LIFE

Domestic Life

In 2019, the life insurance premium volume is estimated to increase 5.8%, boosted by a 46.0% surge in retirement annuities amid the continuous decline of savings policy sales and a slowing increase in protection insurance volume. The growth of protection policies is estimated at 4.2%, driven by huge sales promotions and while preparing against potential regulatory changes. The savings segment is forecast to suffer a 5.7% drop due to continuously shrinking general savings life insurance and a decrease in investment-linked variable savings volume due to a stagnant stock market.

The overall trend in the Korean life insurance market will persist throughout 2020, likely to post a 3.7% drop in premium income. Specifically, the protection segment is likely to see a 2.4% increase, which will be propped up by a mid- to lower-priced health insurance sales hike, while general and variable savings insurance plans are expected to decline by 9.9% and 5.4%, respectively.

In recent years, extremely low interest rates and an aging population have weakened the growth momentum of domestic life insurers, and the upcoming implementation of IFRS17 and K-ICS (Korean Insurance Capital Standard) is posing a serious threat to profitability. Evaluation of insurance liabilities on a mark-to-market basis will require companies to reserve a much greater amount of capital, and will put an enormous burden on those who sold higher-guarantee rate products in the past. Furthermore, medical reimbursement policy providers will have to improve to make them more sustainable and get their lapse and loss ratios under control.

In 2019 the Korean life reinsurance premium income is expected to reach roughly KRW 2,070 billion, up 5% year on year. Korean Re’s market share slightly declined to near 41% due to portfolio readjustment last year. A total of KRW 932.3 billion in gross written premiums was generated from our life insurance operation, up 1.0% from a year earlier. By cutting off short-term, low-margin treaties by KRW 26 billion, we improved profitability, and volumes from general reinsurance categories increased by KRW 35 billion (4.5% growth) based on increased businesses from life and health insurance and the new simplified-issue policies that were jointly developed with our clients. However, due to an aggravated loss ratio from medical expense insurance products, our net operating income ended up being KRW 15.1 billion, nearly 50% of the previous year.

In 2020, Korean Re’s Domestic Life Team will continue to work hard to improve its business portfolio, further strengthening its underwriting discipline to become more stable and profitable. As a leader in the industry, we will provide our expertise in risk management and product development, while taking advantage of our financial strength to upgrade the insurance industry for the long term. In order to help our clients to respond to a rapidly changing environment for the life (re)insurance business, we will increase our joint efforts with primary insurers to develop new life insurance products, such as life and health policies that are issued simply, and low-refund type whole life insurance products. In addition to increasing our reinsurance capacity, we will also stay committed to our business partners by offering training programs, seminars on regulatory changes, medical underwriting services, and research and development of non-traditional reinsurance solutions. By doing so, our aim is to largely contribute to the profitable growth of Korea’s life insurance market and broaden our presence as a leading life reinsurance provider.

Overseas Life & Health

As of July 1, 2019—and as a result of the organizational change to divide the previous Life & Health Team into two teams for covering domestic and overseas markets—the Overseas L&H Team embarked upon a new start as a standalone team. Furthermore, a new EMEA (Europe, the Middle East and Africa) section was created within the team to broaden the existing portfolio, which was traditionally focused on Asia and America, and now includes the EMEA region. With this expansion, our Overseas L&H Team is now geared toward contributing added value to strengthen Korean Re so that it can sustain its growth well into the future.

In the global life reinsurance market, mature markets are expected to continue to see modest growth, but there is still a lot of room for expansion in emerging markets. Traditional reinsurance segments are faced with a historically low cession rate, while solvency II capital requirements and low investment returns present opportunities for meaningful growth for reinsurers.

In 2019, our overseas L&H business achieved 13.3% growth in gross written premiums, reaching KRW 460.5 billion. Signing more treaties from North America and LATAM has also contributed to this positive result.

Geographically, Northeast Asia, the largest market, generates 33% of our total L&H premium volume, followed by North America at 29%, and LATAM and Southeast Asia at 16% and 15%, respectively. Compared to the previous year, EMEA’s share rose from 6% to 7%, and from now on stable growth is anticipated from this region on the back of dedicated EMEA resources within the team.

Throughout 2020, our efforts to diversify our portfolio will continue as we apply strong regulations to the underwriting process. In addition, we will actively support our clients by providing our medical underwriting guidelines and acquiring high-net-worth facultative contracts.