Korean Reinsurance (Korean Re) has delivered strong underwriting results for 2017 despite a series of large loss events in the second half of the year. Its underwriting income last year surged by 59% to KRW82 billion ($76 million), the second highest on record, on the back of strict underwriting discipline and portfolio readjustment.
Large natural catastrophes such as Hurricanes Harvey, Irma and Maria (HIM) eroded net income by KRW48.6 billion. The company sustained KRW47.6 billion in losses from HIM, and KRW16.5 billion in losses from Typhoon Hato in Hong Kong, reports Newsworld.
The combined ratio improved to 98.3% from 98.8%. Domestic commercial lines posted a particularly robust combined ratio of 90.6% compared to the previous year’s 93.1%. In the overseas market, Korean Re increased its business in profitable markets and reduced participation in poorly performing treaties such as US liability and Chinese property to improve overall profitability.
Net income for the year, however, decreased by 2% to KRW133 billion due to weaker investment results. A strong won also had a negative impact on the company’s bottomline.
Korean Re reported a 7.9% increase in gross written premiums to KRW7,185.5 billion for 2017 compared to the prior year’s 4.7% growth.
Domestic business continued to perform robustly, with premiums from domestic personal lines rising by 9.5% year over year due to the effect of a rise in primary long-term insurance rates and increased writings of profitable life business.
Domestic commercial business grew by 2%, and the main drivers of growth were the expansion of the mobile phone insurance market and new business of satellite and offshore wind power risks. Overseas business also showed an improvement in growth to 12.9% in 2017 from 6.9% in 2016, as the company increased its facultative business and focused on profitable business in the developed market.
Korean Re is also planning to set up a subsidiary in Zurich by June 2019 as a springboard for its operations in Europe. The company expects the volume of its European business to increase from the current $200 million to over $300 million by 2025.
The new entity in Switzerland will be Korean Re’s second base in Europe following the one established at Lloyd’s of London in the United Kingdom in 2015. The company entered the Lloyd’s market by establishing Korean Re Underwriting.
Given the uncertainty surrounding Brexit and a potential decline of the London insurance market as the international insurance hub, Korean Re will rely on the Swiss entity to continue with its business expansion strategy in Europe and to ensure continuity for its EU business after Brexit. Korean Re has focused on global business expansion to explore new market opportunities. It recently opened two branches in Labuan and in Dubai, which started operation in July 2017 and January 2018 respectively. In China, Korean Re is awaiting approval for a licence for its Shanghai branch.