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

[Interpreted] Good morning, and good evening. First of all, thank you all for joining this conference call. And now we will begin the conference of the fiscal year 2022 fourth quarter earnings results by Samsung Fire & Marine Insurance. This conference will start with a presentation followed by a divisional Q&A session. [Operator Instructions] Now we shall commence the presentation by Samsung Fire & Marine Insurance.

[Interpreted] Good morning. I am [ Kim Jae Hoon ], Head of the IR team. Thank you for joining our financial year 2022 earnings conference call. Today, we will begin with 2022 business highlights, which will be followed by 2023 business strategy presented by our new CFO, Kim Jun-Ha. And then we will have the Q&A session with answers provided by the executives of each business line. The entire session, including the Q&A will ask a total of 1 hour. With that, I would invite CFO, Kim Jun-Ha.

[Interpreted] Good morning. I'm Kim Jun-Ha, the newly appointed CFO. Allow me to start by presenting to you SFMI's 2022 business results and strategies for this year. 2022 pretax profit reported KRW 1,536.8 billion, while net profit came in at KRW 1,141.4 billion. When excluding last year's one-off gain of special dividends from Samsung Electronics net profit growth was 16.5% year-over-year. First, for the long-term insurance ahead of IFRS 17 implementation this year, we improved our portfolio around high CSM yielding products, which include a term products like children's insurance and lab supported insurances that have robust persistency profiles, thereby growing the mix of high-margin products from new sales. Also, thanks to efforts behind efficiency improvements for value in-force policies, our 21st month persistency ratio for production was up 8.7 percentage points year-over-year, while 37th month rate improved 7.4 percentage points. The size of Risk and Loading premium, which formed the basis of future earnings also posted 8.2% year-over-year growth. On the back of more stringent standard for claims review in response to excessive claims from medical indemnities, like for cataract treatment, risk loss ratio improved by 3.1 percentage points, recording 86.9%. While in Q4, we saw sizable improvement of reduction of 6.4 percentage points year-over-year. Next, Auto Insurance. Direct premium written was KRW 5,924.4 billion with combined ratio of 97.5%, maintaining a flat trend year-over-year. In the year '22, due to heavy rainfall, snow and other natural disasters and deepening inflation, there were levers behind rise in underwriting costs, driving up the loss ratio. But thanks to increases in quality-driven revenue and claims efficiency, we were able to achieve underwriting profit quite steadily for 2 consecutive years. Next, on General Insurance. Direct premium return was up 17.8% on year, underpinned by the reinsurance strategy geared towards reducing profit volatilities, net premium written was up 3.6% year-over-year. Loss ratio increased 2.1 percentage points on air to 77.1% due to the impact from natural disasters and high-risk events. Next, Asset Management. Company's investment profit was KWR 2,811 billion, with investment yield of 0.1 percentage points year-on-year, reporting 2.9%. Excluding year '21's one-off dividend gains, investment yield was up 0.3 percentage points year-over-year. The financial market of late has seen uncertainties continue, both internal and external, characterized by inflation, deepening of interest rate volatility and stagnation of the property market. And with this backdrop, we have been monitoring risk thoroughly and managing the quality steadily. Now that was on 2022 earnings of the company. I will now move on to present some major strategies of Samsung Fire & Marine for this year. The insurance industry in '23 is facing changes, both internal and external, including changes of the atonic system and greater likelihood of a global recession. To counter such change in the market, SFMI will continue to bring fundamental growth and bring efficiency innovation so as to focus on securing earnings stability mid to long term. In terms of the long-term insurance business, it will be where the impact from IFRS 17 will be the greatest. As such, we will focus on growing new sales CSM through developing and distributing high-margin new products and by strengthening our channel competitiveness. We will also continue to improve efficiencies, including the persistency ratio with a view towards gaining a solid basis for future earnings. For the Auto Business, there are levers of pressure, including rise in issuance inflation, deepened market competition and rise in the activity level with the effect of the endemic fully kicking in. Despite such backed by revenue growth driven by quality contracts and process innovation, we will pursue 3 consecutive years of underwriting profit. For the General Insurance, we plan to drive revenue growth by discovering new markets and risks, both at home and abroad, while we continue with the reinsurance strategy to reduce volatility and profitability, all in all contributing to solidifying the robust basis for company earnings. Also mid to long term, we would gradually broaden our business domain by providing a variety of services, having direct relevance to customer safety, such as offering of consulting services for safety management. Lastly, for Asset Management, facing greater financial market volatilities, we will further strengthen the risk management regime while increasing running yields through selective investments into high-rated prime corporate loans. Also, by expanding dividend-bearing assets, we will continue to improve portfolio profitability. And by strengthening ties with global private equity funds, we'll be exploring new investment opportunities. SFMI was able to record highest profit ever despite greater uncertainties, both internal and external last year. We expect many difficulties and changes this year, but by proactively countering changes in the environment while continuously looking for opportunities for uninterrupted growth, we will be laying the basis for future earnings. We will also endeavor to gain market trust and recognition in terms of the ESG, environment, social and governance aspects. In the year 2023, we commit to exit our utmost to bring differentiated earnings and further enhance our shareholder value. Thank you. Now we will move on to the Q&A session. I would like to ask that you please ask no more than 2 questions per person.

[Interpreted] [Operator Instructions] The first question will be provided by Hongjae Lee from Hyundai Motor Securities.

[Interpreted] My first question relates to your loss ratio for the auto business. Looking at the tentative account closing, the figures seem to be quite positive. I would like to understand as to the extent of the impact that you benefited from the changes in the overall system and the rules -- and also looking at the current trend for the February, the month of February, I think that the pattern is still going to be quite favorable going forward. I would like to understand your take on that. Second question, this year, we've seen a lot of interest regarding the dividend payout policies of banks, we've seen heightened interest. And I think going forward, either this year or next year, you -- companies like SFMI will also be facing similar challenges, higher call for shareholder return. Although you can't share any specific number at this point, can you provide some color as to the direction of your shareholder return policy? I would assume that it would be difficult for you to just base it on kick or the solvency ratio.

[Interpreted] Yes. I am Vice President of Automobile Insurance Strategy team. I am [ Lee Sang Mok ]. I will respond to your question about the auto loss ratio relating to the impact of the improvement in the overall system, et cetera. So if you look at month of January, it was slightly higher, higher than expected, but still, we outperformed the plan. Now regarding the impact of changes in the overall regulatory regime because the timing of the implementation of those changes was November '22 and January of 2023. So it's too early to say that we have seen a direct impact from such changes. Now the reason why we've seen some improvement in the loss ratio or a decline in the loss ratio in January is that if you compare to the situation in November, where there was very heavy rainfall and a very cold wave that factor was eliminated. So we've seen this decline in loss ratio, thanks to the seasonal effect. And also recently, because of the economic recession and the overall constraint on the demand and consumption, we've seen less mileage driven, which then drove down the accident rate. So in order to make sure the impact of such changes in the regulatory regime is really felt we are very closely cooperating with the relevant authorities and also providing those information to the -- to our customers and to our customers and also are currently carrying out many different activities to make sure that these improvements can really take a firm route and be well established. So we believe and we expect to see the impact of such improvement in the overall regulatory regime to start to feed in after the first quarter. And lastly, looking at the claims trend for month of February due to the reasons that I had previously mentioned and the fact that the seasonal impact from heavy snowfall and cold wave has been mitigated, which all contributed to improving the accident rate trend. We expect going forward compared to the January figure, we will be seeing a better loss ratio profile going forward.

Yes. This is the CFO. I will respond to your second question on our capital plan. As you know, the company has put in place a shareholder return policy based off of a dividend per share, DPS, -- our plan is to progressively grow that as we go into the future. But as you know, this is the first year of IFRS implementation. So as we close our accounts on a quarterly basis, we would consider the actual figure as well as compare that with the plans set before. And up until the end of the year, we will continuously look at those different factors and continue to finalize our capital plan. Now with the adoption or implementation of IFRS 17 as well as considering the fact that our business environment is quite uncertain. At this point, please I hope you understand that it will be difficult for us to provide you with any specific direction regarding our capital plan. However, having said that, I can make sure that we will continue to carry our DPS trend in a very steady and upward trend.

[Interpreted] The following question will be presented by Junsup Jeong from NH Investment & Securities.

[Interpreted] I am Jeong Junsup from NH Investment Securities. My question relates to your loss ratio for the long-term business. The beginning of year '22, people had some concerns regarding the cataract treatment and expenses. But as we enter into the second quarter, we were able to see that these excessive treatment expenses were well controlled, which was quite positive. So I would like to understand what your take is for what your projection is for year 2023 because recently, we've seen a lot of emphasis placed on banking institutions on the public role. And so -- and also the insurance companies recently have -- ours are really focusing on responding to the civil complaint. Would like to understand whether, hence, under this backdrop, you will be able to continue this trend of really constraining the excessive treatment and expenses. Do you think that, that would if -- that is feasible?

[Interpreted] Yes, I am the Vice President of Long Term Insurance strategy team, [indiscernible], I will respond to your question on the long-term insurances. As you've mentioned, thanks to the improvement of the overall rules on the claims review for the cataract treatment, we've seen improvements, and that improvement continued to show itself in the second half of the year. As you've correctly mentioned, there's been a stronger social call for public responsibility of financial institutions. But the -- but if you look at the measures that we've put in place as well as improvement in the rules and more stringent review process of the claims, it was focused on excessive treatment and some moral hazard issues. Hence, as you've seen from our cataract treatment. Hence, we will continue to focus and continue to have this approach in the future as well. And also last year, FSS issued a code of standard for insurance fraud, and they announced 5 major principles which were announced in order to prevent any insurance claim leakages. So based on those principles, we will continue to strengthen our capabilities around constraining excessive diagnostic treatment as well as preventing any more hazard.

[Interpreted] The following question will be presented by Myung Wook Kim from JPMorgan.

[Interpreted] I am Kim Myung Wook from JPMorgan. I have 2 questions. First is on your long-term business line. Under this new IFRS 17 regime, I understand that the company wants to increase the long-term new business. Now what is your take on the overall TAM, the total addressable market of long-term products in Korea. It's because a lot of people ask whether there will be -- whether companies will be able to increase their CSM on new sales in light of the total addressable market. So it would be helpful to understand what your understanding is. And also, you are increasing your mix your lapse-supported products and at products out of your total portfolio, how do you actually control and manage the underwriting risks that are inherent in these types of products? Second question, on dividend when you were answering the previous question, you mentioned that you are mindful of the uncertainties in the operational backdrop in year 2023. But if you look at other global insurance companies, when they talk about the dividend policy under IFRS 17, if it's a company that has ample amounts of solvency capital, they seem to be quite confident in sharing their positioning on a progressive dividend payout policy. We'd like to, therefore, understand what you mean by these uncertainties.

[Interpreted] [indiscernible] VP of Long Term Insurance, responding to your first question. As you have correctly mentioned, the penetration in the Korean insurance market is, yes, very high based on the projection or conductor, but if you look at the new business market or the new sales market over the past 3 years, we've seen the size be maintained at upper KRW 60 billion. And this is attributable to the fact that the medical technology continuously advances and also people's interest on one health has also heightened over the years, hence, supporting the sustainment or maintenance of this new market. And also in terms of these lab supported as well as a term products, which are higher margin, we've been increasing its share in terms of the -- out of the total sales. And starting last year, we have been keeping to an adequate level of rate making. And also under IFRS 17, the very important aspects are the efficiency indicators, such as the loss ratio and persistency ratio, therefore, in underwriting these types of products, we make sure that we move away from providing high overly excessive level of coverage on a more minor or minor risk or minor diseases. So our operational strategy is geared towards further maximizing the profitability, and we plan to run the portfolio as such.

[Interpreted] I'm Vice President of Corporate Management support, I am [ Lee Junghoon ]. I will respond to your question as to what Samsung Fire & Marine's understanding is regarding the uncertainties that works -- that impacts our dividend policy. So to begin with, when we are determining the DPS for '22, basically, we will consider both the payout ratio and dividend per share. And as our CFO has clearly mentioned, our positioning is that we will continue to take DPS on an uptrend upward trajectory. And last year, some of the shareholders have made their proposal and request that under IFRS 17 and once the CSM volume is more or less fixed that it would -- it could be best to go to quarterly dividend payout or more a steady payout approach. In our view, when we say uncertainties, if you look at under the IFRS 17 regime, the total CSM volume that we calculate, I mean, is that the appropriate level. We believe that we have set it at a quite conservative level, but we would like to continuously monitor as you see the variability between the assumed and the actual figure that we see. And we would like to closely monitor that the CSM volume internally as well as compare that with our peers. And also, you've seen that during the fourth quarter, there's been a quite large fluctuation in terms of P&L for the auto line and the commercial line. So we would also like to see how that volatility variability actually impacts the total -- the size volatility. And once we fix the CSM volume, then we will be able to come back and share with you a more concrete shareholder or capital plans.

[Interpreted] The following question will be presented by Byung Gun Lee from DB Financial Investment.

[Interpreted] I am Lee Byung Gun from DB Financial Investment. I have 2 questions. First, we will be able to expect disclosure under IFRS 17 in early March regarding the numbers. So maybe if -- even if you cannot share the specific 2022 figures under IFRS 17, can you at least share with us and the beginning account basis, the size of the capital, like CSM RA and the surrender reserve and kids percentage. Whatever you can share that will be helpful. Second is a follow-up question on the previous long-term business-related question. it had already been known that age term and life supported products are products that entail high margin, but it's only recently that we've seen a significant and see price in these products. I would assume that this is a combination of the authorities regulatory approach on trying to curve the rate-related hot competition and also it will be in line with the corporate strategy. Hence, I would like to understand as to why you have decided to really grow this product very significantly in recent days. And also what has been your target mix or your percentage of a term and less supported products out of the total portfolio?

[Interpreted] Responding to your first question, I'm VP of Corporate Management, [ Lee Junghoon ]. So as I mentioned before, when we were calculating these numbers, we thought to ourselves that we've been quite conservative. But any now, the beginning term CSM as of this time is KRW 12.2 trillion. With regards to other figures, we will do some more work, and we will communicate with you when that time comes. Let me clarify one more thing. This is as of end of 2022, the CSM is going to be 12.2%. Yes. Regarding the long-term -- long-term question. As you can see and you are correct, the size of the term and lab supported products, the portion out of the total portfolio has grown. And in Q4, as you can see from Page 2 term products have expanded its share to about 46%, and this is not due to any regulatory impact but is attributable to the company's strategy. Now for the last supported products, the premium is cheaper compared to other products. But hence, the policyholders prefer this product. And from the company's perspective, it is also more beneficial from the CSM perspective. Hence, we have seen an increase of these products. Now under such uptrend for the term products for this year as well, we expect and we believe that we will see that share rise to around 50% level.

[Interpreted] The following question will be presented by Do Ha Kim from Hanwha Investment & Securities.

[Interpreted] I just have one question. We've seen long-term insurances is loss ratio improved quite significantly, and it was actually much better than what was expected. I would like to understand whether you can -- you believe you can continue on with this trend. And if you can give us the breakdown between medical indemnity and non-indemnity and share with us what the Q4 trend is. And so for this year, where you think the driver of improvement in risk loss ratio is going to come between medical indemnity versus nonmedical indemnity. And also, the improvement that we've seen was mostly driven by the measures that you put in place for cataract -- and end of last year, Ministry of Health and Welfare also announced that announced -- made announcement relating to 10 areas where there is a specific excessive treatment going on and relevant product improvements that needs to be made. But since that announcement of the plan, we haven't seen any detailed plan that has been shared. Can you share with us once that kicks in, what impact do you foresee in your long-term source ratio?

[Interpreted] I am [indiscernible], VP of Long Term Insurance, responding to your question. Yes, in Q4, we've seen improvement on a year-over-year basis at 89.4%. On a Q-on-Q basis, there's been a slight increase, but that's mostly attributable to seasonality factors and the high-risk events and year-end concentration of health screening. So the loss ratio on a year-over-year basis, last year was 89.4%. So there was an improvement of 6.4 percentage points. And the improvement that we've seen from medical indemnities was twofold. So the main driver behind the improvement was medical indemnity.

[Interpreted] Yes I am VP of Long Term Product Development team, [indiscernible]. I will respond to your question about the impact from rule changes. Now we expect from the overall system perspective that there will be continuous control on the loan benefit items to make sure that there is a -- we can prevent claim leakages and to stay away from excessive treatment. In terms of more specific improvement in the overall regime, one of the key aspects that we can think about is streamlining of the claims process, which will help improve the convenience felt by the consumers, which will have a positive impact on the overall industrial development. And to that end, we will very closely cooperate with the government authorities.

[Interpreted] The following question will be presented by Jaewoong Won from HSBC.

[Interpreted] I have 2 questions. First is -- there is news that the auto insurance premium comparison service by the big tech platforms will soon be launched. I would like to understand as to the level of development or the stage of development and what positives and negatives will be felt by SFMI -- would it not undermine your channel competitiveness. I would like to get some color there. And also, can you provide an update as to what your global business or global expansion of current statuses?

Hello. I am [ Lee Sang Mok ], VP of Automobile Insurance. responding to your question. Up until last year, the overall opinion was that in terms of the comparison, auto premium services to be launched by Naver and Kakao Pay, that the auto insurance will likely be excluded. But starting this year, we see a progress whereby the supervisors is allowing that auto insurance premium comparison. So that process is ongoing. And at this point, we are talking through the insurance association to make sure that the benefit that's introduced through this comparison services on the platform does not further increase the burden from the perspective of the consumers and to make sure that the shock from it is minimized. So recently, I'm sure you've seen some price coverage from the insurance company's perspective. We want to make sure that the platform companies entrance into the market does not overly increase the expense ratio, thereby transferring the burden to the actual users and the consumers. So we've made the proposal that there'll be a specific rate for these platforms and to make sure that the market does not get overheated, which then translates into a bigger burden for the consumers. So in that light, we've also made our position or our opinion known that there should be some cap that is applied on the overall commissions or the advertisement expense level. So lastly, we have -- the insurance companies have shared their views with the authorities. And based on the feedback that we provided, the authorities will now hold in hearing with the platform companies who have a meeting with the platform companies before they come to a final decision.

[Interpreted] Yes I am VP of Commercial Lines strategy team. I will respond to your question about SFMI's overseas business. So for our global endeavors, I can mention 2. One is with Canopius. It's a company that we've made equity investments into some business corporations and markets of U.S. and Asia. So Canopius as you know, is a member of the Lloyd's platform. So it has global underwriting capabilities. While SFMI has our own capital strength as well as license for the U.S. market. Combining these 2 capabilities, we are, at this point, together closely collaborating to explore business opportunities and our volumes are increasing as well. So we will continue to have this closed cooperation with Canopius and one of them being us underwriting the risk portfolio that is already proven and verified. Second endeavor is in China. SFMI and joint venture with Tencent, we've already received all of the regulatory approvals required and all the administrative processes are now complete. At this point in time, we've put in place a new executive team and the POD, and we have all the systems in place for joint management of the company. Now we expect the 2 companies which continuously cooperate closely for the China's local market, our focus for the time being will be the personal insurance, the health insurances. But not only that, we will also explore new opportunities on the B2B side, Korean affiliate B2B side, Korean company B2B side, excuse me.

[Interpreted] The following question will be presented by Seung-Gun Kang from KB Securities.

[Interpreted] I would like to ask 2 questions. First, I believe that with the lesson burden on your new business expenses. In 2023, there may be more heightened competition. So I would like to understand what the company's GA channel strategy is. Usually, if the new business or new sales goes up, typically, the persistency ratio showed the downward profile '22 was different, however. So we'd like to understand what measures you have put in place for that to manage that trend. Second, on your commercial line business, 2022 performance was not all that great. In terms of your domestic income as well, it was not as positive. So I understand the company into do some changes on the insurance product types as well as changed your strategy on major session, yet we have not yet seen that feed through in the results and the performance. So I would like to understand what your 2023 strategy would be?

[Interpreted] I am [indiscernible], VP of Long Term Insurance, responding to your first question. Under IFRS 17, the distribution expenses, the selling expenses will be spread across the entire lifespan of the policy. So you are right, the expense burden is going to go down. So there may be some possibility of a competition on the price expense side. However, there is a limit of 1,200% at the initial year. And under IFRS 17, the difference between the loss ratio and the persistency ratio and the volatilities that are created, the variabilities that are created on the P&L, basically, because of that aspect, we do not foresee there's going to be any fierce competition on the expense side. So because of the lessened burden on the expense side, there is a possibility that the market may start to expand around the GA channel. So our approach is to take the high-margin products like the ATM as well as the lab supported products, which have relatively cheaper premium and which benefits the consumer. So we will take those products and respond to this trend. You also mentioned possibility of competition triggering a decline in the persistency ratio. But if you take a look at Page 8, our persistency trend is on an improving trajectory. So that is attributable to the fact that we've really strengthened our efficiency control system within the company, really controlling the policies where we think the efficiency level is going to be low. And also by expanding the lapse-supported product where there is a requirement in need for long-term subscription policies. We expect that the persistency ratio will continue to show an upward trend.

[Interpreted] I am Hee-Jong Cho, I respond to your question about the commercial line strategy for '23. So as you correctly mentioned, the performance that we've seen from '22 from commercial lines wasn't all that great. And the reason is because in the overall market, there's been a high level of high-risk events. So this overall trend and increase -- upward trend in these high-risk events, that's a common denominator across all of the industry. It's part of the cycle. But as you mentioned, SFMI has been changing its reinsurance session strategy to one that is more conservative. So in terms of the frequency of these events, there was 25% year-over-year growth. While looking at the severity per event, it was actually 15% lower. So the impact that we're getting from such high-risk events had subsided. Now looking at strategy for '23. In '22, because the overall across the industry, higher level of high-risk incidents, the reinsurance market has become a hard market, which will drive up the reinsurance costs and also impact our underwriting cost as well. Yes. The way for us to respond to the hard market underwriting cycle is twofold. First, has to do with appropriate pricing. And can we actually underwrite that risk on an appropriate price. So we are very closely monitoring the market on a monthly basis. And at this point, such upward trend in pricing is being well reflected in the contract. And second approach is portfolio diversification in 2023. The performance from this business was bad because mostly it was attributable to domestic property insurance. That's why we want to expand to products that have more stable profile in terms of loss ratio like the specialty and the marine insurance. And also that is why we want to expand into the global business where we will be able to underwrite -- where we will be able to take a steady risk, which will help us with the overall diversification of the portfolio.

[Interpreted] The following question will be presented by Hye-jin Park from Daishin Securities.

[Interpreted] My question relates to your commercial line. Can you give me a breakdown in terms of loss ratio between domestic and overseas and also some more color on the expense ratio, please?

[Interpreted] I am Hee-Jong Cho, VP of Commercial Line. Responding to your question on loss ratio between domestic and overseas. If you turn to Page 4 on the presentation, you will see that the loss ratio increased 2.1% from 75% to 77%. Looking at overseas, it moved from 74.7% to 61.6%. So there was a decline. While for domestic, there was an increase from 75% to 82.2%. Now responding to your question about expense. Our strategy back in '22 was to expand from B2B and migrate to B2B2C and other smaller and midsized risk underwriting. And in order to do that, we need agency and broker channel. And the drivers behind an increase in expense ratio is distribution costs and other costs. So because the engaged and used the agencies and brokers who we used to not use in the past, there was a temporary uptick in the expense. So last year, this broker and agency basically drove about 30% growth. So overall size was increased. And we believe that there is going to be a fixed cost impact. And there could be a percentage of the expense ratio can actually go up, but we believe that we will be able to cover for the overall expenses with the earnings and the profit that's generated. Thank you. Due to the time constraint. For those in the queue, we would please like to ask that you only ask one question.

[Interpreted] The following question will be presented by Heewon Choi from Morgan Stanley.

[Interpreted] I would like to ask your question on the investment side. As we enter into the second half of the year, we've seen a decline in the interest rates on a KTV basis, about to mid-3% level. And up until the end of this year, we do not foresee that big of a rate hike cycle to kick in. So what is your view on the interest rate going forward for this year? And any take on the improvement for the running -- on the running yield side? And another aspect on asset management is under IFRS 9, do you think that the volatility of the net profit side is going to be further heightened?

[Interpreted] I'm Song Ho Baek, VP of Finance Planning. I will respond to your question. Yes. So recently, up until last year globally, there was a significant rate hike. U.S. and Korea included. Starting this year, we've seen a downward stabilization of the way. So from an investment perspective, the fact that the interest rate is elevated is something positive. But recently, if you look at the overall interest rate cycle, now there is a signal for economic recession. So we are much more focused on risk management of the assets that we hold. So regarding the strategies that we have for investment on the individual investments that we make on the fixed income and loan, we are making investments into more high-rated bonds and prime loans so that we could enjoy an elevated level of interest rate for assets where we could look forward to a much, I guess, higher return from a long-term perspective as can be seen from the presentation, we are expanding our exposure to dividend-bearing assets. So in terms of the new money yield, because we're only in the beginning of the year, and there's still many more months to go up until the end of the year. And since interest rate volatility is quite high. So we cannot put our foot down. But having said that, last year, our new money yield was 4.1%. And on the assumption that the current level of interest rate persists, we are expecting about mid-4%. And also responding to your question on IFRS 9. So under IFRS 9, the biggest differences, the invested securities and invested funds and we, within the company, call it the dividend-bearing assets, basically, the fluctuations of volatility and the valuation gain is going to have an impact on the P&L. So SFMI, we already see a significant rise in the assets that will impact the net profit line item, but versus our peers, that portion is still going to be smaller. The volatility, hence, basically is going to be impacted by the actual holdings under a fund, whether it be a loan or equity. So compared to the past because of the fluctuations in the valuation gain had an impact of that on our investment -- investment gain volatilities because there is going to be a bigger impact, especially in light of the financial market conditions, when we are making overseas fund investments, we are focused on mainly investing into loan products. So we will clearly be aware of these variabilities and volatilities on the P&L in managing our profit.

[Interpreted] The following question will be presented by Yafei Tian from Citigroup.

I have a really quick one. The management mentioned that to end of 2022 is estimated to be KRW 12.2 trillion. I would use the average speculation about 6 years, but that in the net profit is to amortize over the steel horizon would be around KRW 2 trillion profit level for this year. And on top of that, there will be used them to add on top of that number.

Yafei, can you -- the line wasn't really good. can you speak a little closer into the microphone and just say that again?

Is it better now? Is it clear?

Yes. Can you repeat the question, please?

The question is the CSM number, if I were to amortize over well, which is the asset duration, but that we the net profit for this well would be at around KRW 2 trillion level and on top of that, we add we will CSM. thank you.

[Interpreted] Yes, this is [indiscernible] from VP of Long Term. As mentioned, as of year-end of year '22, the CSM volume is KRW 12.2 trillion. With regards to the specific details, we will be able to share that with you early March when we make the disclosure. So typically, it is an amortization across 7 years. You mentioned 6. But depending on each of the insurance companies, the percent of amortization is going to differ. That is what I can say for now. And also recently, as we sold more each term products and labs supported products, the actual percent of amortization is also subject to change. On an annual per annum basis per annum P&L basis, we will also have to consider for the inflow of new policies or the new sales as well as the difference between the actual versus assumed. So those aspects will be considered, and we will be able to later on share with you what our calculation is.

This brings us to the end of the Q&A session. Once again, thank you very much for joining Samsung Fire & Marine Insurance's 2022 Earnings Conference Call. Thank you very much. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]