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

Good morning. Thank you for joining the First Half 2026 Earnings Presentation by Samsung Fire & Marine Insurance. I have with me today CFO and EVP Koo Young Min, who will go through the first half results of fiscal year 2026, after which we will hold a Q&A session. [Operator Instructions]. With that, let me invite our CFO for the presentation.

[Interpreted] Good morning. I am Koo Young Min, CFO and EVP of Corporate Management Support Division. Let me begin with the briefing on Samsung Fire & Marine Insurance's 2026 First Half Business Results. During the first half of 2026, as we placed unwavering momentum behind profit-driven growth strategy across all of our business lines, SFMI was able to turn last year's slow profit trend into a full-fledged turnaround in earnings. Insurance profit thus displayed stronger uptrend year-over-year during the second quarter, reporting KRW 1,114.5 billion in the first half, which was up 10.9%. Investment profit sustained its high growth trend, increasing 22% year-over-year, reaching KRW 788 billion. As a result, pretax consolidated profit reported KRW 1,850.8 billion, rewriting semiannual record since the adoption of IFRS 17, with net profit attributable to majority interest coming in at KRW 1,372.3 billion, which is up by 10.2% year-over-year. Now, moving on to key results of each of our business lines. Firstly, on the long-term insurance, on the back of strategic shift towards rigorous profit focus undertaken since the second half of last year and with an operational focus on the fundamentals across the value chain, spanning products, underwriting and channel, although average monthly new premium reported KRW 14.9 billion, which is down 19.5% year-over-year, CSM multiple came in at 13.9x, improving by 1.1x versus last year. Total CSM also expanded KRW 427.1 billion year-to-date, coming in at KRW 14,594.7 billion. In terms of the efficiency metrics, persistency ratio, particularly for the 25th month and 37th month overall, displayed improvements, up 6 percentage points and 6.3 percentage points year-over-year, respectively, which were sizable increases. Loss ratio, which worsened during last year, fell 1 percentage point in the first quarter and down 1.7 percentage points Q-on-Q during Q2, shifting to a stable trend. Total insurance profit also increased 5.6% year-over-year, recording KRW 880.4 billion in the first half. Despite challenging business environment, long-term insurance business saw improvements in its efficiency metrics and regained profitability from its core businesses. Moving into the second half, while anchoring on enhancing future value and fundamental resilience and profit focus, we will continue on gradually improving our insurance profit. And by driving top-line recovery from health insurance and maximizing channel productivity, we will bring distinguished results in strengthening stronger earnings foundation for the company and generating a generation of new business CSM. Next is auto insurance. Supported by profitability-first discipline and as we pushed more for higher-quality portfolio rather than a mere top-line expansion, first half insurance revenue reported KRW 2,740 billion, a slight decline year-over-year. However, despite higher loss per claim following increases in claims cost, thanks to our effort to expand earned premium since the second half of last year, coupled with a decline in the accident rate on lower mileage traveled, Q2 insurance profit reported KRW 29.6 billion, which is a turnaround both for the quarter and on first-half cumulative basis. As we move into the second half, by identifying higher-quality contracts, strengthening loss-reduction disciplines and supported by improved guidelines, we will amplify the speed of operational innovation so that we can rebuild our earnings structure, not simply defending the bottom line so that we may establish sustainable model for profit-making business. Next is on P&C business. Driven by revenue growth, both from domestic and global businesses, insurance revenue was KRW 942.5 billion, up 11.2% year-over-year. On highly granular management of low-margin sectors and decline in large loss events, loss ratio reported 56.9%, improving by 6 percentage points year-over-year. Insurance profit thus reported KRW 187.5 billion, which is a sizable expansion by KRW 80.7 billion year-over-year. In the second half of the year, we will continue to diversify company's portfolio, pivoting on strategies for specialty and marine insurance. And by fine-tuning loss management framework, we will solidify market leadership in the domestic B2B market. Anchored on collaborations with Canopius, business capacity gains and stronger growth prospects from Samsung Re, we will expand our business footing in the global market, which in turn will prove their competitiveness as growth engines for the future. Next is on asset management. As we continue investing into higher-yielding assets for the purposes of enhancing running yield, we drove steady growth of interest income, which was accompanied also by higher valuation gains on the back of strong stock market. Investment yield for the first half was 3.5%, with investment profit on the AUM recording KRW 1,749.8 billion, increasing by 16.3% year-over-year, sustaining high rate of uptrend. In the second half, we will tightly manage asset quality for domestic and global real estate and retail loans and continue to add exposures on high-yielding interest-bearing assets and build high-return portfolio around private assets so as to drive sustainable performance despite volatilities in the market, underpinned by balance between stability and profitability. Despite intensifying market competition and rise in claims weighing down on industry's profit, SFMI shifted its focus around profit-driven approach early on. While leveraging our enterprise-wide risk management and capital response, we were able to turn the tide away from profit slowdown and achieved record-high semiannual performance. Also last month, global ratings agency S&P upgraded the company from AA- to AA, making SFMI the first and the only Korean private company to be given AA ratings, which is a recognition of our positioning that sits on par with global top-tier insurance writers. With this ratings upgrade, we can give confidence to B2C customers in our strong financial soundness and capacity for fulfilling claims payment. And for the B2B customers, we expect to be able to offer a stronger and stable risk protection across various domains. We also expect this will positively contribute to broadening our global cooperation with overseas partners, reinsurers and financial institutions. The world at this very moment is facing the great tide of AI transformation, which is redefining the order of not just insurance but of all industries as we know it. SFMI is not staying complacent but have embarked on organizational realignment, infrastructure enhancement and enterprise-wide execution to become an AI-native company. By innovating productivity of our core businesses through the redesign of the company's workflow powered by AI and differentiating customer value through delivery of data-driven, ultra-personalized experience, we will cultivate AI and data-driven businesses into future growth engines, thereby cementing industry's #1 positioning while striving towards becoming a global leading P&C insurer. In the second half, we will continue to build on core fundamentals by driving innovation across all businesses. And by taking on bold challenges, we will broaden the basis for growth. We will do our utmost to have our distinctive core value be better recognized by the market and make sure it translates into real improvements in shareholder value. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]