Samsung Life Insurance Co., Ltd. (A032830) Earnings Call Transcript & Summary

[Interpreted] Good morning. Thank you for joining Samsung Life's conference call. [Operator Instructions]. Now we will begin Samsung Life's 2024 Year-End Earnings Presentation.

[Interpreted] Good morning, everyone. This is Minyoung Kim, Head Office of Investor Relations. Thank you for joining us today for Samsung Life's 2024 Year-End Earnings Presentation. Today's call is scheduled for 1 hour and 30 minutes, starting with the earnings presentation delivered by our CFO, Mr. [ Wonsung Lee ], and followed by your questions, which will be addressed by the members of our management team present here today. Please note that the figures in this presentation may be revised during the auditing process, and any forward-looking statements, including the earnings outlook contained in today's conference call, are subject to change depending on both the domestic and overseas market conditions and operating environment. Let me now hand over the presentation to our CFO, Mr. [ Wonsung Lee ].

[Interpreted] Good morning, everyone. This is CFO, Mr. [ Wonsung Lee ]. I would like to thank our investors and analysts for taking the time out of your busy schedules to attend today's earnings call. Let me start with our key business results for the fiscal year 2024. Despite the rapidly changing market environment and volatile macro conditions last year, Samsung Life was able to achieve solid results. Strong earnings were achieved as a result of strengthening our competitiveness within the health segment while focusing on our investment asset diversification strategy. To align ourselves with the growing health market, we have been focusing on capabilities to strengthen our market dominance starting the second half of 2023. As a result, the proportion of health products in the business CSM rose from 37% in 2023 to 58% in 2024. Our new business CSM exceeded our annual target and reported KRW 3.3 trillion on the back of strong health product sales. CSM balance, which is a main source of future insurance profit, rose by KRW 0.7 trillion year-to-date to KRW 12.9 trillion. In 2024, our consolidated net profit reached its highest ever, recording KRW 2.1 trillion, having increased 11.2% year-on-year. This was on the back of persistent focus on profitability enhancement and improved fundamentals. Despite the falling interest rate, Samsung Electronics share price and regulatory tightening for the K-ICS ratio, we expect to maintain sufficient capital and recorded K-ICS ratio within the 180% level for December 2024. Based on our increased profit and capital soundness, we raised our dividend by 21.6% compared to the previous year. Going forward, as a stable dividend growth stock, we intend to continuously increase our shareholder return aligned with our improving fundamentals. Next is our business highlights. Our CSM balance at the end of December 2024 was KRW 12.9 trillion, increasing by 5.3% year-on-year. This was driven by new business CSM of KRW 3.3 trillion, CSM adjustment of negative KRW 1.7 trillion due to a recurring actuarial assumption and regulation guideline changes and CSM amortization of negative KRW 1.4 trillion. Going forward, we will focus on increasing our in-force CSM by securing high-quality new business CSM and efficiently management of in-force contracts. Our new business CSM recorded KRW 3.3 trillion with a CSM margin of 10.5x in 2024. We were able to expand our presence in the health insurance industry by creating competitive riders for health products as well as focus on actively expanding our product lineup for the senior and simplified insurance market. Our CSM margin fell slightly throughout the year due to falling interest rates and strengthening of the discount rate. However, going forward, we will continue to improve our CSM margin by increasing the proportion of high-margin health products within the protection type and efficiency management. Next is on our distribution channel. We have continued to strengthen our exclusive channels as it plays a major role in securing quality CSM. Compared to our other distribution channels, our exclusive channel generates high profitability and efficiency, which contributes to securing quality new business CSM and expand our in-force CSM. In the fourth quarter, we saw a net increase of roughly 5,500 agents year-to-date for exclusive channel, resulting in over 37,000 agents as of 2024. Furthermore, in order to correspond to the changing insurance industry environment and regulation changes, we are closely monitoring the market trends and promoting channel diversification strategies. Continuing on is our major efficiency trends. Protection persistency ratio, which is the most important metric in terms of managing our insurance profit, stood at 90% in the 13th month and 69% in the 25th month, maintaining a high level within the industry. Loss ratio inched up year-on-year due to rise in medical use. Other insurance claims from the university and general hospital decreased on the back of prolonging medical strike, hospital usage and insurance claims from the local hospitals increased. Going forward, we will do our best to maintain our loss ratio at a stable level by managing excessive medical expenses and responding to fraudulent claims. Now let me explain our investment portfolio. Our invested assets recorded KRW 214 trillion as of December 2024, of which interest-bearing assets such as bonds and loans account for 69%. Despite the difficult macro environment and political uncertainties, we were able to increase our investment gains and record an investment yield of 3.09% through asset diversification under risk management. Our delinquency ratio recorded 0.31% in the fourth quarter, a bit elevated compared to previous quarters due to household mortgage loans. Despite such, we still maintain one of the lowest level in the industry, and we'll do our best to minimize future losses through preemptive risk management, including tightening our underwriting criteria and trimming down our loan balance. Next, I'll walk you through our financial highlights. Our consolidated net profit for this fiscal year 2024 reached its highest ever, recording KRW 2.1 trillion, growing by 11.2% year-on-year. Despite the increase in in-force CSM, insurance service results increased by a big margin from a year ago due to several factors. Previously sold annuity participating contracts recognized CSM loss due to longevity risk, and a one-off loss due to accounting method change in accordance with the FSS guidelines were temporarily recognized in the CSM profit, operating variance and other categories. On the other hand, investment profit saw an increase of KRW 1.2 trillion year-on-year. Nonconsolidated investment profit showed significant improvement, thanks to drop in interest amount for the insurance liabilities, while profits from consolidated subsidiaries and dividend income from beneficiary certificates also helped. For details on the consolidated profit, please look at the appendix. We will further explain the one-off factors for the fourth quarter in the following Q&A session. The following is the current status of our consolidated balance sheet. Our total assets came in at KRW 312 trillion as of December and is comprised of KRW 214 trillion in invested assets, KRW 26 trillion in variable account, KRW 30 trillion in corporate pension account and KRW 42 trillion in Samsung Card and other consolidated subsidiaries. Total liabilities came in at KRW 279 trillion with insurance liabilities recording KRW 203 trillion, including KRW 187 trillion for BEL, KRW 3 trillion for RA and KRW 12.9 trillion for CSM. Shareholders' equity recorded KRW 33 trillion with KRW 13 trillion in accumulated other comprehensive income and KRW 19 trillion in retained earnings. Now I'll explain the changes in shareholders' equity in more detail. Our shareholders' equity at the end of December 2024 came in at KRW 32.7 trillion, which decreased by KRW 11.6 trillion year-on-year. The decline was mainly attributable to the drop in Samsung Electronics' share price and falling interest rates, recalling -- resulting in a negative impact of KRW 4.1 trillion and KRW 8.9 trillion, respectively. Next is the K-ICS ratio, which represents our capital soundness. As I mentioned earlier, despite the falling interest rate and external factors, we expect to maintain sufficient capital and recorded K-ICS ratio within the 108% level for December. However, taking into account the discount rate strengthening by the FSS and the possibility of further rate cuts this year, we're actively reviewing and preparing different scenarios to maintain an appropriate capital level under worsening circumstances. Now let me guide you through our future strategies. Under company model of Insurance Beyond Insurance, we have been striving to add new ideas to our existing ones in order to take a big leap to surpass our previous achievements. We will be pursuing the following business strategies for 2025. First, we will make every effort to strengthen competitiveness in our main insurance business. We will focus on our strength with the exclusive channel and expand our market dominance in the health insurance segment. Moreover, we will actively pursue our role as an insurer and enhance our corporate value on behalf of our customers. We will promote health insurance checkup festivals and help customers claim matured endowments. We will also promote stable growth in the asset management business as it is another core value of our company. We will enhance our investment profits by selectively distributing investments in quality alternative assets while continuing investments in bonds. Furthermore, we will seek new opportunities for joint investments on alternative asset management companies in developed countries. In addition, we will preemptively lay the foundation for future growth engines. We will expand the scope of health care service and actively analyze the profitability of the senior living market. Lastly, we will actively promote the digital competitiveness to improve efficiency. Finally, I will go over the direction of our corporate value enhancement plan. In line with what we had previously announced, we will be progressively increasing our shareholder return. We declared a DPS of KRW 4,500 for 2024, an increase of 21.6% year-on-year based on enhanced fundamentals and profit growth. We will continue to enhance our corporate value by stably raising our shareholder return ratio while maintaining proper solvency. In addition, we will improve our ROE based on recurring profit growth and expand our presence in the high-margin health insurance market. In particular, we will expand our shareholder return to meet our mid-term target of 50%. To do so, we will enhance Samsung Life's company value to be more credible in the market by positioning ourselves as a dividend growth stock. This concludes our presentation for our 2024 annual earnings results. Thank you for attending today's earnings call, and we appreciate your continued interest and support for Samsung Life.

[Foreign Language] [Operator Instructions] The first question will be provided by Kim Myung Wook from JPMorgan.

[Interpreted] Thank you for the opportunity to make one suggestion followed by 2 brief questions. First, if you look at the practice by global and Asian insurance companies, during the earnings conference calls, mostly the registered executives, particularly the CEO, does tend to be quite visible, taking part in the meeting, the conference to engage in communication with both investors and shareholders. So in Korea, obviously, there is growing interest towards value-up by corporates. And your company also has made a lot of disclosures about your value-up program. So how about, just as a suggestion, the CEO of Samsung Life, as the representative insurance company of Korea, any plans for the CEO to take more active part in the actual conference call? Second, I'll move on to my questions. Regarding the solvency ratio, if you think about the solvency guidance that you have provided over the past year, I think we started talking about a target of 200% to 220%, and then we were around 190% and then lower by the end of the year. So it does seem to be a bit of a gap between your expected solvency ratio and actual. So what kind of plans do you have in terms of mitigating against that kind of risk? And if you listen to the government, I think their intention is that they want to gradually lower the level of required solvency, perhaps to 150% or so by the next -- or over the next 5 years. And so around that level would be seen as a sufficient level to be recognized as a solid insurance company that's well capitalized. So looking out the next 3, 5 years, what is the company's view in terms of the appropriate or optimal level in terms of your solvency ratio? Second question. It seems following on the previous months, we have -- you have been doing significant asset disposals. So in the -- as you proceed, I'm just interested in the company's thoughts in terms of shareholder return. So as the Insurance Business Act is also going to be revised, potentially larger-scale disposals may become possible. So what is your view in terms of allocation of those proceeds between shareholders and also the policyholders?

[Interpreted] Yes. Thank you, Mr. Myung Kim, for the very good suggestion. This is [ Lee Wonsung ], the CFO. So certainly, the company will examine closely, as you suggested, having our CEO or another registered executive taking more active part in our earnings calls going forward, whether on an annual, half year or quarterly basis, so that we can improve the process.

[Interpreted] This is [ Won Changyi ] from the IR team -- RM team, sorry. Let me address your question regarding the gap between guidance versus actual. So as of the end of 2024, our K-ICS ratio is expected to close at around low to mid- 180% due to the impact of lower interest rates and also share prices, also a larger-than-expected impact from regulatory changes. Actually, with the falling rate environment and also larger-than-expected impact from tightening of the discount scheme, we do expect a gradual decrease in the K-ICS ratio going forward. And we have been looking at a wide set of different measures to improve our K-ICS ratio. So again, the discrepancy versus guidance is largely due to larger-than-expected policy changes. As we expect interest rates to continue to fall, our priority would be to secure a solid new business CSM, purchase long-dated securities, also use co-insurance as part of a robust ALM policy to further support our K-ICS ratio. And we'll be flexibly managing our alternative investment portfolio as well as one of various options that we will be open to so that we can best improve our K-ICS ratio. Looking out to the next 3, 5 years, in terms of what level of K-ICS would be most optimal, our view is to maintain K-ICS at minimum at or above the current level.

[Interpreted] Yes. This is the CFO. Regarding your second question on disposal gains, obviously, we consider those gains to be a part of the available pool to fund shareholder dividends. So according to IFRS 17, gains on disposal of Samsung Electronics shares, for example, would not be booked under our income statement but would go under retained earnings on our balance sheet. However, for the purpose of allocation of those disposal gains, we will maintain the same practice that we employed back in 2018, which is when we also disposed of SEC shares. And regarding the particular details about how exactly the allocation of disposal gains will be made, we will communicate with you as soon as the details are fleshed out. In terms of allocation between policyholders and shareholders, of course, it will be done in compliance with the regulatory requirements.

[Foreign Language] The following question will be presented by Jung Jun-Sup from NH Investment & Securities.

[Interpreted] Yes. I would also like to ask 2 questions. I understand you are now intending to incorporate Samsung F&M as one of -- or as your subsidiary. Could you provide a little bit of background in terms of the change timing perhaps from the perspective of capital management, shareholder return, management priorities and earnings? And the stake, however, will still be under 20%, I understand, even after the incorporation. So any plans to further -- acquisition of further interest to above 20%? Second question has to do with Samsung Electronics shares. So as they embarked on the first round of share buybacks, Samsung Life, you disposed of a certain portion of the excess shares. Samsung Electronics also has a second round of share buybacks planned around KRW 7 trillion worth. And of course, it's not certain when they may cancel those shares upon buyback, if they do. But in any case, would you also be preemptively selling off your excess shares for that portion of the share buyback?

[Interpreted] So this is the CFO. Thank you for the first question, which was what would be the impact of incorporating Samsung Fire & Marine into Samsung Life in terms of capital ratio, earnings, et cetera. So we do not expect any impact actually from that perspective, and overall business management activities will also remain unchanged after incorporation as a subsidiary pursuant to the Insurance Business Act. So the 2 companies are representative companies in the life and non-life sector in Korea, and we are engaged in healthy competition in the overlapping health insurance space. Within the scope of what is allowed by law, we're also seeking and achieving synergy through cross-selling of -- cross-selling in some instances, also joint investments into alternative assets. You also asked about any plans to acquire additional shares. We do not have those plans at the moment.

[Interpreted] Yes, let me take your second question. This is Woo Mu-Cheol, Head of Finance. So for Samsung Electronics, although they have filed the disclosure on plans to do additional share buyback, they are still undecided in terms of the cancellation of those shares. So likewise, we do not have plans on our end as well.

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

[Interpreted] Yes. So thank you for delivering good performance despite the difficult environment. And I would like to ask 2 questions. First of all, it seems that you incurred about KRW 500 billion in cost from loss-making contracts. And based on what you said at the last conference call, I'm suspecting that they probably have to do with part-type annuity products. So could you provide more details about the exact size of that kind of block of contracts? What scale of loss are you looking at? And on a conservative basis, what are the odds of additional costs or -- arising from the loss-making annuities? Second question, additional question regarding K-ICS. So we are in a situation where, obviously, it can weigh on your K-ICS ratio. The media has been floating some ideas that potentially you may seek to convert, if not all, but a significant portion of your SEC holdings into what are called long-term held specialty shares. So what do you think about those various options? You did mention co-insurance. But between the different options at hand, what are your thoughts in terms of allocation, size of investments? And also, there's no reason in my view to not consider capital invest -- or capital securities actually. Most of the global advanced insurance companies are looking at or issuing capital securities to secure added buffer for their shareholder returns. And it's not just for funding purpose, but it could actually help reduce your FX exposure incurred from your foreign currency investments. So again, another reason why there would be no reason for you rule out capital securities. So on balance, between the different options, again, how much allocation are you thinking of in terms of expense? And what are your thoughts in terms of weighing the pros and cons of different options?

[Interpreted] This is [ Yongin Choi ], Head of the Actuarial team. Let me take your first question. So as you mentioned, we did incur a loss from the part-type annuity products that were previously sold as actual life expectancy was improved versus our initial underlying assumptions. So we did see an increase in the payout of claims for that block of products. So the changes were reflected into the actuarial assumptions for the fourth quarter, and the loss amount was KRW 300 billion. So conservatively, assuming that this kind of pickup in the payout does -- or is sustained, we are expecting perhaps annual loss from this type of product between KRW 200 billion to KRW 300 billion. However, this is an issue that we, as a company, are sufficiently aware of. And despite this type of product, we expect continued upside in overall insurance earnings by securing more high-quality new business CSM and also more tighter management of our in-force book and efficiency.

[Interpreted] Yes. This is [ Won Changyi ], Head of RM. Thank you again for your question. So given the forecast for further fall in interest rates, we are placing priority on tight ALM management, namely securing new business CSM and also purchasing long-dated bonds. And apart from the ALM measures, since 2022, we have seeded our contracts to co-insurance 4x, and we're very much open to different options that we are currently examining, which does include capital securities, as you mentioned, also the designation as long-term stockholdings. And particularly regarding the issuance of the capital securities, the instruments, we are still in the process of actively examining it as an option. But the decision would have to come after thoroughly weighing the pros and cons, especially in comparison -- or when comparing the cost versus the use of co-insurance. And we'd also have to take into consideration different external environmental conditions as well. So again, these matters are not decided at the moment. So once we are finalized, we will follow up with you.

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

[Interpreted] Yes. I'd also like to ask some questions. It seems not just for the fourth quarter but on a full year basis for all of 2024, you have seen a slight -- or deterioration year-on-year in terms of your insurance profits. And one of the factors were that you just mentioned, the loss-making block. Also, it seems that there was a variance, also some adjustments of the components of liability for incurred claims in the fourth quarter and also in the previous quarter. So what is the likelihood that this kind of situation for incurred claims may repeat itself, particularly the fourth quarter? Also, in terms of variance, it seems that your expense variance in particular was deteriorated in the fourth quarter. And this may actually include some noncurrent or non-ordinary reasons or components. So if you could split out some of the factors, it would be helpful in formulating our outlook for 2025. And then moving on, in terms of your value-up program, you have not specified a particular time line. When do you think you would be able to provide more details on the exact time line? And also, since the capital market -- or the enforcement decree to the Capital Markets Act has been approved, going forward, you will have to file disclosures about the purpose of holding treasury shares, also your plans on how to dispose of or use those treasury shares. So what is the company's thinking with -- in that regard?

[Interpreted] Yes. This is [ Yongin Choi ], Head of the Actuarial team. So in terms of the liability for incurred claims, as of the fourth quarter, the amount of loss was about KRW 30 billion. On a full year basis, it was KRW 170 billion. So as you know -- or as you may know, there was a bit of an increase in outstanding insurance claims. And so that was reflected into the actual assumptions as of the fourth quarter. And of course, also any update to the experience statistics. It also has an impact on the assumptions. But as a result, that led to the KRW 170 billion in related loss. But because this was largely expected and factored into our assumptions in the fourth quarter, we do not anticipate a major swing like this next year or in the current year. Let me explain about our variance for the expense. So the total amount there was about KRW 200 billion. This is on account of an increase in certain cost items, but the big part about KRW 100 billion or more is due to one-off factors, including our employee welfare fund, also [ PS ] payments for our employees as well. So when we take out the impact of those one-offs, it is actually quite consistent with last year's levels.

[Interpreted] Yes. This is [ Lee Wonsung ], the CFO. Let me take your second question. So I do understand that there is a great deal of attention and interest in terms of the exact timing of our value-up program, when it will be announced, especially following the value-up program announcement by our affiliate, Samsung F&M, as of the end of January. But I do apologize as we're not able to share those details with you just yet because, at the moment, we're still exploring different measures and options. So our utmost priority would be to achieve greater shareholder returns through our value-up program, and we intend to continue to gradually expand our payout in the mid-term to achieve our 50% target. And we will also do our best to come up with a sustainable set of plans and measures to deliver on our mid- to long-term growth strategy and also different measures to boost and enhance our profitability so that we can earn the trust and confidence of our investors. And under the broad banner of enhancing our company value, we are again considering a wide range of different measures for the mid- to longer term, including existing and new treasury shares.

[Interpreted] Yes. This is [ Ho Jongmu ], Head of the Management Support team. I do understand that there is some concern in the market as our insurance profit declined to KRW 542 billion as of 2024. But as our actuarial team had mentioned, in 2024, we did see a significant number of one-off factors, including the variance, also the incurred -- liabilities for incurred claims. However, starting from 2024, Samsung Life, we have been focusing on sales of higher-margin health-related products to boost new business CSM, which we have started to achieve. Also, we're improving the tight management of our in-force book, improving lapse and other efficiency metrics for our CSM balance to improve our CSM profit. And with those measures, we intend to achieve insurance profit of above KRW 100 million for 2025.

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

[So this is a clarification from the translator because the last number, I think I was mistaken. The 2025 insurance profit target is KRW 1 trillion. Sorry, I misspoke.] [Interpreted] And this is the next question from analyst Kim Do Ha. I think this was partially covered earlier, but I would just like to hear more about your CSM adjustment factors. You did talk about the impact from your loss-making block for part-type annuity. I imagine there would be other detractors that reduce CSM. So if you could elaborate further. And then also regarding your insurance finance cost, could you also elaborate more on those items in terms of your CSM? Also, the discount rate curve has been made public as of January, and it is currently down by about 20 basis points. So what kind of expected impact do you think that will have on your K-ICS ratio? And regarding your 180% level, could you elaborate further on your plans, especially in terms of what level you are looking at from the perspective of expanding your shareholder returns?

[Interpreted] Yes. Let me address your questions. This is [ Yongin Choi ] from the actuarial team. So as of the fourth quarter, our total CSM adjustment was KRW 650 billion. To break it down, KRW 300 billion were ordinary or current adjustments from lapse or cancellation of policies, KRW 200 billion impact from changes to the insurance regulations. Also, changes at the end of the year to assumptions led to another KRW 150 billion. And your second question regarding the CSM amortization -- or CSM profit, excuse me, and the insurance finance cost, let me tie them together to answer. So as we applied the guidelines by the FSS regarding lapsed policies, there was a bit of a trade-off between the insurance side and insurance finance accounts. And apart from the KRW 300 billion in loss, again, from the part-type annuity products, there was KRW 120 billion -- KRW 120 billion in CSM loss and then KRW 70 billion decrease from amortization of CSM. So on the insurance side, again, CSM amortization or profit decreased. And there was an increase in CSM loss. But this was largely offset by the KRW 340 billion decrease in the insurance finance-related costs, namely in terms of interest expense. But this time around, the -- our insurance finance expense reflects the impact of the FSS guidelines. So this is more of a temporary effect. But going forward, I think you should see levels that are more consistent with market interest rates and changing market conditions.

[Interpreted] Yes. This is [ Won Changyi ], Head of RM. Regarding the impact from the lower discount rate, we are still in the process of doing the final closing for our K-ICS ratio for the end of 2024. And that work will be complete by the end of March. While we do not have the exact figure available now, we are expecting somewhere low to mid-180%. Regarding the impact of further lowering of the discount rate early 2025, in terms of interest rate sensitivity, for a 10 basis point movement in interest rates, this impacts our K-ICS by about 2 to 3 percentage points. But we are making various efforts on a current basis to improve our K-ICS, and regardless, we expect to maintain K-ICS ratio consistent to the level as of the end of 2024.

[Interpreted] And let me just add. This is the CFO. So our goal at the moment is to maintain current level of K-ICS, but we do need some time for the new scheme to become more stabilized. And so we feel the need to formulate a comprehensive set of policies and measures. So K-ICS target or level of low to mid-180%, we think, is quite significant even when assuming very extreme stressed conditions. With more than 30%, 40% drop in interest rate and share prices, we believe we will still be able to remain above -- 150% or above. And even based on the robust and stable earnings driven by net increase in CSM, even after raising our payout to 50%, we still expect to be able to maintain current K-ICS levels. And so based on our very strong earnings fundamentals and KRW 7 trillion in terms of the profit pool available for dividends according to the commercial code, we will make our final decision. Always mindful not to compromise shareholder value.

[Interpreted] So actually, my question was asking in terms of the level of the K-ICS ratio that you want to maintain, is mindful of expanding your shareholder return. So what level would allow you to continue to expand shareholder return? You did mention 150% even under very stressed conditions. So could you clarify?

[Interpreted] Yes. So you are correct.

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

[Interpreted] Yes. I would also like to ask some questions. First, regarding your shareholder return policy goals. In your side, you mentioned in the mid- to long term, you want to boost it to 50%. So what time line should we have in mind? By when do you mean you intend to achieve 50%? And second, regarding CSM, I think you mentioned that you expect the CSM multiple to improve in the mid- to longer term. So for this year, what level of CSM as the multiple are you thinking of? And what is your new business CSM target for this year?

[Interpreted] Thank you for your question. Let me answer that. I'm the CFO. So because we have not publicly announced our value-up program yet, instead of suggesting a specific period, let me just say it would be fair to think in the next 3, 4 years.

[Interpreted] This is [ Lee Donghun ], Head of Channel Marketing. Let me take your second question. So for 2025, we expect even tougher external business conditions to persist given the falling interest rate environment, also regulatory tightening. However, in 2024, we have seen a significant increase in the scale of our distribution organization with more than a 5,000-plus increase in our exclusive FC channel. And the share of health-related CSM as a percentage of total new business CSM also increased by 21 percentage points year-on-year. It is now at 58%. So against that context, we are preparing for 2025 in 3 big ways. So based on our expanded [ SV ] channel, we want to increase the volume of our sales. In terms of our product portfolio, we want to increase the health mix up to 70% to further boost our profitability. And third, we will enforce stronger efficiency management measures. And so through these measures, we will work hard to maintain CSM -- new business CSM and our CSM multiple consistent to 2024 levels. And let me add regarding our new business multiples. So our target CSM multiples are 14 to 15x for health, 6x for mortality or death cover and 1x or more for savings annuities. But we will continue our efforts to maintain upside trends to deliver levels consistent with last year by adjusting volume and also improving the sales attributes and profile.

[Interpreted] Yes. If I may ask just one more question on CSM. It seems that overall, you are looking to improve the efficiency of your in-force CSM. Last year, I think you did incur CSM adjustment of around KRW 300 billion on a quarter -- every quarter on a recurring basis. So will the pattern be similar this year or improved? What is your view?

[Interpreted] Yes. This is [ Yongin Choi ], Head of the Actuarial team. So last year, on a quarterly basis, we did see about KRW 300 billion in CSM adjustments due to changes to in-force policies. But starting in the second half of last year, we have been making an all-out effort company-wide to improve the efficiency metrics, including lapse or cancellation. So up to December last year, we were working to broaden consensus across the company and organization and building out the relevant infrastructure, which is why we did not see any major impact to our performance in a visible way. But from what we have been seeing from January to February, it seems that for 2025, a lot of these efforts will really translate into some more visible impact throughout the year. And so that is why we expect the CSM adjustments to improve versus the prior year levels.

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

[Interpreted] Yes. I think we had lots of questions today, which reflects a lot of interest from the market. And a lot of what I was wanting to ask was covered. So let me just ask one thing. You mentioned that you're examining different options in terms of what you will do with existing or new treasury shares. So if you look at what Samsung F&M did in the past, anytime it was considering buybacks, it did have -- it did face some constraints. Perhaps they had to seek approval from the Fair Trade Commission or other authorities or one of the other group companies as well. So in your plans in terms of share buybacks for existing or new treasury stock, what kind of constraints are in place, would you say, just from a legal perspective, also in terms of your relationship with the other affiliates?

[Interpreted] This is [ Lee Wonsung ], the CFO. So in terms of what kind of legal measures, also other factors that we would have to consider as a constraint, there are none. And in terms of our treasury shareholdings, in terms of -- well, actually, they are already -- well, they will be deducted from our available capital at acquisition cost. So even upon cancellation of shares, they do not impact our K-ICS ratio. And so we will try to expedite so that we can come up with a comprehensive value-up program that includes our growth plans, also our plans to improve profitability, also our capital management plans as well. We'll try to get that to you as quickly as possible.

[Foreign Language] This ends the conference call for Samsung Life for 2024. Please contact the IR team with any more questions. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]