Korean Reinsurance : 2022 Korean Re Annual Report(fact book)

This fact book was produced in an environmentally friendly way using environmentally friendly paper. Korean Re continues to be environmentally conscious to reduce its impacts on the environment.

1963 2023

Challenge Ourselves,

Change the World

ANNUAL REPORT 2022

FACT BOOK

Anniversary

1963-2023

Korean Reinsurance Company

68 Jongno 5 Gil (Susong-dong),Jongno-gu, Seoul 03151, Korea Tel: [phone] Fax: [phone] www.koreanre.co.kr

Company Profile

Korean Re, the one and only Korean professional reinsurer, started its operations in 1963. Today, we not only deal with most traditional lines of reinsurance business, including property, engineering, marine, casualty, motor, life, and health, but also offer non-traditional reinsurance solutions.

This year marks the 60th anniversary of Korean Re. After six successful decades in the business, it is a matter of great pride to see our company still growing and thriving. As we now begin a new chapter in our corporate history, we are determined to challenge ourselves and change the world by constantly seeking internal innovation in a manner that increases our positive impact on the world around us.

Our new slogan, "Challenge Ourselves, Change the World," embodies the spirit that has driven us forward over the past 60 years and will continue to guide us into the future. We have grown from a small local reinsurer to one of the leading players in Asia and beyond. We could not have been where we are now without constantly challenging ourselves to expand into new markets across the world. This undertaking to explore global markets has led us to a point where 26.5% of our business comes from overseas. Currently, Korean Re has 12 overseas presences across the world - four subsidiaries, four branches, and four liaison offices.

Furthermore, we have continued to challenge ourselves to improve our organizational structure in a way that best leverages our resources. An effectively organized structure provides a business and its employees with the environment and resources they need to perform at their very best every day, contributing to value creation for the organization, its employees, and other stakeholders.

Contents

This report is also published online at: www.koreanre2022.annualreport.kr

03 Company Profile

1. Message from the CEO

1. Financial Highlights 2022

1. Review of Operations
2. Premium Growth

1. Underwriting Performance
2. Investment Performance

1. Financial Review

1. Consolidated Statements of Financial Position
2. Consolidated Statements of Comprehensive Income
3. Consolidated Statements of Changes in Equity

1. Consolidated Statements of Cash Flows
2. Organization
3. Global Network

03

Message from the CEO

We achieved a strong year-on-year growth of 16.4% in gross written premiums, with net written premiums growing by 21.1% in 2022.

Profitability has been another crucial pillar of our business strategies over the last few years. By tightening our underwriting guidelines, we have focused on increasing our retention of good risks and building optimal treaty schemes. Our underwriters have become more selective in what new or existing business they want to pursue, helping to reduce the volatility of our business results.

Effective portfolio management has been a critical driver of our endeavors to ensure a stable and profitable business performance. The share of our overseas business increased from 23.1% in 2017 to 26.5% in 2022, and diversifying the overall portfolio has contributed to stabilizing our underwriting results. Based on the underwriting expertise and experiences that we have built over the last 60 years, we have been able to actively respond to market cycles and readjust our business portfolio in ways that have reduced the fluctuation of business results and improved profitability.

On the investment side, we have taken a flexible

Korean Re has ceased to invest in new construction of coal mining and coal-based power plants, and has not been providing facultative reinsurance covers for such new coal projects since January 2023.

Korean Re is celebrating its 60th anniversary in 2023. In Asian culture, 60 years marks one full cycle of life, and the 60th birthday is regarded as a monumental point and the beginning of a new life cycle. We are both happy and grateful to enter into 2023 to start a new corporate life cycle, setting off to reinvent ourselves to bring innovation to our business and work toward a better future. As we have grown steadily in lockstep with the growth of our clients over the last six decades, we will continue to remain a solid partner for them.

Now that we begin a new chapter in our corporate history, we are determined to challenge ourselves and change the world by constantly seeking internal innovation in a manner that increases our positive impact on the world.

In 2022, Korean Re made important strides forward, delivering steady growth and stable profit. We achieved a strong year-on-year growth of 16.4% in gross written premiums, which totaled KRW 9,878.6 billion, with net written premiums growing by 21.1% to KRW 7,337.6 billion. This robust top-line performance was driven by our new coinsurance business and a sharp recovery in premium growth for our overseas business. We also reported a bottom-line increase of 2.9%, with after-tax net income amounting to KRW 157.9 billion. At the end of 2022, our total assets increased by 14.2% year on year to KRW 14,978.1 billion, while there was an 18.8% rise in invested assets, which totaled KRW 8,534.7 billion.

Our business growth has been supported by continued efforts to explore new markets. Global business expansion has been an important pillar of our business strategies to drive growth. Currently, Korean Re has 12 overseas operations across the world - four subsidiaries, four branches and four liaison offices. Half of them were established over the last six years, meaning that our global expansion initiative has notably accelerated in recent years. Since 2020, we have successfully set up a subsidiary in New Jersey, USA, and one branch in Shanghai, China, and a representative office in Bogotá, Colombia. This drive to take our operations into overseas markets will continue going forward.

approach in managing our alternative investments and loan portfolio in response to market changes and regulatory developments. As a result, we continued to deliver a solid investment yield of 3.5% in the face of a volatile market environment in 2022.

In the run-up to the implementation of IFRS 17 in 2023, the Korean insurance industry had a busy year in 2022 with finalizing its transition to the new reporting regime. Korean Re is likely to experience a smooth transition to IFRS 17, as we have been proactive in preparing for IFRS 17 by raising capital and managing financial solvency effectively.

In terms of our environmental, social and governance (ESG) drive, 2022 was a significant milestone as we declared our intention to phase out coal financing. In line with this declaration,

The economy is set to have a tough year in 2023 with weak growth prospects, and that will present a challenge to our business. Nevertheless, Korean Re is ready to move forward fearlessly, building on its successful 60-year track record.

I would like to thank all our shareholders, clients, and partners for putting their trust in Korean Re. We will stay true to our commitment to ensuring growth and value for all our stakeholders.

Thank you.

Jong-Gyu Won

President and CEO

04

Korean Re

05

Financial Highlights 2022

	FY 2022	FY 2022	FY 2021		FY 2021
	(KRW billion)	(USD million)	(KRW billion)		(USD million)
For the Year
Gross Written Premiums	9,878.6	7,600.2	8,488.7		7,385.2
Net Written Premiums	7,337.6	5,645.3	6,060.9		5,273.0
Net Income	157.9	121.5	153.3		133.4
At the Year End
Total Assets	14,978.1	11,704.4	13,115.7		10,956.2
Insurance Contract Liabilities	8,427.6	6,585.6	7,377.6		6,162.9
Total Shareholders' Equity	2,819.5	2,203.3	2,525.7		2,109.9
Financial Ratio (%)
RBC Ratio 1		180.8		187.9
Combined Ratio 2		100.7		100.9
ROA		1.1		1.2
ROE		5.9		6.2
Payout Ratio		33.4		35.0
EPS (KRW, USD) 3	1,132	0.87	1,186
	1.03

• All figures are based on K-IFRS and the Consolidated Financial Statements of Korean Re. The conversion from KRW to USD is shown here for information purposes only.

Net Written Premiums

(Unit: KRW billion)

				7,337.6
5,318.0	5,533.0	5,900.1	6,060.9
FY 2018	FY 2019	FY 2020	FY 2021	FY 2022

Investment Yield*

4.0% 3.8% 3.7% 3.5%

3.0%

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

• Gains and/or losses from foreign exchange hedging for insurance liabilities have been excluded.

Combined Ratio*

100.6%	100.6%	100.9%	100.7%
	100.1%

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

* Excluding foreign currency evaluation effects

Return on Equity (ROE)

8.0%

5.8% 6.2% 5.9%

4.7%

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

1. Risk-basedcapital ratio (solvency margin ratio)
2. Excluding foreign currency evaluation effects
3. In December 2022, Korean Re issued bonus shares to its shareholders. To ensure a valid comparison of earnings per share (EPS), the weighted average shares outstanding have been adjusted to include the bonus shares. The EPS for the year ended December 31, 2022, and the comparative prior period presented have been restated to reflect this adjustment.

Total Shareholders' Equity

Dividend per Share

(Unit: KRW billion)			(Unit: KRW)
		2,819.5	500	525
2,456.0	2,455.9	2,525.7	450	430
2,237.6

Financial Strength Ratings

AStable

A.M. Best • S&P (2022)

06

RBC Ratio*

180.8%

* Solvency Margin Ratio (2022)

ROE

5.9%

(2022)

Korean Re

275

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

07

Review of Operations

I. Premium Growth

In 2022, Korean Re achieved double-digit growth in gross written premiums on the back of new

investment results, with an investment yield of 3.5%. Our investment profit improved to KRW

Breakdown of Gross Written Premiums

(Units: KRW billion, USD million)

coinsurance transactions. We wrote gross premiums of KRW 9,878.6 billion in 2022, up 16.4% from the previous year. It was encouraging to see our book of business grow strongly both at home and abroad.

Our domestic business generated KRW 7,257.1 billion in gross written premiums, up 16.1% from the prior year. Excluding coinsurance business, the growth rate would slow to 3.2%, with long- term and property lines of business boosting our domestic business growth.

There was a sharp recovery in overseas business, with premiums surging by 17.2% to KRW 2,621.5 billion. This notable turnaround was backed

263.6 billion, excluding gains and/or losses from foreign exchange hedging for insurance liabilities, compared to KRW 244.9 billion in the prior year. The current rising interest rate environment has altered the investment landscape, boosting returns on our new investments, especially in fixed-income assets. We are seeking various methods to capitalize on this high interest rates period, such as contracting bond forward derivatives to maintain a high level of profit

and pursue an asset liability management simultaneously.

Moving into 2023, we will strive to build portfolios that are fundamentally sound and resilient against a potential increase in market uncertainties.

Domestic Property 1

Domestic Engineering, Marine & Aviation

Domestic Casualty

Motor, Surety & Agriculture

Long-term

Financial Solutions

Domestic Life & Health

Overseas Life & Health

International Treaty

International Facultative

Overseas Operations 2

Total 3

FY 2022 (KRW)		FY 2022 (USD)	FY 2021 (KRW)		FY 2021 (USD)	YoY Change*
652.1	501.7		611.2	531.7		6.7%
647.2	497.9		564.0	490.7		14.7%
655.3	504.2		685.3	596.2		-4.4%
1,145.3	881.1		1,209.4	1,052.2		-5.3%
2,746.9	2,113.4		2,531.5	2,202.4		8.5%
801.7	616.8		0	0		n/a
862.0	663.2		856.8	745.4		0.6%
457.0	351.6		452.4	393.6		1.0%
1,078.1	829.4		923.4	803.4		16.8%
296.8	228.3		270.3	235.2		9.8%
536.3	412.6		384.4	334.4		39.5%
9,878.6	7,600.2		8,488.7	7,385.2		16.4%

by global market hardening, which is likely to continue for the time being in conjunction with a shortage of reinsurance capacity.

Alongside gross premium growth, our net written premiums rose by 21.1% to KRW 7,337.6 billion in

Our asset management strategy will be focused on mitigating potential market uncertainties while maintaining our investment income. We will achieve this goal by making a meaningful reduction in the risks associated with our investment portfolio. More specifically, we intend

* YoY change is based on the value in KRW.

1. Domestic property includes nuclear insurance.
2. Overseas operations include KRUL, KRSA, and branches in Singapore, Labuan, Dubai, and Shanghai.
3. Individual figures may not add up to the total shown due to rounding.

1. Domestic Property

(Units: KRW billion, USD million)

2022. As we held on to our selective retention of profitable business, the overall retention rate went up to 74.3% from 71.4%.

Our underwriting profitability modestly improved in 2022, with the combined ratio decreasing by 0.2%p to 100.7%. We saw our underwriting losses

to increase the weight of Treasury bonds in our portfolio while decreasing the relative importance of corporate bonds and alternative investments.

We will also respond proactively to major regulatory changes to ensure stable investment results, building on the strength of our investment

Fire

Comprehensive

Korea Interest Abroad (KIA)

Nuclear Insurance*

Total

FY 2022 (KRW)		FY 2022 (USD)
111.9	86.1
422.6	325.1
111.2	85.6
6.4	4.9
652.1	501.7

FY 2021 (KRW)

121.3

400.2

83.8

5.9

611.2

FY 2021 (USD)

105.5

348.2

72.9

5.1

531.7

narrow to KRW 50.2 billion as we continued to readjust our business portfolio and maintain underwriting discipline. Our underwriting performance, excluding COVID-19 losses, actually improved with a profit of KRW 10.5 billion.

Our underwriting deficit was softened by gains on the investment portfolio in 2022. Backed by a significant increase in our invested assets and portfolio diversification, we delivered robust

assets. We will also continue to seek out new investment opportunities and strategies to maximize overall profitability throughout the year.

* Nuclear insurance includes overseas business.

2. Domestic Engineering, Marine & Aviation

(Units: KRW billion, USD million)

		FY 2022 (KRW)		FY 2022 (USD)		FY 2021 (KRW)		FY 2021 (USD)
Engineering	297.7	229.0	244.3	212.5
Hull	205.2	157.9	176.4	153.5
Cargo	92.6	71.2	71.7	62.4
Aviation	51.6	39.7	71.6	62.3
Total	647.2	497.9	564.0	490.7

• Individual figures may not add up to the total shown due to rounding.

08

Korean Re

09