In 2021, our marine and aviation business reported KRW 401.5 billion in gross written premiums, down 4% from a year earlier. Although we achieved a 3% growth in our domestic business thanks to increased premiums from builders’ risks of naval vessels and a rise in trade volume, our overseas business portfolio has been downsized due to overall portfolio adjustments and treaty portfolio transfers from the head office to overseas branches.
Hull and energy premiums remained flat at KRW 247.8 billion in 2021. Domestic hull premiums increased considerably because there were substantial rate rises in the Korean market after several large losses in 2019. However, the growth was offset by a decrease in gross premiums from the overseas book of business due to the portfolio optimization efforts aimed at improving profitability.
Although global trade volume recovered from the downturn caused by the COVID-19 pandemic, our cargo business shrank with premiums falling by 3% to KRW 82.2 billion. That was because we focused on optimizing our portfolio by enhancing our underwriting guidelines for overseas cargo risks, which resulted in a kind of trade-off between profitability and growth. Aviation premiums also declined to KRW 71.6 billion, mainly because of the base effect from the one-off growth in the wake of active satellite launches in the previous year.
Our years of hard work to focus on profit-oriented underwriting paid off in 2021. The combined ratio before management expenses for our marine and aviation business significantly improved from 93.1% in 2020 to 73.1% in 2021. We have tightened our underwriting guidelines and substantially restructured our portfolio and retention scheme in tandem with our profit-oriented underwriting discipline. In the current discipline-led hard market, we have focused not only on ensuring price adequacy and commission readjustments but also on improving the terms and conditions of the coverage provided.
In 2022, the marine insurance market is expected to show moderate growth, but the year may be marked by less hardening. The capacity in the market is sufficient, and the Korean marine market experienced fewer large losses in 2021, which may bring a deceleration in premium rate increases.
Nevertheless, as the leading reinsurer in Korea, we will strive to preserve adequate price levels and sound terms and conditions. At the same time, we will expand our portfolio selectively so that we can secure good loss-record accounts. In addition, we will continue our efforts to find new sources of growth, such as offshore windfarm risks and overseas builders’ risks of naval vessels. We are confident of the growth opportunities that lie ahead for us as we keep pushing ourselves to tap into new markets with growth potential.
Gross Written Premiums: Marine and Aviation
(Units: KRW billion, USD million)
|FY 2021 (KRW)||FY 2021 (USD)||FY 2020 (KRW)||FY 2020 (USD)|
|Hull & Energy||247.8||215.6||247.9||208.0|
✽ Individual figures may not add up to the total shown due to rounding.