Korean Re delivered strong business results for the year on the back of robust investment gains, with after-tax net income increasing by 7.9% to KRW 153.3 billion.
COVID-19 has been unrelenting, much to the dismay of us all. With no end in sight, the pandemic made 2021 another incredibly difficult year for many people. When the Korean government switched to a “Living with COVID-19” approach, there was growing hope that things would get back to normal soon, but that hope quickly turned into anxiety and fear due to the emergence of Omicron and a rapid spread of new cases.
In 2021, the economy recovered quickly from the pandemic-induced shock but remained vulnerable, with COVID-19 injecting uncertainty into the business landscape and financial markets. The stock market fluctuated widely as liquidity increased amid massive fiscal support and accommodative monetary policy. Household debt ballooned to record high levels, putting economic resilience at risk.
Korean Re delivered strong business results for the year on the back of robust investment gains, with after-tax net income increasing by 7.9% to KRW 153.3 billion.
It was a challenging year for the insurance industry as well, with many insurance leaders trying to figure out what strategies needed to be taken in response to rapidly evolving market conditions. Insurers faced intensifying competition as boundaries between industry sectors became blurred. They were also pressed to work on the strategic implications and challenges presented by regulatory changes.
As did many others, we at Korean Re challenged ourselves to make a turning point in navigating the uncertainty of a post-pandemic world. One of the efforts was to lay the groundwork for business expansion in the United States by setting up a reinsurance intermediary in New Jersey in 2021. Global business expansion has been an important pillar of our future business strategies while we have been struggling to overcome low growth and find new markets and growth engines.
In terms of organizational effectiveness, we have continued to improve our organizational structure and expand our human resources. In particular, we set up a task force team dedicated to preparing for IFRS 17, which poses one of the most critical challenges for the insurance industry. Through this dedicated team of experts, we are making all the necessary arrangements in order to run our business seamlessly on the IFRS 17 system. We also added an organizational unit responsible for environmental, social, and governance (ESG) management so that we can establish and implement an effective ESG strategy to seek sustainable growth and become a company that is more responsible toward society, employees, and other stakeholders.
These efforts clearly demonstrate how we drive change in a way that creates value. Changes start with a challenge, and small changes evolve into innovation. This process of making continuous changes creates new value, and we measure our success on how well we create value for all our stakeholders.
This commitment to value creation led our business to turn 2021 into another financially successful year. Korean Re delivered strong business results for the year on the back of robust investment gains, with after-tax net income increasing by 7.9% to KRW 153.3 billion. This increase in our bottom-line results allowed us to report an ROE of 6.2%, up 0.4%p from the previous year.
Our underwriting results took a negative turn, however, with the overall combined ratio deteriorating to 100.9% due to overseas COVID-19 and natural catastrophe losses and persistently weakening results from domestic personal lines of business. Still, we made notable improvements in domestic commercial lines, driven by favorable pricing trends in most commercial lines of business and fewer large-loss events in Korea.
As we continued to focus on building profit-oriented portfolios, our top-line growth slowed to 0.5%, with gross written premiums remaining stable at KRW 8,488.7 billion and net written premiums growing by 2.7% to KRW 6,060.9 billion.
At the end of 2021, our total assets increased by 4.8% year on year to KRW 13,115.7 billion, while there was an 11.6% rise in invested assets, which totaled KRW 7,186 billion.
Insurance is an invention designed to provide individuals and businesses with a means of protection from risks. Today, in a world full of unexpected perils including climate change and pandemics, risks are becoming all the more complex and complicated, making it increasingly difficult to predict and measure them. This may present a daunting challenge for insurers and reinsurers, but potentially could be turned into opportunities for the industry to bring innovation to risk management solutions.
In 2022, we will strive to become a new global leader that pushes the envelope to create innovation. Creativity and innovation rarely come out of a stable environment, but instead arise out of the process to take on new challenges. We are determined to step outside our comfort zone and sail the wide-open oceans to push the boundaries of what we can achieve. We believe this strong determination in challenging ourselves to take the next significant step forward will be the very momentum that leads our business to grow further in the years to come.
The pandemic is not over yet, and the future is still uncertain. Nevertheless, we are optimistic that rays of light toward a brighter future are finally beginning to emerge. We are fortunate to belong to a crucial industry that can provide a beacon of optimism and security in times of difficulties.
I would like to thank our clients and partners for working with us to navigate these challenging times. I would also like to pay tribute to my colleagues for their commitment to supporting our clients and partners, and improving our business performance in a way that drives value for our shareholders. To our shareholders, I am grateful for your trust and confidence in Korean Re, and we won’t settle for less than the best for you. We will always remain passionate about serving all our stakeholders and the communities we are a part of. We wish you all the best and good health in the coming year.
Thank you.
Jong-Gyu Won
President and CEO
COVID-19 has been unrelenting, much to the dismay of us all. With no end in sight, the pandemic made 2021 another incredibly difficult year for many people. When the Korean government switched to a “Living with COVID-19” approach, there was growing hope that things would get back to normal soon, but that hope quickly turned into anxiety and fear due to the emergence of Omicron and a rapid spread of new cases.
In 2021, the economy recovered quickly from the pandemic-induced shock but remained vulnerable, with COVID-19 injecting uncertainty into the business landscape and financial markets. The stock market fluctuated widely as liquidity increased amid massive fiscal support and accommodative monetary policy. Household debt ballooned to record high levels, putting economic resilience at risk.
It was a challenging year for the insurance industry as well, with many insurance leaders trying to figure out what strategies needed to be taken in response to rapidly evolving market conditions. Insurers faced intensifying competition as boundaries between industry sectors became blurred. They were also pressed to work on the strategic implications and challenges presented by regulatory changes.
As did many others, we at Korean Re challenged ourselves to make a turning point in navigating the uncertainty of a post-pandemic world. One of the efforts was to lay the groundwork for business expansion in the United States by setting up a reinsurance intermediary in New Jersey in 2021. Global business expansion has been an important pillar of our future business strategies while we have been struggling to overcome low growth and find new markets and growth engines.
In terms of organizational effectiveness, we have continued to improve our organizational structure and expand our human resources. In particular, we set up a task force team dedicated to preparing for IFRS 17, which poses one of the most critical challenges for the insurance industry. Through this dedicated team of experts, we are making all the necessary arrangements in order to run our business seamlessly on the IFRS 17 system. We also added an organizational unit responsible for environmental, social, and governance (ESG) management so that we can establish and implement an effective ESG strategy to seek sustainable growth and become a company that is more responsible toward society, employees, and other stakeholders.
These efforts clearly demonstrate how we drive change in a way that creates value. Changes start with a challenge, and small changes evolve into innovation. This process of making continuous changes creates new value, and we measure our success on how well we create value for all our stakeholders.
This commitment to value creation led our business to turn 2021 into another financially successful year. Korean Re delivered strong business results for the year on the back of robust investment gains, with after-tax net income increasing by 7.9% to KRW 153.3 billion. This increase in our bottom-line results allowed us to report an ROE of 6.2%, up 0.4%p from the previous year.
Our underwriting results took a negative turn, however, with the overall combined ratio deteriorating to 100.9% due to overseas COVID-19 and natural catastrophe losses and persistently weakening results from domestic personal lines of business. Still, we made notable improvements in domestic commercial lines, driven by favorable pricing trends in most commercial lines of business and fewer large-loss events in Korea.
As we continued to focus on building profit-oriented portfolios, our top-line growth slowed to 0.5%, with gross written premiums remaining stable at KRW 8,488.7 billion and net written premiums growing by 2.7% to KRW 6,060.9 billion.
At the end of 2021, our total assets increased by 4.8% year on year to KRW 13,115.7 billion, while there was an 11.6% rise in invested assets, which totaled KRW 7,186 billion.
Insurance is an invention designed to provide individuals and businesses with a means of protection from risks. Today, in a world full of unexpected perils including climate change and pandemics, risks are becoming all the more complex and complicated, making it increasingly difficult to predict and measure them. This may present a daunting challenge for insurers and reinsurers, but potentially could be turned into opportunities for the industry to bring innovation to risk management solutions.
In 2022, we will strive to become a new global leader that pushes the envelope to create innovation. Creativity and innovation rarely come out of a stable environment, but instead arise out of the process to take on new challenges. We are determined to step outside our comfort zone and sail the wide-open oceans to push the boundaries of what we can achieve. We believe this strong determination in challenging ourselves to take the next significant step forward will be the very momentum that leads our business to grow further in the years to come.
The pandemic is not over yet, and the future is still uncertain. Nevertheless, we are optimistic that rays of light toward a brighter future are finally beginning to emerge. We are fortunate to belong to a crucial industry that can provide a beacon of optimism and security in times of difficulties.
I would like to thank our clients and partners for working with us to navigate these challenging times. I would also like to pay tribute to my colleagues for their commitment to supporting our clients and partners, and improving our business performance in a way that drives value for our shareholders. To our shareholders, I am grateful for your trust and confidence in Korean Re, and we won’t settle for less than the best for you. We will always remain passionate about serving all our stakeholders and the communities we are a part of. We wish you all the best and good health in the coming year.
Thank you.
Jong-Gyu Won
President and CEO