Samsung Fire & Marine Insurance Co., Ltd. (A000810) Earnings Call Transcript & Summary

[Interpreted] Good morning. I am Kim [indiscernible], Head of the IR team. Thank you for joining Samsung Fire & Marine Insurance First quarter 2022 Earnings Conference Call. We will begin with our CFO, Hong Seong-Woo's presentation on key earnings highlights and future business strategy, followed by Q&A, during which answers will be provided by the management team. The whole session will last around 1 hour. And now I invite our CFO, Hong Seong-Woo.

[Interpreted] Good morning. This is CFO, Hong Seong-Woo, allow me to present on the first quarter 2022 earnings results of the company. Q1 pretax profit was KRW 560.2 billion with net profit at KRW 409.1 billion, down 5.2% year-over-year, but excluding the one-off profit in Q1 of last year, net profit recorded a growth of more than 28%. First, long-term business saw year-over-year decline in new sales following constrained sales activities on the back of the sudden spread of the COVID pandemic. While versus the second half of last year, we are seeing top line recovery as the CSM yielding higher-margin products such as health, disease and children's insurance are growing their share out of the new sales. Also on the back of the efforts to improve the efficiencies of the value in-force, 25th month persistency ratio improved by a more than 16 percentage points year-over-year, boding well and in sync with the plan while risk and loading premium was also up by 8.1%. In the near term, uptick in claims for cataract surgery and medical indemnities, risk loss ratio was up 1.5 percentage points year-on-year to report 88.1%. Since April, however, loss ratio trend has stabilized as the regulator tightened standards for claims payment and through the company's own efforts in medical claims review. Also to secure sources for future earnings, we will bring recovery of sales activities for our off-line sales organization and expand new businesses by strengthening product competitiveness. Meanwhile, through sustained efforts behind efficiency improvements, including the persistency ratio, we will continue on with the uptrend in loading premium. Auto insurance on the back of Omicron, which led to a surge in number of people under quarantine, accident rates fell, driving the combined ratio down 4.7 percentage points year-over-year to 90.1%. The company, with the improvement in the profitability of our auto insurance, will continue on with its competitiveness in the top line generation. And we will also continuously focus on the high-quality policies so that we may sustain our top line trend. After the second quarter, in order to prepare against a rise in loss ratio with the resumption of the normalcy and lifting of social distancing measures, we plan to improve claims process efficiency and strengthen claims management so as to secure the basis for earnings generation. General line insurance saw loss ratio improvement of 17.8 percentage points year-over-year, reporting 69.5% and efforts behind strengthening of profitability, including the optimization for underwriting and the reinsurance policies. From Q2 onwards, we plan to continue to drive top line in the domestic market and minimize risk volatility. We are also placing full force behind the collaboration with Canopius in bringing the capabilities and assets both companies for mainly the North American and the Asian market. We expect this to bring more than $200 billion in cooperation based revenue this year and with further broadening of such collaboration on a sustained basis, we will drive tangible financial performance. Next is asset management. Investment profit reported KRW 561 billion with investment yield at 3%, down 0.6 percentage points year-over-year. But excluding the one-off dividend gain impact, investment improved 0.1 percentage points versus last year. But recently, there were rate hikes and steep price in the FX rate creating concerns around stagflation, which is, in turn, constraining the equities market as nervousness spreads across the greater financial market. Against this backdrop, we plan to focus on improving mid- to long-term profitability of the portfolio by way of increasing the mix of higher yielding assets like dividend-bearing assets. Next, I will briefly highlight key tasks being undertaken by SFMI. First, on the upcoming implementation of IFRS 17 next year, we are in the process of making the final checks on the regime together with the regulators, while internally, we are making our internal business framework more geared towards efficiency, including placing efforts behind improving the persistency performance. We are also working to drive higher revenue from higher-margin products to secure contract service margins. As such, we plan to make thorough preparations for stable earnings profile after the adoption of IFRS 17. Lastly, on the company's digital business initiatives. Based on SFMI's [ Direct CHAC ], which is our stand-alone platform, we are evolving into a daily life platform as we expand product and services befitting the customer's lifestyle. And through Monimo, which is Samsung's integrated financial platform launched last month, we plan to maximize synergies across its affiliates and actively use it to attract inflow of new customers. For the digital health care business, we are working on the launch of Anyfit plus month, newly revamped and personalized health care management services that could be used by the nation's entire population to be more than a service just for the company's customers. We are also developing a B2B business model that offers health management programs for the employees of companies. During the first quarter, despite difficult operational backdrop, both internal and external, we outperformed the market expectations. Although we expect there to be added uncertainties such as rising claims as we transition from pandemic to endemic, we will continue on with a steady basis of earnings through sustained efforts behind efficiency improvements and profit-driven growth. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]