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

[Interpreted] Good morning. I am Helen Park, Head of IR at Samsung Fire & Marine Insurance. I'd like to thank you all for taking the time to participate in our first quarter fiscal year 2025 earnings results presentation. Today's session will begin with an overview of the first quarter fiscal year 2025 business performance, and we will then proceed with the Q&A session. The total session is expected to last approximately 1 hour. With that, I will turn it over to the CFO for the presentation.

[Interpreted] Good morning. I am Jun-Ha Kim, CFO and EVP of Corporate Management Support Division. I would like to now present Q1 2025 earnings of Samsung Fire & Marine Insurance. On the back of widening market volatilities and large natural catastrophic events, SFMI in Q1 of 2025 reported consolidated pretax profit of KRW 822.3 billion with net profit attributable to majority interest reporting KRW 608.1 billion, which is a decrease of 13.2% year-over-year. In terms of earnings from each of our lines of business, first, long-term insurance faced heightened market competition for new business as a means to secure CSM. And under this backdrop, through enhanced product competitiveness and by strategically responding to the GA channel, we achieved KRW 19.6 billion of monthly average new premium for the protection business, driving 1.7% year-over-year growth as we continued to broaden our market dominance. With the application of guideline on the lapse ratio for the no-lapse policies and other assumption adjustments affected at the end of the year, CSM multiple fell, driving new business CSM down by 20.8% year-over-year, reaching KRW 701.5 billion. CSM volume reported KRW 14,332.8 billion, expanding by KRW 258.9 billion year-to-date. Despite larger CSM amortization underpinned by expanded CSM volume due to loss ratio deterioration from certain risk coverage and occurrence of large-scale cat events, which had an impact of narrowing the claims variance, insurance profit declined 6% year-over-year, reporting KRW 419.4 billion. From second quarter and onwards, we will deliver innovative market-leading products and engage in distinctive marketing strategy for each of the channels and focus on improving efficiency metrics, including persistency ratio, claims and expense ratio. Through such efforts, our market position will be fortified while we continue to drive stable growth of CSM volume. Next, auto insurance. Despite rate cut impact and heightened competition for discount riders, which led to total market contraction through enhancing of the renewal rate for the value in force and sustained growth of our direct online channel, insurance revenue was KRW 1,377.2 billion, sustaining the level similar to that of last year. Also compared to last year, despite lower accident rate and enhanced expense ratio due to cumulative rate cut impact and increase in loss per accident following the snowstorm, insurance profit was down 70.9% year-over-year, reporting KRW 29.9 billion. We recognize that uncertainties surrounding the auto insurance industry is greater than ever. But nevertheless, we will continue to secure steady cost base, differentiate pricing and product competitiveness and drive productivity innovation for business workflow and enhance business environment to place unwavering momentum to turn the tide on profitability deterioration. Next is on our commercial insurance. Commercial insurance saw both domestic and overseas business revenue grow in tandem, driving insurance revenue up 6.3% year-over-year, reporting KRW 409.9 billion, but on increase in high-risk domestic events, loss ratio reported 63.4%, rising 2.1 percentage points year-over-year. All in all, insurance profit came in at KRW 49.6 billion, which is down by 10% year-over-year. In Q2, we will continue to strengthen pricing of property insurance and diversify across specialty and maritime insurance so as to continue to drive balanced growth between profit and top line revenue. Next is asset management. While valuation gain narrowed due to higher volatility seen in the financial market beginning of the year through shifting of the bond portfolio with the purpose of increasing the running yield and other efforts behind improving operational efficiencies, we were able to expand interest and dividend income. As a result, first quarter's investment yield was 3.57% with investment profit on an AUM basis reporting KRW 739.7 billion, staying flat year-over-year. SFMI will continue to make its utmost effort to manage asset quality, including for domestic and global property and retail lending segments in Q2 and onwards, while at the same time, we will endeavor to secure high-yielding dividend-paying assets and diversify higher return portfolio centering around private assets. This will ensure stable investment return, while at the same time, drive growth in investment profit. While internal and external uncertainties continue to exist, market competition is also building up. Under such harsh business environment, SFMI will respond nimbly and proactively to such changes and challenges, be it small or big across all our business lines. By channeling our capabilities and through bold innovations, we will further widen the competitiveness gap that we have in our core business and explore new growth engine in line with the megatrends of the insurance market and the demographic shift to build stable basis for our future earnings. Also, through fundamental change and innovation, we will attain well-balanced growth that is of value so that we can enhance shareholder value throughout the year. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]