Meritz F&MMeritz F&MFY2011 Financial Results & Embedded ValueFY2011 Financial Results & Embedded Value

FY2011 Financial Results & FY2012 Business ForecastFY2011 Financial Results & FY2012 Business Forecast

FY2011 Embedded ValueFY2011 Embedded Value

Q & AQ & A

1

FY2011 Financial Results FY2011 Financial Results & FY2012 Business Forecast& FY2012 Business Forecast

DisclaimerDisclaimer

This material has been prepared based on internally audited figures and final figures may change due to the results of an independent audit without notice.

This presentation includes forward-looking statements regarding the company’s outlook for FY2012 and beyond, including projected premium and net income. These forecasts are subject tounknown risks and uncertainties that may cause actual figures todiffer from those stated or implied by such statements. We have no obligation or responsibility regarding investment made based on such forward-looking statements.

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Contents

FY2011 Financial ResultsFY2011 Financial Results2

3

About Meritz F&MAbout Meritz F&M1

FY2012 Business ForecastFY2012 Business Forecast

4History

Era of Growth(1983~2004)

Second rebirth (2005~ )

Rebirth (1950~1982)

Era of foundation & exploration(1922~1949)

1996.05 Total assets exceed W1trn

1983.12 Head office relocated to Yeoido

2011.11 Total assets exceeded W8trn

2011.10 Total Invested Assets exceeded W6trn

2011.03 Founding of Meritz Financial Holding

2010.08 Acquisition of Meritz Business Service (MBS) as subsidiary

2010.04 Founding of ‘Meritz Securities’ (Merger of Meritz Securities and Meritz Investment Bank)

2009.12 Founding of Ritz Partners (Sales Subsidiary)

2008.07 Founding of Meritz Asset Management

2008.04 Founding of Meritz Financial Information Service

2006.11 Acquisition of Meritz Investment Bank as subsidiary

2006.02 Stock split 10:1 (W5,000 →W500)

2005.11 Acquisition of Meritz Securities as subsidiary

2005.10 Rechristened Meritz Fire & Marine Insurance, Head office relocated to new building in Kangnam

2005.03 Disaffiliates from Hanjin Group

1976.12 Sales exceed W10b, a first among Korean insurers

1967.07 Hanjin Group acquires Oriental Fire & Marine Insurance

1956.07 IPO on KSE, becoming Korea’s first listed insurer

1950.05 Rechristened Oriental Fire & Marine Insurance

1922.10 Founding of Chosun Fire & Marine Insurance

(Korea’s first non-life insurance company)

Shareholders Structure

Spin-off(2011.3.25)

Affiliates

MeritzFinanceHoldings

MeritzSecurities

RitzPartners

MeritzFinancialService

MeritzAsset

Management

40.0% 100% 100% 100%

MeritzBusinessService

100%

MeritzF&M

50.01%

MeritzF&M

Jung-ho Cho

74.4%

Major shareholder’s stake : 50.15% Meritz Finance holdings 50.01% (48,357,743 shares)

Shareholders (2011.3.31)

Meritz Financial holdings

Affiliates

Domestic investors

Foreign investors

ESOP

Free-float : 46.0%Foreign investors : 13.24%, domestic : 32.76%Major institutional investors :NPS 7.96%, KB Asset management 5.74%,Allianz global investors 5.42%

50.17%

13.24%

32.77%

2.19%

1.63%

Share Price Performance

1.66

4,575

13.72

554

07.03.31

0.90

4,293

-

-800

09.03.31

1.85

4,864

13.15

684

08.03.31

1.26

9,217

6.72

1,727

2012.2.29

1.461.10(Adj) PBR

8,5526,457(Adj) BPS

8.255.90(Adj) PER

1,244

2010.3.31

1,516(Adj) EPS

2011.3.31(KRW, x)

Meritz, Industry, KOSPI Performances (06.03.31~ 12.3.31)

100.0%

KOSPI148.1%

Meritz282.3%

Top 4 221.8%

Insurance150.2%

2006/3/31 2007/3/31 2008/3/31 2009/3/31 2010/3/31 2011/3/31 2012/3/31

Meritz

KOSPI

Insurance

Top 4

Dividends

32.5%4.5%W 120.9 bnW450(39.3 bn)FY10

FY09

Dividend Net income Dividend ratio Payout ratio

FY06 W100 W 35.8 bn 1.4% 22.2%

FY07

Interim W 100 (11.8 bn) W 56.9 bn 1.1% 20.7%

Year-end W 125 (14.2 bn) W 71.1 bn 1.4% 20.0%

Total W 225 (26.0 bn) W 71.1 bn 2.5% 36.6%

FY08

Interim W 50 (5.3 bn) W 42.3 bn 0.6% 12.6%

Year-end - W -58.8 bn - -

Total W 50 (5.3 bn) W -58.8 bn 0.6% -

W300(32.0 bn) W 140.4 bn 4.0% 22.8%

FY11 W550(53.2 bn) W 164.6 bn 4.1% 32.3%

Samsung Hyundai Dongbu LIG

Payout ratio 26.1% 35.3% 20.3% 35.5%

Dividend yield 1.6% 2.4% 2.0% 1.9%

[Dividend History] The first insurance company to pay an interim dividend (Sep 2007)

[FY10 Industry Dividend]

Our Management

- CEO of Meritz Insurance since June 2011

- CFO of Meritz Insurance, Head of strategic planning division (May 2005 – May 2011)

- Current member of Korean Actuarial Association

- More than 20 years in the non-life insurance industry

- Actuary and risk management manager of Samsung Fire & Marine (2005)

CEO: Jin Kyu Song

Chairman: Jung Ho Cho

CFO: Tae Koo Kang

- Chairman of Meritz Insurance since 2003

- Chairman & CEO of Meritz Securities (2003)

- Vice Chairman & CEO of Hanjin Securities (1999)

- Swiss International Institute for Management Development (MBA)

- CFO of Meritz Insurance since June 2011, head of strategic planning division

- Meritz Insurance (July 2008 – May 2011)

- Strategic planning division in Samsung Group / Business management and risk management of Samsung F&M (2007)

- University of Michigan (MBA)

ContentsContents

2

3

1

FY2012 Business ForecastFY2012 Business Forecast

About Meritz F&MAbout Meritz F&M

FY2011 Financial ResultsFY2011 Financial Results

10FY2011 Meritz F&M was FY2011 Meritz F&M was ……

StrengthStrength

Competitiveness in profitability, productivity, stability

(Higher ROE, lower L/R & C/R, financial soundness)

ConsistencyConsistency DifferentiationDifferentiation

The path Meritz F&MThe path Meritz F&Mhas followed this year has followed this year

Despite industry’s competition in sales, Meritz F&M has continued to push ahead with its strategy focused on health insurance

Growth strategy focused on core regions for long-term line / Entering selective daily system & mileage auto insurance market in advance / Remodeling in commercial line / Business process innovation

11

120.9

140.4

75.6

35.826.4

19.8

99.6

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011

Growing earning power : Growing earning power : Record high net profitRecord high net profit

FY00~04(avg.)

164.6bn164.6bn

Record highRecord high

(excl. non-recurring effect)

FY2011

(KRW Bn)

12Growing earning power : Growing earning power : Industry leader in earning growthIndustry leader in earning growth

ROE has continued to surpass Top 4 since FY2009ROE has continued to surpass Top 4 since FY2009

Annual earning growth (CAGR) at #1 level in industry during FY20Annual earning growth (CAGR) at #1 level in industry during FY2007~FY201107~FY2011

16.9%15.8%

13.7%12.4%

14.8%

20.8%

23.1%

-17.5%

17.0% 17.1%

FY2007 FY2008 FY2009 FY2010 FY2011

Meritz Top 4

ROE

10.4%

17.3%

6.2%

10.9%

18.1%

메리츠 A B C D

FY07~FY11 CAGR

Note) FY07~FY10 : Based on adjusted net profitNote) ROE in FY07~FY10 : Based on adjusted net profit

ROE = Net profit / Total shareholders’ equity (average outstanding)

FY2011 Meritz

13

(Unit: KRW Bn) FY2006 FY2007 FY2008 FY2009 FY2010 FY2011

Direct premium 2,180.2 2,534.0 2,896.4 3,288.0 3,836.1 4,254.3

U/W Profit -116.0 -77.2 -186.4 -16.4 -95.8 -47.8

Combined Ratio 105.4% 102.8% 108.7% 100.1% 102.4% 101.2%

Net investment profit 159.2 179.2 106.2 207.6 257.0 268.6

Investment Yield 5.9% 5.6% 2.8% 4.9% 5.3% 4.6%

Net Profit 35.8 71.1 -58.8 140.4 120.9 164.6

Adj Net Profit 47.5 84.7 -99.1 154.0 132.3 164.6

Adj ROE 13.7% 18.6% -16.1% 26.2% 18.7% 20.8%

Solvency Ratio(RBC Ratio)

170.4% 235.8% 189.9%230.9%

(269.7%)162.9%

(198.9%)176.1%

-

Overview

Note) FY2008 Unusual factors: RG loss -181.7bn / bad investments write-off -60.2bn / additional DAC amortization -30.2bn

1,234.91,552.8

1,849.62,274.4

2,760.2671.5

685.5

726.7

691.8

776.2

273.8

295.8

320.0

321.9

299.7

3,190.2

796.4

267.7

2,180.2

2,534.0

2,896.4

3,288.0

3,836.1

4,254.3

FY2006 FY2007 FY2008 FY2009 FY2010 FY2011

Commercial

Auto

Long-term

14Sales : Sales : Exceed W4tn based on longExceed W4tn based on long--term line growthterm line growth

FY2011

LongLong--term sales W3.2tnterm sales W3.2tn / LT mix in direct premium written FY06 57% / LT mix in direct premium written FY06 57% →→ FY11 75%FY11 75%

(13%)

(31%)

(57%)

(12%)

(27%)

(61%)

(11%)

(25%)

(64%)

(10%)

(21%)

(69%)

(8%)

(20%)

(70%)

(6%)

(19%)

(75%)Sales(mix)

(KRW Bn)

15LongLong--term : term : FocusFocus on LT health insuranceon LT health insurance

Fierce sales competition among top tiersFierce sales competition among top tiers

→→ Health insurance market slowdown / Rapid growth in savings & proHealth insurance market slowdown / Rapid growth in savings & property insurance marketperty insurance market

Meritz F&M has continued to focus on health insuranceMeritz F&M has continued to focus on health insurance

Industry’s initial P growth by product

31.4%

22.4%

30.9%

-3.1%2.1%

-23.1%

8.8% 16.0%

62.8%

33.7%

84.9%

27.7% 30.0%

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011

Health

Property

Savings/annuities

Rapid growth of savings & property type

Health insurance G/R by company

Health insurance market slowdown

Note) FY2011 figures : As of Feb 2012

FY2011

14.8%

26.3%

7.9%

-20.1%

4.4%

FY2007 FY2008 FY2009 FY2010 FY2011

메리츠 A B

C D

FY2011

Meritz

Note) FY2011 figures : As of Feb 2012

16LongLong--term : term : M/S rise in health market leads earning power growthM/S rise in health market leads earning power growth

10.3%

10.9%

10.5%

11.1%

11.6%

10.8%10.7%10.8%

10.2%

10.7%

10.1%

12.4%

FY06 FY07 FY08 FY09 FY10 FY11

Protection

Health

M/S Trend of protection type

ProtectionP/F

83% 85% 86% 81% 72% 70%

HealthG/R

39% 15% 26% 8% -20% 4%

FY2011 M/S 12.4% in health insurance, C/R of longFY2011 M/S 12.4% in health insurance, C/R of long--term line at #1 level in industryterm line at #1 level in industry

Focus on protection type, maintain savings product mix below 30%Focus on protection type, maintain savings product mix below 30%

20%17%

15% 14%

20%

28%30%

26% 26% 25%

37%

46%

53%

20%

FY05 FY06 FY07 FY08 FY09 FY10 FY11

Meritz

Top 4

P/F Trend of savings type

Rapid increase of savings portion in industry

Meritz’s Cap : 30%

FY11

FY11

Note) FY2011 figures : As of Feb 2012 Note) FY2011 figures : As of Feb 2012 and including annuities

17

82.5%

78.8%79.5%

84.4%

82.4% 82.2%83.2%

85.3%

80.1%

77.5%

85.0%

86.6%

79.3%

FY2006 FY2007 FY2008 FY2009 FY2010 FY2011

Meritz Top 4

Long-term : L/R & C/R at #1 level in industry

LT Loss ratio LT Combined ratio

FY2011

101.3% 101.2%

98.6%

101.5%

103.4%

101.3%

99.6%

101.1%

99.8%

99.0%

103.7%

103.6%

FY2006 FY2007 FY2008 FY2009 FY2010 FY2011

Meritz Top 4

FY2011

Note) FY2011 L/R : Based on K-IFRS (survey fee 0.8%, future survey fee 0.0%)

L/R of Top 4 : As of Feb 2012

(K-GAAP)99.7%

(K-GAAP)

Note) FY2011 figures : Based on K-IFRS / C/R of Top 4 : As of Feb 2012

18

77.1%

80.5%

86.0%

78.2%

84.1%

83.4%

87.1%

FY2006 FY2007 FY2008 FY2009 FY2010 FY2011

Risk loss ratio (incl. IBNR)

(K-GAAP)

Long-term : Risk loss ratio improvement

FY2011

34.9% 32.6% 29.9% 26.7% 24.3%

16.3% 22.1% 27.8% 33.5% 35.9%

28.2%26.6%

24.5% 22.3% 22.0%

20.7% 18.7% 17.8% 17.5% 17.8%

23.4%

38.8%

20.9%

16.9%

FY2006 FY2007 FY2008 FY2009 FY2010 FY2011

Living benefit guaranteed Living benefit non-guaranteed

Death Property & cost

Premium mix by coverage

FY2011

Note) Excl. IBNR / Based on DPE

19

6.1%6.3%

2.3%

2.8%

Auto : On-line M/S upturn & Loss ratio improvement

Sales & M/S Combined ratio

FY2010 FY2011

Loss ratio(YoY)

Expenseratio

82.5%

103.7%

21.2%

76.4%(△3.9%p)

106.9%

23.0%

+1.2%

+18.9%

+5.1%

IndustryG/R

FY2010 FY2011

776.2bn 796.0bn

713.2bn(91.9%)

706.0bn(88.6%)

63.0bn(8.1%)

90.4bn(11.4%)

-0.6%

+43.5%

+2.6%

MeritzG/R

Off-line(mix)

On-line

M/S

Note) FY2011 M/S & industry’s G/R : Preliminary figures

Industry IndustryMeritz Meritz

Note) FY2011 figures : Based on K-IFRS / Industry’s figures : As of Feb 2012

/ Meritz’s survey fee & future survey fee : 7.5%

Combinedratio

Utilize Mileage insurance & Selective daily system Utilize Mileage insurance & Selective daily system (15.4% registered in mileage)(15.4% registered in mileage)

Expand onExpand on--line auto insurance M/Sline auto insurance M/S

L/R improved in industry. Meritz L/R improved in industry. Meritz F&MF&M’’ss L/R improved 3.9%p L/R improved 3.9%p YoYYoY (based on K(based on K--GAAP standard)GAAP standard)

(On-line)113.1% 116.8%

79.6%

33.6%

80.3%(+4.8%p)

36.5%7.5%

83.9%

20Commercial : L/R improvement based on profitable strategy

DPE M/S Loss ratio

Note) Commercial L/R in FY2008 and FY2009 : Excluding RG lossesFY2011 figures : Based on K-IFRS / Industry’s figures : As of Feb 2012

8.5% 8.7%8.4%

7.8%

5.5%

6.8%

FY2006 FY2007 FY2008 FY2009 FY2010 FY2011FY2011

49.8%

58.8%

55.6%

64.8%

53.0%

59.8%61.0%

59.3%

69.7% 70.1%

54.7%

66.2%

FY2006 FY2007 FY2008 FY2009 FY2010 FY2011

Meritz Industry

FY2011

Note) M/S : As of Feb 2012 / DPE (Direct premium written)

DPE M/S 5.5% down 1.3%p DPE M/S 5.5% down 1.3%p YoYYoY due to business remodelingdue to business remodeling

L/R improvement based on profitable strategyL/R improvement based on profitable strategy

(K-GAAP 58.2%)

21Expand base focused on Core regionsExpand base focused on Core regions

Expansion of branches in Core regions

41

16

6

-3

Core regions Strategic regions Managing regions

Head branch Branch

Note) Include closed branches

LT Protection M/S Risk L/Rin Managing regions

18.5%

10.1%

13.0%10.8%

Core regions Managingregions

FY2010 FY2011

+0.7%p

-5.5%p

FY2010 FY2011

102.0%

90.9%

-11.1%p

P/F in auto insurance Auto L/R by region

25.5%

74.5%

23.4%

76.6%

Core+Strategicregions

Managingregions

FY2010

FY2011

+2.1%p

-2.1%p

Core+Strategicregions

Managingregions

74.5%

81.0%6.5%p

FY2011

Note) Classify regions into three groups : Core region / Strategic region / Managing region

(Unit)

22U/W Profits : C/R 101.2% / #1 at L/R in industry

[Combined ratio]

Note) FY2011 figures : Based on K-IFRS / Top 4 figures : As of Feb 2012

105.4%102.8%

108.7%

100.1%102.4% 101.2%

81.1% 82.5%

75.4%

80.4%

103.8%

100.7% 100.9% 100.7%102.3%

101.3%

78.9% 79.3%78.6%

80.8% 83.5%

76.7%78.5%81.5%

24.3% 23.9%

26.2%24.7%

23.1%20.8%

17.3%

21.5%22.7%

24.2%

22.2%22.3%

FY2006 FY2007 FY2008 FY2009 FY2010 FY2011

Top 4

Meritz

[Loss ratio]

[Expense ratio]

Top 4

Meritz

Top 4

Meritz

FY2011

23Invested Asset Portfolio : Focus on fixed income assetsFocus on fixed income assets

(KRW Bn)2010.3 2011.3 2012.3

Mix Mix Mix G/R Profit Yield

Fixed-income asset 3,169.3 68.5% 3,888.5 72.4% 5,034.3 75.8% 29.5% 254.4 5.9%

Performance-based asset 215.8 4.7% 305.9 5.7% 283.7 4.3% -7.3% 15.9 5.6%

Stock-type asset 357.6 7.7% 413.8 7.7% 547.7 8.2% 32.4% 3.3 0.7%

Other 27.4 0.6% 39.2 0.7% 18.9 0.3% -51.8% -7.7 -

Freely invested Assets

3,770.0 81.5% 4,647.5 86.6% 5,884.6 88.6% 26.6% 265.9 5.2%

Equity-method

& real estate857.6 18.5% 720.0 13.4% 757.6 11.4% 5.2% 2.6 0.4%

Total investment asset 4,627.6 100% 5,367.5 100% 6,642.2 100% 23.7% 268.6 4.6%

Total Asset 6,035.0 - 6,973.9 - 8,505.7 - 22.0% - -

Total assets 8.5trn, Invested assets 6.6trn, Investment yield 4Total assets 8.5trn, Invested assets 6.6trn, Investment yield 4.6%.6%

72.4% mix of Fixed income assets72.4% mix of Fixed income assets

Note) Fixed income = deposit, AFS bond, overseas bond, loan / performance based = trading bond, alternative investment /Stock = outsourced investment, trading stock, stock-type AI / Other = Non-operating deposit, Property management fees

ContentsContents

FY2012 Business ForecastFY2012 Business Forecast3

2

1

FY2011 Financial ResultsFY2011 Financial Results

About Meritz F&MAbout Meritz F&M

25

Net profits W195bn, Net profits W195bn,

LT HealthLT Health M/S 15%M/S 15%

Secure IndustrySecure Industry’’s s 1~21~2ndnd rank level of rank level of ROE/Profit Margin ROE/Profit Margin

□□ 3 New growth Momentum3 New growth Momentum

Regional differentiation growth

strategy

Maintain LT health high margin-

focused strategy

Expansion of auto Insurance Stance

Maintain commercial insurance

remodeling, Competitive markets-

centered growth

Stabilized investment strategy

□□ Maintain existing strategy Maintain existing strategy for current marketfor current market

FY2012 New ChallengeFY2012 New Challenge

Great leap in 90th Anniversary ! Meritz F&M New turning point!Great leap in 90Great leap in 90thth Anniversary ! Anniversary ! Meritz F&M New turning point!Meritz F&M New turning point!

□□ Resource allocationResource allocationIntensive investment

in key strategic sectors for

Mid-long term

sustained growth

90th anniversary projects performed

extensively

Dramatically increase sales strength

Secure the highest level of software

competitiveness

11

22

33

FY2012 Three Big New Growth MomentumFY2012 Three Big New Growth Momentum

3 Big New Growth Momentum

33 Big New Growth Big New Growth MomentumMomentum Taking Quality and Quantity Taking Quality and Quantity

to Top tier companyto Top tier company

Meritz F&M is at ..

Mediocre of Industry, 5th ranked,

Small but strong company!…

Differentiated product concept

Service advertising strategy

Perform 90th anniversary

celebration

Reinforcement of exclusive

channel

Always ensure qualitative and

quantitative sales resources

Innovative Customer-centered

/ Field-oriented Process

Customer Service Competitiveness

Successful introduction of next-generation

system

26

27FY2012 Allocation of future business investment

Allocation of Allocation of

investments for investments for

future businessfuture business

9090thth Anniversary Anniversary BusinessBusiness

Investment in massive advertising Investment in massive advertising

and anniversary celebrationand anniversary celebration

→ Boom-up for Meritz

Build virtuous cycle for Build virtuous cycle for

managing sales managermanaging sales manager

incase of vacanciesincase of vacancies

Secure Sales ManagerSecure Sales ManagerPool system Pool system at all timesat all times

Expanding OnExpanding On--line line ChannelChannel

Expanding Expanding BranchesBranches

Increase of 24 branches

centered on core regions

Customer Service Customer Service CompetitivenessCompetitiveness

Remodeling of customer

contact center by regions

Saving cost by relocating of

office space

→ Committed to improving

the business environment

Innovative Innovative office facilityoffice facility

Establishing 5 Out Bound Establishing 5 Out Bound

center and recruitcenter and recruit

representativesrepresentatives

28

GrowthGrowth & Profitability Two major power& Profitability Two major powerDifferentiated strategy to secure both Differentiated strategy to secure both

of them simultaneouslyof them simultaneously

FY2012 Market conditionFY2012 Market condition Key word : Key word : 『『Slow Slow GrowthGrowth』』++『『UncertaintyUncertainty』』

→→ ‘‘ Risk atRisk at all timesall times’’ Management SystemManagement System

: Enhance vital business competitiveness under through risk man: Enhance vital business competitiveness under through risk management, agement,

and focus on development of midand focus on development of mid--long term growth factorslong term growth factors

Promote strategy consistent with market conditionPromote strategy consistent with market condition

11 Differentiation growth strategy by regions

Acquisition of opportunities and Acquisition of opportunities and aggressive strategy under slow growing aggressive strategy under slow growing

environmentenvironment

22 Maintain LT health insurance centered high margin products

33 Expansion of Auto insurance

Ensure internal business stability with Ensure internal business stability with thorough risk managementthorough risk management

44 Remodeling of commercial line

55 Stabilized investment strategy

Future investment for longFuture investment for long--term term sustainable growthsustainable growth

66 Input of future business investment resources

29Continue to promote Regional differentiation strategy

3

20

5

-1

Core regions Strategic regions Managing regions

Head branch

Branch

18.9%20.3%

6.4% 6.8% 7.4% 7.8%

12.7%

15.4%

FY11 FY12 FY13 FY14

LT Health

Auto

41

16

6

-3

Core regions Strategic regions Managing regions

FY2011 Results

FY2012 Plan

Head branches/branches expansion plan Core regions 3-year target

(Unit)

30

15.8% 14.5%

10.7%

LT New Prem M/S & G/R Long-term C/R

Protection Health M/S

12.4%

15.0%

G/R

P/F 85% 86%

(Within Protection)

Protection M/S

10.8%

12.9%

71% 73%

8.5% 8.3%

New premium M/S

(Within New Prem)

FY2011

FY2012

실 적 48.3bn 56.0bn 56.9bn65.1bn 80.1bn 88.6bn

80.1% 80.1%

19.6% 19.4%

FY2011 FY2012

Combined ratio 99.5%99.8%

Loss ratio(Risk loss ratio)

Expense ratio

(87.1%) (84.8%)

Note) Monthly Equivalent Prem standard. Excludes Annuity

M/S

FY2011 FY2012

Sustain LT Health insurance-focused growth strategy

LT profitability improves with expansion of LT ProtectionLT profitability improves with expansion of LT Protection M/S andM/S and P/FP/F

31

10.0%11.1%

11.7%12.2%

Active Elite

7,300(11.0%)

3,300(16.8%)

Passed

4,800(15.8%)

Organization Target Quarterly targets

Note) Active Personnel : LT New Adjusted Monthly Prem Equivalent KRW 500,000 ↑ or Auto KRW 7,500,000 ↑ or Commercial 5,000,000 ↑Elite Personnel : LT New Adjusted Monthly Prem Equivalent KRW 1,000,000 ↑ or Auto 10,000,000 ↑ or Commercial 5,000,000 ↑

New recruitmentNew recruitment : Average monthly targets of: Average monthly targets of 400 passed (G/R +15.8%), M/S 9.3% 400 passed (G/R +15.8%), M/S 9.3% →→ 10%10%

Active personnel: Active 7,300 people (G/R +11%), Elite 3,300 (GActive personnel: Active 7,300 people (G/R +11%), Elite 3,300 (G/R +16.8%) trained/R +16.8%) trained

FY2012(G/R)

FY2011

Passed M/S

Active sales

Sustain LT Health insurance-focused growth strategy: FY2012 Organization Target

(Persons)

32

4 5 6 7 8 9 10 11 12 1 2 3

Health-insurance

(Health) Health-insurance

(Accidents)

90th anniversary products

Health-insurance

(Aging society)

Product Schedule and New Prem Growth

Sustain LT Health insurance-focused growth strategy : New Product Launch Plan

Diversified targeting to customerDiversified targeting to customer needs , and active strategy such as needs , and active strategy such as

balanced growth between companybalanced growth between company’’s line of business and marketss line of business and markets

-- Supply two products to acquire seasonal demands of first half oSupply two products to acquire seasonal demands of first half of FY2012f FY2012

-- Develop 90Develop 90thth anniversary product for new values and earning poweranniversary product for new values and earning power

-- Continuous challenge for aging societyContinuous challenge for aging society

-- Supply corresponding products by Market Sensing Supply corresponding products by Market Sensing

33Maintain Expansion of Auto insurance

FY2011 FY2012

796.4bn(6.1%)

858.2bn(6.5%)

706.0bn(7.2%)

726.6bn(7.7%)

90.4bn(2.8%)

131.5bn(3.4%)

Industry & Meritz F&M Growth Forecast

Off-line

On-line

Combined ratio

Sales(M/S)

G/RMeritz Ind.7.8% 1.5%

M/S

+0.4%p

2.9% -3.9% +0.5%p

45.5% 17.8% +0.6%p

Faster growth than industry focused on OnFaster growth than industry focused on On--line line : Establish 5 new out bound center: Establish 5 new out bound center

Reduction of gap between top tiers with loss ratio targeting 75%Reduction of gap between top tiers with loss ratio targeting 75% (K(K--GAAP)GAAP)

83.9% 82.9%

23.0% 27.3%

FY2011 FY2012

Combined ratio110.2%

106.9%

Expense ratio

FY2011 FY2012

Loss ratio(K-GAAP) (76.4%) (75.0%)

34Maintain Remodeling of Commercial insurance

267.7bn

DPE

Total Commercial line

Competitive Markets

289.2bn

36.5% 41.5%

63.7%64.8%

Combined ratio

FY2012FY2011

101.2%105.1%

Plan to grow faster than industry by focusing on competitive marPlan to grow faster than industry by focusing on competitive markets kets

C/R

E/R

L/R

+8.0%

Note) Competitive Markets : Captive and Meritz F&M’s not involved markets (Cell phone, Foreigners, and overseas non-life insurance market)

Sales M/S

9.2%

5.5% 5.7%

9.8%

FY2011 FY2012

FY2012FY2011

35

Asset portfolio

FY2011

255.4bn286.5bn

41.8bn

14.2bn

Investment profit

FY2012

11.4%

12.8%

75.8%

Real estate

Performance type and etc

Fixed incomeassets

9.9%

12.0%

78.1%

6,642.2bn

7,923.0bnNew Investment

+1,154.1bn

+96.8bn

+29.9bn

+1,280.8bn

FY2011 FY2012

※ ( ) : Investment yield

(4.6%)268.6bn

328.3bn

Maintain Stabilized Investment Strategy

Fixed incomeassets

(4.6%)

+59.7bn

+27.6bn

+31.1bn

Expand fixedExpand fixed--income asset portfolio income asset portfolio (75.8% (75.8% →→ 78.1%)78.1%)

Total investment yield remains same as previous yearTotal investment yield remains same as previous year

36

Expense ratio

20.8%(838.7bn)

FY2011 FY2012

9.4%(422.4bn)

11.8%(477.3bn)

9.0%(361.4bn)

Sales costratio

Admin ratio

21.4%(956.7bn)

0.2%p↑(57.0bn)

0.4%p↑(61.0bn)

0.6%p↑(118.0bn)

12.0%(534.3bn)

Allocation of resources for future business

Administrative ratio

FY2010

361.4bn

90th anniversary business and

investment for future business etc

+39.0bn

9.0%

FY2011

422.4bn

9.4%9.4%Admin ratio

Admin cost

Labor costs 162.6bn

198.8bn

187.5bn

234.9bn

Expense ratio 21.4% : Sales cost ratio 0.2%p, Administrative coExpense ratio 21.4% : Sales cost ratio 0.2%p, Administrative cost ratio 0.4%p increase (st ratio 0.4%p increase (YoYYoY))

Input of W 39.0bn for 90Input of W 39.0bn for 90thth anniversary celebration and investment for future businessanniversary celebration and investment for future business

Expenseratio +61.0bn

0.4%p0.4%p↑↑

+24.9bn

+36.1bn

37

(KRW Bn)FY2011 FY2012

G/R M/S G/R M/S Difference

Long-term

Initial Premium (monthly equivalent) 82.1 9.5% 7.7% 89.6 9.2% 7.1% -0.7%p

Protection 56.9 4.8% 10.8% 65.1 14.5% 12.9% 2.1%p

(Health) 48.3 2.6% 12.4% 56.0 15.8% 15.0% 2.6%p

Savings 25.2 21.8% 4.7% 24.5 -2.8% 3.2% -1.5%p

Initial Premium 96.8 16.8% 6.8% 104.0 7.4% 7.2% 0.4%p

Continuous Prem 3,031.8 16.6% 8.9% 3,458.1 14.1% 8.9% 0.0%p

Sub total 3,128.7 16.6% 8.8% 3,561.9 13.8% 8.9% 0.0%p

Auto

Off-line 706.0 -1.8% 7.2% 726.6 2.9% 7.7% 0.5%p

On-line 90.4 43.5% 2.8% 131.5 45.5% 3.4% 0.7%p

Sub total 796.4 2.6% 6.1% 858.2 7.8% 6.5% 0.4%p

Commercial 267.7 -10.7% 5.5% 289.2 8.0% 5.6% 0.1%p

One-time payment 61.6 -19.5% 2.4% 60.0 -2.5% 7.0% 4.6%p

Total 4,254.3 10.9% 7.6% 4,769.3 12.1% 8.0% 0.4%p

FY2012 Business Plan : Sales Plan

Note) New Monthly Equivalent Premium : Excludes One-time payment and Annuity / New Premium: Includes Annuity, but excludes one-time payment

38FY2012 Business Plan: Summarized Financial Statement

(KRW Bn)FY2012

YoY

Assets

Invested assets 7,923.0 19.3%

Non-invested assets 1,987.5 -1.2%

Total 10,201.3 17.9%

Liability

Policy reserve 8,453.7 19.0%

Other liability 401.0 -38.7%

Total 9,145.0 17.9%

TotalShareholder’sEquity

Capital stock 48.4 0.1%

Capital surplus 261.7 0.1%

Retained earnings 420.0 56.7%

Cat reserve 157.0 9.9%

Capital Adjustment 6.0 16.0%

Other comprehensive income

315.4 -0.2%

Total 1,051.5 17.0%

PofitPofit/Loss/Loss Balanced SheetBalanced Sheet

(KRW Bn)FY2012

YoY

Loss ratio

Long-term 80.1% -0.1%p

(Risk) 84.8% -2.3%p

Auto 82.9% -1.0%p

Commercial 63.7% -1.1%p

Total 80.1% -0.3%p

Expense ratio 21.4% 0.6%p

Combined ratio 101.5% 0.3%p

Investment

Investment profits

328.3 22.3%

(Yield) 4.6% -

Net Profits 195.0 18.5%

ROE 19.9% -0.9%p

39

Certain of the statements contained herein are statements of future expectations

and other forward looking statements that are based on management's current view and

assumptions and involve known and unknown risks and uncertainties. In addition,

expressions and words which are forward-looking by reason of context identify forward-

looking statements. Actual results, performance or events may differ materially from

those in such statements due to general economic conditions, performance of financial

markets, the frequency and severity of insured loss events, mortality and morbidity levels

and trends, persistency levels, interest rate levels, general competitive factors, changes

in laws and regulations, changes in the policies of governments and/or regulatory

authorities. Although the embedded value and value of new business results presented

in this document are based on a traditional embedded value methodology calculated on

a deterministic basis, alternative valuation methodologies and approaches to calculate

these results have emerged. Meritz Insurance assumes no obligation to update any

forward-looking information contained in this report. We also have no obligation or

responsibility to investment made based on such forward looking statements.

DisclaimerDisclaimer 40

41ContentsContents

. Review Statement

Ⅰ. Embedded Value1. Embedded Value results2. Adjusted Net Worth (ANW)3. Value of in-force business (VIB)4. FY2012 Forecast5. RoEV

Ⅱ. Value of New Business (VNB)

Ⅲ. Movement of EV

Ⅳ. P/EV

Ⅴ. Sensitivities

42

Ⅰ. Embedded Value1. Embedded Value results2. Adjusted Net Worth (ANW)3. Value of in-force business (VIB)4. FY2012 Forecast5. RoEV

43- . Embedded Value results

▶▶ FY2011 EmbeddedFY2011 Embedded Value : 2,154.0bnValue : 2,154.0bn (increased by 473.0 (increased by 473.0 bnbn (28.1%) compared to (28.1%) compared to FY2010 (KFY2010 (K--IFRS))IFRS))

Unit : KRW Bn

1,599.11,599.1

753.7753.7Value of in-force business

AdjustedNet Worth

EmbeddedValue

1,041.71,041.7

688.4688.4

131.08.2% ↑

-157.018.6% ↓

845.4845.4

1,316.61,316.6

837.4837.4198.1

31.0% ↑

288.038.2% ↑

1,730.11,730.1

473.028.1% ↑2,154.02,154.0

274.926.4% ↑

639.3639.3

1,041.71,041.7

FY2010(K-GAAP)

FY2009 FY2011FY2010(K-IFRS)

1,681.01,681.0-49.1

2.8% ↓

-49.17.1% ↓

44- . Adjusted Net Worth (ANW)

▶▶ FY2011 ANW : 837.4bnFY2011 ANW : 837.4bn (increased by 198.1bn(31.0%) (increased by 198.1bn(31.0%) compared to compared to FY2010 (KFY2010 (K--IFRS))IFRS))

Unit : KRW Bn

FY2010K-GAPP FY2011

164.6

639.3

837.4

-39.3-21.6

96.0

688.4

FY2010K-IFRS

-49.1

-2.7 Etc.

1.1

Net income

Gain on Valuation Of Available-for-Sale securities

Dividend

Intangible asset

Capital increasewith consideration

※ Reference to the Appendix : Convert to 2010 K-IFRS

Convert to K-IFRS

45- . Adjusted Net Worth (ANW)

Unit : KRW Bn

▶▶ FY2011 ANW Details FY2011 ANW Details

CategoryFY2011

(A)

FY2010 YoY(A-B)

NoteK-IFRS(B) K-GAAP

Shareholder’s

Equity (a)899.0 682.5 615.6 216.5

•Net income : +164.6

•Capital increase with consideration: +96.0

•Dividend : -39.3•Gain on valuation of Available-

for-Sale Securities : -2.7Declared dividend (53.2bn) is

included

-61.6 -43.2 72.8 -18.4

Catastrophe Reserve - - 99.1 -

Allowance for Bad Debt 7.2 4.1 7.0 3.1

Intangible asset -65.1 -43.5 -32.4 -21.6

Prepaid cost -3.7 -3.9 -0.9 0.2

Adjusted Net Worth (a+b) 837.4 639.3 688.4 198.1

Adjusted Capital (b)

46- . Value of in-force business - Assumptions

Operational AssumptionOperational Assumption

Persistency Ratio - Experience analysis on 3-years data Analysis for product type and channel

Loss Ratio(L/R)- Analyze past 6-year data Analysis per 17 benefit categories

- PV of Inforce- Biz L/R : FY2010 89.4% , FY2011 86.8%

Expense Cost

- Commission : Applied Meritz’s payment schedule

- Expense cost excluding Commisson : Experience study on one-year experience

data

Crediting Rates - Applied for traditional /ISP Rates of ISP are applied per types (Saving ISP , Protection ISP , etc.)

47- . Value of in-force business - Assumptions

Economic AssumptionEconomic Assumption

Risk Discount Rate : 11.0% (Previously 11.5%)

Inflation Rate : 3.0%

Tax : 24.2%

Required Capital : Applied 150% of RBC Standard

Investment yield : 4.85%

(Unit : %) FY2011 FY2010 YoY

Investment yield 4.85 5.00 - 0.15%p

- Derived using CAPM(Capital Asset Pricing Model) method

48- . Value of in-force business (VIB)

VIB = Present Value of Future Profit VIB = Present Value of Future Profit –– Cost of Capital = 1,316.6bnCost of Capital = 1,316.6bn

Unit : KRW Bn

Item FY2011 FY2010 YoY

PV of Future Premium (a) 13,851.1 10,936.2 2,914.9 26.7%

PV of Future Profit (b) 1,542.9 1,198.0 344.9 28.8%

Cost of Capital (c) 226.3 156.3 70.0 44.8%

(c/a) 1.6% 1.4% +0.2%p

Value of In-force Business (d = b - c)

1,316.6 1,041.7 274.9 26.4%

Value Margin (d/a) 9.5% 9.5% +0.0%p

49- . Value of in-force business (VIB)

PV of Future ProfitPV of Future Profit Margin : 11.1%, increased by 0.1%pMargin : 11.1%, increased by 0.1%p

Unit : KRW Bn

PV of Future Profit Margin =

itemRisk margin

(ratio)

Savings margin(ratio)

Expense margin

(ratio)Tax & Dividend ( ) Total

FY2011

PV(premium) 4,182.9 (30.2%) 6,896.6 (49.8%) 2,771.6 (20.0%) 13,851.1

PV(profit) 550.9 816.0 709.9 533.9 1,542.9

Margin = / 13.2% 11.8% 25.6% 11.1%

Portion on margin 4.0% 5.9% 5.1% 3.9%

FY2010

PV(premium) 3,242.6 (29.6%) 5,464.9 (50.0%) 2,228.8 (20.4%) 10,936.3

PV(profit) 342.8 675.4 565.4 385.6 1,198.0

Margin = / 10.6% 12.4% 25.4% 11.0%

Portion on margin 3.1% 6.2% 5.2% 3.5%

ChangesDifference - 2.6%p 0.6%p 0.2%p 0.1%p

Portion on margin 0.9%p 0.3%p 0.1%p 0.4%p

PV of Future Profit ( Risk margin + Savings margin +Expense margin – Tax & Dividend)

PV of Future Premium ( Risk premium + Saving premium + Expense loading )

50- . FY2012 Forecast

▶▶ Forecast on Forecast on VIB VIB : 1,608.8bn, increased by 22.2% compared to FY2011: 1,608.8bn, increased by 22.2% compared to FY2011

FY2011 FY2012

PVFP

13,851.1

15.6% ↑

16,011.1

VIB

1,316.6

1,608.8

FY2011 FY2012

※PVFP : PV of Future Premium

Unit : KRW Bn

22.2% ↑

9.5%

10.0%0.5%p ↑

[VM]

※ VM : Value Margin

51

RoEVRoEV

48.9%17.6%p ↓

- . RoEV

※EV : Adjusted EV at BOP

FY2009 FY2010

EV(KRW Bn) 1,073.9 1,610.0

△EV(KRW Bn) 525.2 503.6

FY2011

1,706.9

390.4

31.3%22.9%

8.4%p ↓

※※ Capital increase with consideration, 96bn is excluded in FY2011△EV

52

Ⅱ. Value of New Business (VNB)

53. Value of new business (VNB)

▶▶ ValueValue of 1of 1--year new business : 274.4 year new business : 274.4 bnbn

Unit : KRW Bn

+0.2%p8.3%8.5%Margin (c/a)

Category FY2011 FY2010 YoY

PV of Future Premium (a) 3,776.5 3,209.6 566.9 17.7%

Annualized Premiums equivalent (b) 1,151.8 1,059.0 92.8 8.8%

PV of Future Profit (c) 319.4 267.7 51.7 19.3%

Cost of Capital 45.0 33.8 11.2 33.1%

Value of 1-year New Business (d) 274.4 233.9 40.5 17.3%

Profit Margin (d/a) 7.3% 7.3% 0.0%p

Profit Margin on ANP (d/b) 23.8% 22.1% + 1.7%p

※ ANP : Annualized premiums equivalent

54. Value of new business (VNB)

PV of Future ProfitPV of Future Profit MarginMargin :: 8.5% , increased by8.5% , increased by 0.2%p0.2%p

Unit : KRW Bn

PV of Future Profit Margin =

CategoryRisk margin

(ratio)Savings margin

(ratio)Expense margin

(ratio)Tax & Dividend

( )Total

FY2011

PV(premium) 787.7 (20.9%) 2,263.6 (59.9%) 725.2 (19.2%) 3,776.5

PV(profit) 166.6 172.0 79.2 98.3 319.4

Margin = / 21.2% 7.6% 10.9% 8.5%

Portion on margin 4.4% 4.6% 2.1% 2.6%

FY2010

PV(premium) 729.0 (22.7%) 1,831.8 (57.1%) 648.8 (20.2%) 3,209.6

PV(profit) 118.7 152.7 73.8 77.5 267.7

Margin = / 16.3% 8.3% 11.4% 8.3%

Portion on margin 3.7% 4.8% 2.3% 2.4%

ChangesDifference - 4.9%p 0.7%p 0.5%p 0.2%pDifference on total

margin 0.7%p 0.2%p 0.2%p 0.2%p

PV of Future Profit ( Risk margin + Savings margin +Expense margin – Tax & Dividend)

PV of Future Premium ( Risk premium + Saving premium + Expense loading )

55. Value of new business (VNB)

▶▶ FY2012 FY2012 VNB ForecastVNB Forecast : : 325.0bn (18.4 % increase year325.0bn (18.4 % increase year--onon--year ) year )

FY2011 FY2012

NB Initial Premium

137.4

18.4% ↑

VNB

4,351.3

※PVFP : PV of Future Premium

PVFP

149.5

3,776.5

8.8% ↑

325.0

15.2% ↑

274.4

Unit : KRW Bn

7.3%7.5%0.2%p ↑

[PM]

FY2011 FY2012 FY2011 FY2012

56

Ⅲ. Movement of EV

57. Movement of EV

Value ofNew Business

FY2010 FY2011

1,730.1

155.5

1,706.9

Adjusted EVat BOP

-52.9

274.4

8.7

-57.8 -3.2

25.9

ModelChange

-54.7

RBC& Tax

(in-force)

14.7

DiscountUnwinding(new biz)

159.1

DiscountUnwinding(in-force)

IncreasedIncreased 473.0bn 473.0bn YoYYoY to 2,154.0bnto 2,154.0bn

33.52,154.0

-69.4

Variances

Unit : KRW Bn

Change in Net Asset value- Dividend : -39.3- Accumulated other comprehensive income: -4.7- Adjusted Capital changes : -18.4- Etc. : 95.9(Capital increase with

consideration:96.0)

-49.1

39.4

RDROperationalAssumptionChange

EconomicAssumptionChange

General AccountInvestmentincome

P&COperatingResults

Change inNet Asset Value

OtherOperatingResults

Convert to K-IFRS

58

Ⅳ. P/EV

59. P/EV

Stock price, EVPS (EV per share), P/EVStock price, EVPS (EV per share), P/EV

FY2009 FY2010

W7,350

W12,917

P/EV

StockPrice

EVPS

W12,900

W19,825

Current(2012.5.15)

StockPrice

EVPSStock price

EVPS

W11,750

W22,2750.53x0.57x

0.65x

60

. Sensitivities

61. Sensitivities ( In-force business )

Unit : KRW Bn

Interest Loss ratio

Lapse Expense ※

-10%

+10%

-10%

+10%

-10%

+10%

+50bp

-50bp

71.6 (5%)

-66.4(-5%)

56.0 (4%)

-55.9(-4%)

160.6 (12%)

-157.7 (-12%)

273.3 (21%)

-272.5 (-21%)Expense sensitivity does not apply to commission and other expenses.Interest sensitivity includes changes in crediting rate.

62. Sensitivities ( New Business )

Unit : KRW Bn

Loss ratio

Lapse

-10%

+10%

-10%

+10%

-10%

+10%

+50bp

-50bp

17.9(7%)

-16.5 (-6%)

21.8 (8%)

-21.8 (-8%)

25.6 (9%)

-25.2 (-9%)

47.2 (17%)

-47.2 (-17%)

Expense ※

Interest

Expense sensitivity does not apply to commission and other expenses.Interest sensitivity includes changes in crediting rate.

63. Sensitivities ( Others )

Unit : KRW Bn

ItemRisk Discount Rate

10.0% 11.0% 12.0%

Adjusted Net Worth 837.4

Shareholder’s Equity 899.0

Adjusted Capital -61.6

Value of In-force Business 1,422.4 1,316.6 1,221.6

PV of future profit 1,632.1 1,542.9 1,462.3

Cost of Capital 209.6 226.3 240.7

Embedded Value 2,259.8 2,154.0 2,059.0

Value of 1-year New Business 296.7 274.4 254.4

PV of future profit 338.6 319.4 302.1

Cost of Capital 41.9 45.0 47.7

64

. Review Statement

65. Review Statement - Towers Watson

Towers Watson has reviewed the methodology and assumptions used to determine the results of Meritz’sEmbedded Value as at 31 March 2012 and the value of new business written in the twelve months to 31 March 2012 for the long-term insurance business.

Towers Watson has concluded that: The methodology used is consistent with recent industry practice for traditional deterministic embedded value

reporting in Korea. In particular the values have been based on a deterministic projection of future profits, with allowance for risk through the use of a risk discount rate specified by Meritz and an explicit adjustment for the cost of holding an amount of solvency capital;

The operating assumptions have been set with appropriate regard to past, current and expected future experience; and

The economic assumptions used have made allowance for the company's current and expected future asset mix and investment strategy, are internally consistent and consistent with observable market data.

Towers Watson has also reviewed the results of the calculations made by Meritz, including a number of checks of the models and processes, and considers that the results have been determined in a manner consistent with the methodology and assumptions described in this report and has confirmed that any issues discovered do not have a material impact on the disclosed embedded value as at 31 March 2012 or the disclosed value of new business written in the twelve months to 31 March 2012 for the long-term insurance business.

In arriving at these conclusions, Towers Watson relied on data and information provided by Meritz. This opinion is made solely to Meritz in accordance with the terms of Towers Watson's engagement letter. To the fullest extent permitted by applicable law, Towers Watson does not accept or assume any responsibility, duty of care or liability to anyone other than Meritz for or in connection with its review work, the opinions it has formed, or for any statement set forth in this opinion.

6666[Appendix] Convert to FY2010 K-IFRS

Unit : KRW Bn

CategoryK-IFRS(A)

K-GAAP(B) Difference(A-B)

CapitalCapital (a)(a)

Capital stock-common

Premium on stock

Retained earnings(Except for Catastrophe Reserve)

Other components of equity

Catastrophe Reserve

Adjusted Capital (b)Adjusted Capital (b)

Catastrophe Reserve

Allowance for Bad Debt

Intangible asset

Prepaid cost

Adjusted Net Worth (Adjusted Net Worth (a+ba+b))

67[Appendix] FY2012 Forecast

▶▶ VIB forecastVIB forecast : 1,608.8bn, increase by 22.2% compared to FY2011: 1,608.8bn, increase by 22.2% compared to FY2011

CategoryPV of Future

Premium

Risk margin Other margin VIB

Ratio Ratio Ratio

FY2011

Protection

Saving

Annuity

Total

FY2012

Protection

Saving

Annuity

Total

Unit : KRW Bn

Other margin = Savings margin + Expense margin – Dividend– Tax - CoC

68[Appendix] FY2012 Forecast

▶▶ VNB ForecastVNB Forecast : 325.0bn, increase 18.4% compared to FY2011: 325.0bn, increase 18.4% compared to FY2011

Category

NB Initial Premium

PVFP Risk margin Other margin VNB

Ratio Multiple Ratio Ratio PM

Protection

Saving

Annuity

Total

Protection

Saving

Annuity

Total

Unit : KRW Bn

※PVFP : PV of Future Premium

69[Appendix] EV Methodology

EmbeddedValue

Represents embedded value of a companyFocuses on future distributable earnings to the shareholderDeterministic assumptions and risk discount rates are used (Traditional EV)

AdjustedNet Worth

Market adjusted value of company’s net assetIncludes adjustments to statutory net assetsAdjusted Net Worth = Shareholder’s Equity + Adjustments to Statutory Net Assets

＝

Value of In-forceBusiness

Present value of future after tax profit net of cost of capitalConsidering the operational and economic best estimate assumptions ofthe long term business

＋

70

AppendixAppendix

ContentsContents

-- FY2011 Financial ResultsFY2011 Financial Results

71Appendix : Sales

(KRW Bn)FY2011 FY2010 FY2009 FY2008

Mix G/R Mix G/R G/R G/R

Commercial 267.7 6.3% -10.7% 299.7 7.8% -6.9% 321.9 0.6% 320.0 8.2%

Auto 796.4 18.7% 2.6% 776.2 20.2% 12.2% 691.8 -4.8% 726.7 6.0%

Long-term 3,128.7 73.5% 16.6% 2,683.7 70.0% 19.2% 2,252.0 22.1% 1,844.1 19.3%

New 96.8 2.3% 16.8% 82.9 2.2% -6.7% 88.9 17.7% 75.5 20.8%

Recurring 3,031.8 71.3% 16.6% 2,600.8 67.8% 20.2% 2,163.1 22.3% 1,768.6 19.3%

One-time pymt 61.6 1.4% -19.5% 76.5 2.0% 242.9% 22.3 298.2% 5.6 -26.5%

Total 4,254.3 100% 10.9% 3,836.1 100% 16.7% 3,288.0 13.5% 2,896.4 14.3%

M / SFY2011 FY2010 FY2009 FY2008

G/R G/R G/R G/R

Commercial 5.5% -1.3%p 6.9% -0.9%p 7.8% -0.6%p 8.4% -0.4%p

Auto 6.1% -0.2%p 6.3% 0.1%p 6.2% -0.4%p 6.6% 0.2%p

Long-term 8.8% -0.2%p 9.0% -0.1%p 9.1% -0.2%p 9.3% 0.3%p

New 6.8% -1.1%p 7.8% -1.3%p 9.1% -0.4%p 9.5% -0.5%p

Recurring 8.9% -0.2%p 9.1% 0.0%p 9.1% -0.1%p 9.2% 0.2%p

One-time pymt 2.4% -7.2%p 9.6% 1.3%p 8.3% 4.8%p 3.5% -0.8%p

Total 7.6% -0.5%p 8.1% 0.0%p 8.1% -0.2%p 8.3% 0.2%p

72

(KRW Bn)FY2011 FY2010 FY2009 FY2008

G/R G/R G/R G/R

Com -mercial

Losses 77.0 -22.3% 88.4 74.7% 50.6 -81.1% 267.8 258.0%

Earned prem 119.0 -6.3% 127.0 -3.1% 131.1 -7.0% 141.0 11.6%

Loss ratio( w/o RG)

64.8% -13.3% 69.7% 10.4%p59.3%

(38.6%)-1.8%p

(151.3%p)61.1%

(189.9%)131.1%p

-

Auto

Losses 645.1 8.7% 545.7 5.1% 519.0 10.4% 470.3 -1.1%

Earned prem 768.5 13.1% 679.5 -1.1% 687.2 2.1% 673.3 5.0%

Loss ratio 83.9% -3.4%p 80.3% 4.8%p 75.5% 5.6%p 69.9% -4.3%p

Long-term

Losses 2,524.2 15.6% 2,161.6 25.2% 1,727.2 22.1% 1,414.8 14.2%

Earned prem 3,149.8 15.8% 2,719.8 22.1% 2,228.1 24.1% 1,795.5 19.7%

Loss ratio 80.1% -0.2%p 79.5% 2.0%p 77.5% -1.3%p 78.8% -3.8%p

LT risk L/R (w/ IBNR) 87.1% 1.1%p 86.0% 1.8%p 84.2% 3.6%p 80.6% 3.5%p

LT risk L/R (w/o IBNR) 83.9% - 83.2% 5.7%p 77.5% 2.2%p 75.3% 2.5%p

Total

Losses 4,037.3 12.8% 2,795.7 21.7% 2,296.8 6.7% 2,152.9 20.3%

Earned prem 3,686.8 14.5% 3,526.3 15.8% 3,046.4 16.7% 2,609.8 15.1%

Loss ratio 80.4% -1.2%p 79.3% 3.9%p 75.4% -7.1%p 82.5% 3.6%p

Note1) Commercial L/R in ( ) includes RG losses, Note2) FY2011 figures are based on K-IFRS

Appendix : Loss Ratio

73

Note1) K-GAAP is reflected on FY2011 figures

Note2) Sales-related expenses: acquisition cost/collection fees, commissions paid to agencies, acquisition cost, amortization, deferred acquisition cost, etc

Note3) Other expenses: loss adjustment expenses, co-insurance paid, reinsurance commission paid, etc

Note4) Expenses recovered: claim service fee recovered, R/I commission received, etc

Note5) Sales expenses: collection fees and agencies commissions/ Admin cost: Labor cost excluding sales cost, maintenance cost

(KRW Bn)FY2011 FY2010 FY2009 FY2008

G/R G/R G/R G/R

Expenses 875.5 2.1% 857.9 7.3% 799.9 8.6% 736.7 24.1%

Wages & benefits 162.6 -8.7% 178.0 7.7% 165.3 6.5% 155.2 4.9%

Administrative 210.6 10.4% 190.8 25.0% 152.7 6.4% 143.5 14.3%

Sales-related 499.5 10.7% 451.0 -0.1% 451.3 9.7% 411.4 38.7%

Other expenses 2.9 -92.5% 38.1 24.5% 30.6 15.0% 26.6 12.7%

Expenses recovered 36.8 -14.0% 42.8 -9.9% 47.5 -10.7% 53.2 3.1%

Net expenses 838.7 2.9% 815.1 8.3% 752.4 10.1% 683.5 26.1%

Gross premium earned 4,037.3 14.5% 3,526.3 15.8% 3,046.4 16.7% 2,609.8 15.1%

Expense Ratio 23.1% -%p 23.1% -1.6%p 24.7% -1.5%p 26.2% 2.3%p

Admin Expense Ratio 11.8% 0.8%p 11.0% -0.1%p 11.1% -0.8%p 11.9% -0.6%p

Sales Expense Ratio 11.3% -0.8%p 12.1% -1.5%p 13.6% -0.7%p 14.3% 2.9%p

Combined Ratio 101.2% -1.2%p 102.4% 2.3%p 100.1% -8.6%p 108.7% 5.9%p

Appendix : Expense Ratio

7474

(KRW Bn) FY2011 Mix FY2010 mix FY2009 mix FY2008 mix

Protection-type 2,544.0 79.3% 2,227.3 80.7% 1,922.1 84.5% 1,527.0 82.6%

Accident 1,846.3 57.5% 1,545.6 56.0% 1,270.0 55.8% 859.2 46.5%

Drivers 343.8 10.7% 345.3 12.5% 316.1 13.9% 291.9 15.8%

Property 208.5 6.5% 175.1 6.3% 157.6 6.9% 161.6 8.7%

Disease 108.4 3.4% 121.0 4.4% 136.5 6.0% 167.1 9.0%

Bundle 39.7 1.2% 40.3 1.5% 41.9 1.8% 47.2 2.5%

Personal annuities 95.8 3.0% 86.2 3.1% 77.5 3.4% 66.3 3.6%

Savings - - 446.7 16.2% 274.5 12.1% 2,56.0 13.8%

Total 568.9 17.7% 2,760.2 100.0% 2,274.1 100.0% 1,849.6 100.0%

3,208.7 100.0%

Note) Including one-time payment. Persistency: 6 month average

Risk+loading premiums 1,435.1 45.3% 1,188.7 17.5% 10,12.0 44.5% 7,45.9 40.3%

Savings premiums 1,773.6 54.7% 1,531.0 21.3% 12,62.1 55.5% 11,03.7 59.7%

13th month persistency 79.6% +0.4%p 79.2% -0.4%p 79.6% 6.0%p 73.6% -5.6%p

25th month persistency 64.1% -5.8%p 69.9% 12.4%p 57.5% -5.3%p 62.8% -1.2%p

Appendix : Long-term product portfolio

7575

Note1) Loss Ratio: As of Gross Premiums Written, excluding IBN

Note2) Death coverage: death/disablement (total disablement, disease death) / Medical treatment: accident treatment, disease treatment

Daily allowance: accident daily allowance, disease daily allowance / Disease: cancer, other diseases, CI

Other: other accident (fracture/burn, etc), other disease (food poisoning, etc), Property/Other: Driver expenses, liabilities, property loss, fire

Category

FY2011 FY2010 FY2009 FY2008

L/R Mix L/R Mix L/R Mix L/R Mix

Death coverage 39.6% 20.9% 39.0% 21.9% 34.6% 22.4% 33.7% 24.5%

Living benefits 103.8% 62.2% 107.4% 60.3% 102.2% 60.1% 101.6% 57.7%

Medical treatment

114.1% 36.3% 114.6% 35.4% 108.7% 35.4% 107.1% 31.7%

Daily allowance 99.5% 12.3% 112.1% 12.3% 101.1% 12.8% 94.1% 13.5%

Disease 90.2% 9.2% 91.8% 8.5% 90.4% 8.0% 98.6% 8.5%

Other 59.1% 4.4% 63.2% 4.1% 70.6% 3.9% 90.1% 4.0%

Property/other 49.7% 16.9% 55.4% 17.8% 56.5% 17.6% 52.3% 17.8%

Total 81.2% 100.0% 83.2% 100.0% 79.1% 100.0% 76.2% 100.0%

Appendix : Long-term product portfolio

7676Appendix : Long-term Funding Cost & ALM

ALM FY2011 FY2010 FY2009 FY2008

Asset Duration 3.88 4.21 3.92 3.30

Bond Duration 5.43 6.30 5.60 4.70

Liability Duration 4.61 5.04 4.90 4.82

Matching ratio 84.2% 83.5% 80.0% 68.5%

Long-term FY2011 FY2010 FY2009 FY2008

Funding Cost 4.21% 4.19% 4.34% 4.50%

Fixed 5.14% 5.19% 5.36% 5.63%

Variable 4.12% 4.06% 4.16% 4.23%

Fixed mix 9.1% 11.4% 15.3% 19.3%

Variable mix 90.9% 88.6% 84.7% 80.7%

Investment yield 5.6% 5.6% 5.8% 3.6%

Spread 1.4%p 1.4%p 1.5%p -0.9%p

Note1) Subject : LT/Pension account, Funding cost: Monthly basis, Investment yield is YTM

Note2) RBC Duration : FY2009 Asset 4.34, Liability 4.08 FY2011 Asset 4.02, Liability 3.35

FY2010 Asset 4.73, Liability 4.16

77

(KRW Bn)FY2011 FY2010 FY2009 FY2008

G/R Mix YTD Mix Mix Mix

Cash & equivalents 401.5 7.0% 6.0% -1.0%p 343.7 6.4% 222.2 4.8% 238.3 5.8%

Equities 167.9 -14.7% 2.5% -1.1%p 196.9 3.7% 126.3 2.7% 142.4 3.4%

Trading 0 - - 0%p 45.6 0.9% 0 0.0% 0 0.0%

Available-for-sale 167.9 11.0% 2.4% -0.3%p 151.3 2.8% 126.3 2.7% 142.4 3.4%

Equity-method stakes 2.8 - 0.0% - 2.8 0.1% 190.2 4.1% 143.3 3.5%

Domestic bonds 2,579.2 35.1% 38.8% 3.2%p 1,887.9 35.2% 1,597.6 34.5% 1,349.3 32.6%

Investment funds 734.9 12.9% 11.1% -1.1%p 651.2 12.1% 525.4 11.4% 516.6 12.5%

Overseas securities 610.4 22.1% 9.2% -0.1%p 499.7 9.3% 446.1 9.6% 427.4 10.3%

Other 153.3 175.9% 2.3% 1.3%p 113.8 2.1% 62.1 1.3% 89.8 2.2%

Loans 1,237.4 29.9% 18.6% 0.9%p 954.3 17.8% 790.2 17.1% 568.8 13.7%

Real estate 754.8 5.2% 11.4% -2.0%p 717.2 13.4% 667.3 14.4% 662.4 16.0%

Investment assets 6,642.2 23.9% 100% - 5,367.5 100.0% 4,627.6 100.0% 4,138.3 100.0%

Investment yield 4.6% - - -0.7%p 5.3% - 4.9% - 2.8% -

Note) FY2011 figures are based on K-IFRS

Appendix : Investment Assets Portfolio

78

(KRW Bn) FY2011 FY2010 FY2009 FY2008

Normal 1,231.2 943.3 784.2 565.5

Precautionary 0.3 0.5 11.2 0.6

Substandard 11.6 15.0 3.4 9.3

Doubtful 8.5 13.2 3.8 0

Estimated loss 6.6 3.2 2.0 1.8

Total 1,258.2 975.2 804.6 577.2

NPL ratio 2.12% 3.22% 1.14% 1.92%

Provisions 26.0 19.7 13.3 8.3

provisions/

substandard & below)

(Coverage ratio)97.2% 62.6% 144.6% 74.9%

Delinquency Ratio 0.74% 1.45% 2.45% 2.0%

Retail 0.79% 0.98% 1.02% 1.7%

Corporate 0.68% 2.12% 4.67% 2.5%

(KRW Bn) FY2011 FY2010 FY2009 FY2008

Retail loan 686.9 571.7 503.8 390.0

Credit 0.0 0 0 0.2

Secured 337.2 273.2 228.6 129.1

Policyholder 349.7 298.5 275.1 260.7

Corporate loan 571.3 403.5 300.8 187.2

Credit 97.8 78.2 47.5 77.9

Secured 133.2 132.7 44.6 55.0

SOC related 142.5 65.7 50.8 0

PF 197.8 126.9 157.9 54.3

Total 1,258.2 975.2 804.6 577.2

Discounts difference in Present value

-1.2 0 0 0

Bad debt Allowance -21.0 -19.7 -13.3 -8.3

Additional deferred loan

income1.4 -1.2 -1.1 -0.2

Net Total Loan 1,237.4 954.3 790.2 568.7Note1) NPL ratio = Substandard & below /TotalNote2) Based on K-IFRSNote3) Coverage ratio = Total Provision / substandard & belowNote4) FSB Standard (including retirement accounts, 30 days Overdue principal and interest, Delinquency on Policyholder loan)

FY2011 is based on K-IFRS, others are K-GAAPNote1) Corporate Credit : Including Unsecured private placement bondsNote2) Corporate secured : Including mortgage bond, RP, CP

Note 1)

Note 2)

Appendix : Loan Quality

Note 2)

Note 4)

Note 1)

Note 3)

79

(Unit: KRW Bn)Debtor Site/Project Constructor Loan

amount Maturity NPL Remark

Saenal, Co. Gimpo apartment Shindongah, NamKwang, Chonggu 10.8 ’12-12-14

Pre-cautionary, fixed

81.84% is reserved in bad debt allowance

Jeju Investment & Development, Co. Jeju ICC Anchor resort&hotel Kumho Industrial 3.1 ‘10-03-25 Estimated loss

100% is reserved in bad debt allowance

N-mode House, Co.Wonhyo-ro Complex(Office & apartment)

Prime Construction, Dongah Construction 8.1 ‘14-04-09 Normal As of Mar 38.0% in process (Planned

process 41.5%) / 90% Contracted

PSIB Posco E&C office building POSCO Engineering 10.0 ‘12-10-16 Normal Completed

Shin Dong D&I Co. Suwon Shin Dong urban development project

Samsung C&T Corporation 24.8 ‘12-09-28 Normal As of Mar 24.4%in process (Planned

process 24.5%) / 75.8% contracted

C-First, Ltd Chong-na Complex(Office & apartment) PF ABL POSCO Engineering 20.0 ‘13-06-15 Normal As of Mar 67.0% in process (Planned

process 65.3%) / 96.5% contracted

Yang Woo Construction Gimpo apartment Samsung C&T Corporation 1.2 ‘12-05-26 Normal As of Mar 100% in process (Planned

process 100%) / 94.3% contracted

Song-do Global Complex Development, Co. Song-do A3 block apartment Lotte Engineering &

Construction 7.0 ‘13-11-30 Normal As of Mar 39.7% in process (Planned process 39.7%) / 83.3% contracted

S.L D&C, LtdChun-ho Dong Complex

(Office & apartment)Samsung C&T

Corporation 30.8 ‘14-08-24 Normal Permit in progress

White Korea, LtdKangseo Kayang GS Xi mixed-

use developmentGS Cons 27.8 ’14-03-28 Normal As of Mar 26.0% in process (Planned

process 25.9%) / 60% contracted

Chun-ahn doojunglandmark project

Chun-ahn Doojung-dong e-convenient world

Dae lim industry 9.3 ‘13-12-06 Normal As of Mar 30.2% in process (Planned process 32.0%) / 100% contracted

JS SaejongChung-nam yeongi-gun e-

convenient worldDae lim industry 32.0 ‘13-11-30 Normal Start constructing and contracting in

1H of 2012

Digiprism Co., LtdUiwang Poil Information

Technology CenterSamsung Heavy

Indurstries 13.0 ‘14-09-26 NormalStart constructing in Apr 2012 and contracting in May 2012

Total 197.9

Appendix : PF loan

80

(KRW Bn)FY2011 FY2010 FY2009 FY2008

G/R G/R G/R G/R

Net premium earned 4,037.3 14.5% 3,526.3 15.8% 3,046.4 16.7% 2,609.8 15.1%

Gross premium written 4,254.3 10.9% 3,836.1 16.7% 3,288.0 13.5% 2,896.4 14.3%

Net premium written 4,019.5 12.0% 3,590.4 18.9% 3,020.9 14.8% 2,631.4 14.9%

Incurred losses 1,380.3 10.3% 2,795.7 18.2% 993.2 -2.7% 1,021.0 36.2%

Refund of LT insurance polices 732.7 8.2% 673.7 2.6% 656.8 -1.0% 663.5 12.2%

Net operating expenses 838.7 14.2% 815.1 8.3% 752.4 10.1% 683.5 26.1%

Incr in premium reservesfor LT savings 1,129.0 20.1% 940.3 47.2% 638.9 37.2% 465.6 5.4%

Net incr in policyholders’dividend reserves 4.4 -44.5% 7.4 -6.0% 7.9 182.1% 2.8 -53.6%

Incr in catastrophe reserves - - 11.3 -17.0% 13.6 - -40.2 -

Underwriting income -47.8 - -95.8 - -16.4 - -186.4 -

Investment income 268.6 15.2% 257.0 23.8% 207.6 95.5% 106.2 -40.8%

Non-operating income -3.2 - -4.9 - -4.0 - 1.8 -

Ordinary income 217.5 52.1% 156.3 -16.5% 187.2 - -78.5 -

Incurred tax expenses 52.9 55.5% 35.4 -24.3% 46.8 - -19.7 -

Net income 164.6 51.1% 120.9 -13.9% 140.4 - -58.8 -

Note) FY2011 figures are based on K-IFRS

Appendix : P & L

81

(KRW Bn)FY2011 FY2010 FY2009 FY2008

G/R G/R G/R G/R

Total assets 8,654.5 20.9% 6,973.9 15.6% 6,035.0 14.6% 5,265.5 15.4%Investment

assets 6,642.2 23.9% 5,367.5 16.0% 4,627.6 11.8% 4,138.3 14.2%

Non-invested assets 2,012.3 11.7% 1,606.4 14.1% 1,407.4 24.9% 1,127.1 19.8%

Total liabilities 7,755.5 19.7% 6,358.3 18.7% 5,355.0 10.6% 4,839.8 17.8%

Policy reserves 7,101.3 19.6% 5,702.1 21.4% 4,697.0 11.9% 4,196.6 19.9%

Cat reserves 142.8 9.2% 130.8 9.5% 119.4 12.9% 105.8 -27.5%

Other liabilities 654.2 20.5% 525.4 -2.5% 538.9 0.2% 537.4 16.5%

Total shareholders’equity 899.0 31.7% 615.6 -9.5% 680.0 59.8% 425.6 -6.7%

Capital stock 48.4 10.8% 43.6 -29.5% 61.9 0.0% 61.9 0.0%

Capital surplus 261.3 53.6% 170.4 -27.7% 235.8 0.6% 234.4 -1.2%

Retained earnings 268.0 -33.0% 386.8 29.9% 297.8 89.2% 157.4 -33.2%

Capital adjustment 5.2 - -250.9 - -116.6 - -28.1 -

Solvency margin ratio - - 162.9% -68.0%p 230.9% 41.0%p 189.9% -45.9%p

RBC Ratio 176.1% -22.8%p 198.9% -70.8%p 269.7% - - -

Appendix : B/S

Note) FY2011 figures are based on K-IFRS

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