PROPERTY

Domestic Business

In 2019, the Korean property insurance market experienced a small increase in claims in the wake of several mid-sized typhoons, such as Lingling, Tapah, and Mitag. Nonetheless, the loss ratio has remained relatively stable at 46.7%. In terms of premium growth, the market slightly rebounded from the continuous downward trend over the past several years. Premium income went up by 2.63%, to KRW 1,737 billion in 2019, mostly owing to comprehensive insurance premiums, which grew by 3.3%, to KRW 1,467 billion. On the other hand, fire insurance premiums went down by 1.1%, to KRW 270 billion, as rates continued to be softening.

Adverse market conditions made 2019 another challenging year for Korean domestic property markets. Korean Re, however, has been successful in limiting the negative impacts on the profitability of the book. Our premium income from domestic property insurance went down in 2019 by 7.2 percent, to KRW 474.6 billion, amid an increase in retention by local primary insurers. Our premium income from fire insurance shrank by 13.2 percent, to KRW 98.3 billion, while comprehensive insurance went down by 5.5 percent, to KRW 376.3 billion. Yet our bottom line remains outstanding, with our combined ratio before management expense improving to 81.58% from 87.31% in 2018. This outcome is largely due to our dedication to underwriting strategy, which is focused on profitability.

Premium growth for Korean domestic property insurance market is expected to be sluggish again in 2020, and primary insurers are likely to maintain their increased retention levels. Despite the strain from these unfavorable market conditions, we will continue to rebalance our portfolio to maximize our profit levels through selective underwriting based on exhaustive risk analysis for writing quality risks.

Gross Written Premiums: Domestic Property Business
(Unit: KRW billion, USD million)

FY 2019(KRW) 

FY 2019(USD) 

FY 2018(KRW) 

FY 2018(USD) 

Fire

98.3

83.6

113.3

102.0

Comprehensive

376.3

319.8

398.1

358.2

Total

474.6

403.4

511.4

460.2

Gross Written Premiums: Domestic Property Business
(Unit: KRW billion, USD million)

International Facultative Business

Our international property facultative business recorded another outstanding year, with gross written premiums remaining stable at KRW 108.6 billion, up 4.1% from the previous year, and a reduced combined ratio before management expense noticeably down to 91.3% in 2019 from 98.9% in the previous year. The outcome was achieved through customizing underwriting guidelines better responding to each region and restructuring portfolio where necessary.

Geographically, Asia is still the biggest market for us, comprising 43% of the total international property facultative business, followed by the Middle East and Africa (26.3%), the Americas (15.1%), and Europe (12.6 %). The overall composition has not changed dramatically from the previous year.

Following a series of large losses in 2019, our underwriting guideline has been reinforced to minimize exposure in catastrophe-prone areas. We have also focused on enhancing profitability by increasing our participation in proportional reinsurance businesses with strong risk management and healthy loss records. Meanwhile, the strategic initiative to expand the book in less developed territories has contributed a great deal to the increase in gross written premium income. The expansion of business will continue to play a part and will be accompanied by thorough risk assessment to identify markets which are worth further tapping into.

An unexpected regulatory intervention, fierce competition, and large catastrophe losses may continue to pose a challenge in 2020. Nonetheless, over the past number of years, our underwriting results have proven to be profitable through stable growth rates. In addition, our credit rating from both S&P and A.M. Best, which is backed up by large capacity, is instrumental in serving our clients with industry-leading practices. We will continue to take advantage of the aforementioned strengths in an effort to distinguish our presence both in existing and new markets.

Gross Written Premiums: International Facultative Business
(Unit: KRW billion, USD million)

FY 2019

(KRW)

FY 2019

(USD) 

FY 2018

(KRW) 

FY 2018

(USD) 

International

Facultative Business

108.6

92.3

104.3

93.9

International Facultative Portfolio by Geography
(%)
Gross Written Premiums: International Facultative Business
(Unit: KRW billion, USD million)
International Facultative Portfolio by Geography
(%)

International Treaty Business

In 2019, insured losses from natural catastrophes worldwide stood at USD 71 billion, much lower than their peak of USD 157 billion in 2017, USD 100 billion in 2018. The top 10 insured loss events that occurred in 2019 were concentrated in Japan (Typhoon Hagibis and Typhoon Faxai) and the United States (floods in Mississippi and Missouri and Hurricane Dorian in Florida).

Overall capacity remains sufficient in the global reinsurance market. Despite two consecutive years of above-average catastrophe losses, the overall rate increase could not meet market expectations. January 2020 renewals addressed the demand for rate increases only in the areas hardest hit by catastrophe losses, mainly in the U.S. and Asia.

In 2019, our international treaty business saw a 2.4% growth in gross written premiums, reaching KRW 581.8 billion. Our target was achieved, and driven by a moderate growth in the U.S. and the Middle East & Africa.

Geographically, East Asia still makes up the largest portion of our international treaty portfolio at 40.6%, followed by the Middle East & Africa at 20.6%, Europe at 19.6%, and the U.S. at 19.2%. Compared to the previous year, Europe’s portion was slightly adjusted downward due to a reassessment of certain large proportional accounts, whereas those of the Middle East & Africa and the U.S. increased. Overall, we are well in line with our strategy to achieve steady growth.

In 2020, we will continue to optimize our portfolio so as to withstand the volatility of catastrophe losses, while pursuing sustainable growth in target regions.

Gross Written Premiums: International Treaty Business
(Unit: KRW billion, USD million)

FY 2019

(KRW)

FY 2019

(USD) 

FY 20178

(KRW)

FY 2018

(USD) 

East Asia

236.2

200.7

229.9

206.9

Middle East & Africa

113.8

96.8

107.4

96.6

Europe

111.7

95.0

120.6

108.5

Americas

120.1

102.1

110.0

99.0

Total

581.8

494.5

567.9

511.0

Individual figures may not add up to the final shown due to rounding.
International Treaty Portfolio by Geography
(%)
Gross Written Premiums: International Treaty Business
(Unit: KRW billion, USD million)
International Treaty Portfolio by Geography
(%)