maintain our Trading Buy call and target price of W9,500 on Hanwha Life.
Hanwha Life (088350 KS)
Hanwha Corp.’s acquisition points to potential dividend
hike
FY (Dec.) 03/12 03/13 12/13 12/14F 12/15F 12/16F
Earned premiums (Wbn) 11,832 14,510 9,970 13,783 14,532 15,305
OP (Wbn) -90 -289 -153 -267 -158 622
NP (Wbn) 534 467 389 476 573 655
EPS (W) 615 538 448 549 659 754
BPS (W) 7,481 8,059 8,053 8,631 9,356 9,900
P/E (x) 12.2 12.7 17.0 15.7 13.1 11.4
P/B (x) 1.0 0.8 0.9 1.0 0.9 0.9
ROE (%) 8.4 6.9 5.6 6.6 7.3 7.8
Dividend yield (%) 3.1 2.2 1.6 1.7 2.3 2.9
Stockholders’ equity (Wbn) 6,497 6,999 6,995 7,496 8,126 8,598
Notes: All figures are based on non-consolidated K-IFRS; 12/13 figures are based on 9-month period due to changes
in accounting standards
Source: Company data, KDB Daewoo Securities Research estimates
Life Insurance
(Maintain) Trading Buy
Target Price(12M,W) 9,500
SharePrice(11/27/14,W) 8,610
ExpectedReturn 10%
OP (14F, Wbn) -267
Consensus OP (14F, Wbn) -129
EPS Growth (14F, %) -8.1
Market EPS Growth (14F, %) 1.2
P/E (14F, x) 15.7
Market P/E (14F, x) 13.1
KOSPI 1,982.09
Market Cap (Wbn) 7,478
Shares Outstanding (mn) 869
Free Float (%) 20.3
Foreign Ownership (%) 15.0
Beta (12M) 1.06
52-Week Low 6,310
52-Week High 8,690
(%)(%)(%)(%) 1M1M1M1M 6M6M6M6M 12M12M12M12M
Absolute 9.8 29.3 20.1
Relative 7.0 30.3 22.9
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11.13 3.14 7.14 11.14
Hanwha Life Insurance
KOSPI
26. Insurance
26
November 28, 2014
KDB Daewoo Securities Research
The top dividend growth play in the insurance sector
We maintain our Buy rating and target price of W355,000 on Samsung F&M and
continue to recommend the stock as one of our top picks in insurance.
We believe insurance plays are beginning to resemble utilities, which are characterized
by maturing demand, declining capex requirements, and substantial retained earnings.
The most common investment theme for utilities is cash return to shareholders, and,
unsurprisingly, investors’ focus in the insurance sector has also been shifting to profit
management ability and dividend yield. In this regard, we think Samsung F&M is best-
positioned to raise dividends.
Robust profit management ability
Samsung F&M boasts the insurance industry’s most stable loss ratio, which is key to the
maintenance of healthy profits. We believe Samsung F&M’s loss ratio will remain below
the levels of second-tier insurers thanks to its low exposure to living benefits (which
make loss ratios harder to contain). We also expect the insurer’s auto loss ratio to
remain stable. It is true that the external environment is unsupportive: hiking auto
premiums is becoming increasingly difficult, and the introduction of a bonus-malus
scheme (applying premium surcharges based on the number of claims) appears unlikely
to significantly lower auto loss ratios. But in the current environment, we believe the
best defense is a good offense, and Samsung F&M has continuously expanded its market
share in the online segment (which tends to have a lower loss ratio).
Key investment theme shifting from share repurchases to dividends
As uncertainties over RBC regulations dissipate, we expect Samsung F&M’s dividend
payout to near 30% from 2014. Given the insurer’s strong capital adequacy, we could
see a more meaningful increase in 2016, when the implementation of the new RBC
formula is expected to be completed. The insurer could also turn to dividends to avoid
the drawbacks of share repurchases (e.g., share dilution and speculative trading by short-
term investors).
Any increase in dividend payout will be conditional on the possession of sufficient capital.
In addition to minimum RBC thresholds, we believe insurers will be required to meet
other conditions in order to be allowed to distribute dividends above a certain level
(similar to the mandatory capital conservation buffer imposed under Basel III). Samsung
F&M is also free from risks related to IFRS 4 phase II rules, unlike major life insurers, as
the company has very low reserves against fixed-rate liabilities and is less exposed to
risks of liability valuation fluctuations owing to a lower discount rate.
Samsung F&M (000810 KS)
The top dividend growth play in insurance
FY (Dec.) 03/12 03/13 12/13 12/14F 12/15F 12/16F
Earned premiums (Wbn) 13,679 15,699 12,179 16,623 17,338 18,014
OP (Wbn) 1,101 1,031 711 1,259 1,410 1,554
NP (Wbn) 785 760 505 921 1,023 1,133
EPS (W) 16,821 16,831 11,560 20,205 22,444 24,836
BPS (W) 164,987 197,334 179,352 210,734 221,598 233,355
P/E (x) 12.7 13.0 22.4 14.2 12.8 11.6
P/B (x) 1.3 1.1 1.4 1.4 1.3 1.2
ROE (%) 10.7 9.2 6.0 10.6 10.4 10.9
Dividend yield (%) 1.8 1.7 1.1 1.7 2.3 3.0
Stockholders’ equity (Wbn) 7,695 8,916 7,839 9,609 10,105 10,641
Notes: All figures are based on non-consolidated K-IFRS; 12/13 figures are based on 9-month period due to changes in
accounting standards
Source: Company data, KDB Daewoo Securities Research estimates
Non-Life Insurance
(Maintain) Buy
Target Price(12M,W) 355,000
SharePrice(11/27/14,W) 312,500
ExpectedReturn 14%
OP (14F, Wbn) 1,259
Consensus OP (14F, Wbn) 1,219
EPS Growth (14F, %) 31.1
Market EPS Growth (14F, %) 1.2
P/E (14F, x) 15.5
Market P/E (14F, x) 13.1
KOSPI 1,982.09
Market Cap (Wbn) 14,805
Shares Outstanding (mn) 51
Free Float (%) 69.8
Foreign Ownership (%) 52.3
Beta (12M) 0.85
52-Week Low 224,000
52-Week High 312,500
(%)(%)(%)(%) 1M1M1M1M 6M6M6M6M 12M12M12M12M
Absolute 10.0 18.1 22.5
Relative 7.3 19.1 25.4
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Samsung Fire & Marine Ins.
KOSPI
28. Insurance
28
November 28, 2014
KDB Daewoo Securities Research
Strongest profit management ability among second-tiers
As new business growth slows across the industry, the profit management abilities of
individual insurers are becoming a key focus for investors. Dongbu Insurance has been
the only second-tier insurer to consistently meet its guidance, which we attribute to 1)
its solid investment yield, 2) strong expense controls, and 3) stable risk loss ratio.
The most important consideration in the valuation of financial stocks is current profits,
as future cash flow indicators (i.e., embedded value) are less reliable during times of
rising financial market volatility. More importantly, because future cash flow is
unrealized profit, it is not recognized as capital, which reflects a financial firm’s
underlying strength. We therefore believe insurance stocks should be valued based on
their present earnings power. In this sense, Dongbu Insurance’s significant lead over
other second-tier players in terms of profit makes it an appealing investment.
An attractive dividend play
Despite the recent earnings slowdown, we believe Donbgu Insurance remains the most
attractive play among second-tier non-life insurers in terms of profit management and
dividend yield.
We see upside to dividend payout ratio, considering the insurer’s: 1) healthy earnings, 2)
industry-low payout ratio, and 3) high RBC. Financial authorities recently lowered the
risk coefficient for equity holdings applied in the calculation of insurers’ RBC. This should
further raise Dongbu’s RBC ratio, given its large equity exposure.
We also think it is likely that members of Dongbu Group’s controlling family, the largest
shareholders of Dongbu Insurance, will seek higher dividends from the insurer, as their
control on manufacturing subsidiaries has weakened significantly.
Correction owing to group-related concerns offers value-buying opportunity
In our view, the stock’s latest correction triggered by group-related risks presents a
compelling value-buying opportunity. The insurer’s recent purchases of property and
shares of Dongbu Life are small in value and in line with its existing asset management
strategies. In addition, the insurer no longer has ties to Dongbu Steel due to the
steelmaker’s capital reduction. In other words, group-related risks that have weighed on
Dongbu Insurance have largely dissipated.
We reiterate our Buy call and target price of W77,000 and maintain the stock as one of
our top picks in insurance.
Dongbu Insurance (005830 KS)
A compelling value play
FY (Dec.) 03/12 03/13 12/13 12/14F 12/15F 12/16F
Earned premium (Wbn) 8,368 9,004 7,095 9,889 10,333 10,779
OP (Wbn) 562 566 424 572 652 734
NP (Wbn) 403 413 306 416 475 534
EPS (W) 6,369 6,529 4,837 6,570 7,499 8,430
BPS (W) 34,830 43,546 42,708 53,098 58,997 65,427
P/E (x) 7.7 7.0 11.6 8.6 7.5 6.7
P/B (x) 1.4 1.0 1.3 1.1 1.0 0.9
ROE (%) 20.0 16.7 11.2 13.7 13.4 13.6
Dividend yield (%) 2.5 2.7 1.8 2.8 3.6 4.4
Stockholders’ equity (Wbn) 2,205 2,756 2,703 3,361 3,734 4,141
Notes: All figures are based on non-consolidated K-IFRS; 12/13 figures are based on 9-month period due to changes
in accounting standards
Source: Company data, KDB Daewoo Securities Research estimates
Non-Life Insurance
(Maintain) Buy
Target Price(12M,W) 77,000
SharePrice(11/27/14,W) 56,300
ExpectedReturn 37%
OP (14F, Wbn) 572
Consensus OP (14F, Wbn) 559
EPS Growth (14F, %) 1.9
Market EPS Growth (14F, %) 1.2
P/E (14F, x) 8.6
Market P/E (14F, x) 13.1
KOSPI 1,982.09
Market Cap (Wbn) 3,986
Shares Outstanding (mn) 71
Free Float (%) 57.4
Foreign Ownership (%) 41.0
Beta (12M) 0.38
52-Week Low 48,700
52-Week High 63,300
(%)(%)(%)(%) 1M1M1M1M 6M6M6M6M 12M12M12M12M
Absolute -4.3 -1.2 3.9
Relative -6.7 -0.5 6.3
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Dongbu Insurance
KOSPI
![Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including tAnalysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including tAnalysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including tAnalysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the U.S.he U.S.he U.S.he U.S.
PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
Insurance
Insurers facing two obstacles as they
transition into dividend plays
Positive policy changes expected next year; Earnings to remain flat
In 2014, the insurance sector has deviated from the pattern seen in previous years. While
non-life insurers have lost investment appeal due to their sluggish earnings, life insurers
have regained the spotlight.
Amid the overall slowdown in earnings growth, a sharp decline in bond yields has
weakened investment sentiment. The turnarounds of banks and securities firms have also
depressed the sector’s relative attractiveness.
Although the current slow growth trend is unlikely to reverse soon, insurers should
benefit—albeit temporarily—from some positive policy changes next year, including a cut
in the statutory rate and changes to the life table. Life insurers are seeing
improvements in both loss and expense ratios, as their efforts to offset the impact of
negative spreads are paying off. In contrast, non-life insurers are suffering from the
double whammy of tepid new business growth and rising loss ratios. Meanwhile, we are
not sure if adjustments to medical reimbursement policy premiums will be approved by
the authorities, as: 1) premiums for other insurance types are also scheduled to be raised
next year and 2) medical reimbursement policies are considered public goods.
Two obstacles on the road to becoming dividend plays
Amid a secular slowdown in the insurance industry, insurance plays are beginning to
resemble utilities, which are characterized by maturing demand, declining capex
requirements, and substantial retained earnings. For utilities, the most common
investment theme is the return of cash to shareholders, and, in the insurance sector,
investors’ focus has been shifting to profits and dividend yield.
In the financial industry, however, sizable retained earnings do not directly lead to higher
dividends as firms' dividend policies must conform to regulatory restrictions. Accordingly,
we believe insurers with good capital adequacy and profit-generating ability are better
positioned to raise their dividend payouts.
We believe insurers’ dividend payout ratios will generally trend upward thanks to the
improved visibility of RBC regulations. However, two hurdles still stand in the way of their
becoming dividend plays. First, regulatory authorities are expected to set an RBC ratio
level at which insurers will be allowed to pay out higher dividends. Second, authorities are
strengthening the liability adequacy test (LAT) ahead of the implementation of IFRS 4
phase II. As for RBC regulations, authorities are expected to adopt regulations similar to
the ones applied to banks. In an effort to strengthen the LAT, authorities are adjusting
the discount rate used in the calculation of liability adequacy, which should put pressure
on insurers (life insurers, in particular) to increase their legal reserves.
Top picks: Samsung F&M and Dongbu Insurance
We advise investors to pay attention to companies that: 1) have healthy capital adequacy
and room to raise dividend payouts and 2) are capable of maintaining stable earnings.
Some top-tier players, including Samsung Life and Samsung F&M, satisfy both criteria.
Among second-tier players, Hanwha Life and Dongbu Insurance fulfill the latter
requirement. Hanwha Life is expected to display improving mortality profits and expense
ratio. Dongbu Insurance has been outstanding among second-tier firms in terms of
defending earnings.
We present Samsung F&M and Dongbu Insurance as our top picks, as the stocks are not
expected to be heavily affected by the potential hurdles that are likely to materialize. We
maintain our Overweight rating on the insurance sector.
Overweight (Maintain)
2015 Outlook
November 28, 2014
Daewoo Securities co., Ltd.Daewoo Securities co., Ltd.Daewoo Securities co., Ltd.Daewoo Securities co., Ltd.
[Securities/Insurance]
Gil-won Jeong
+822-768-3256
gilwon.jeong@dwsec.com
Ju-hyun Kim
+822-768-4149
juhyun.kim@dwsec.com](https://image.slidesharecdn.com/ab9b6549-82aa-415d-abc8-9db527861508-150211051002-conversion-gate01/85/141128insurance-1-320.jpg)
