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� FY08 premium growth slows, but continues to beat industry averagFY08 premium growth slows, but continues to beat industry averagFY08 premium growth slows, but continues to beat industry averagFY08 premium growth slows, but continues to beat industry averageeee�� FY08 premium growth slows, but continues to beat industry averagFY08 premium growth slows, but continues to beat industry averagFY08 premium growth slows, but continues to beat industry averagFY08 premium growth slows, but continues to beat industry averagFY08 premium growth slows, but continues to beat industry averagFY08 premium growth slows, but continues to beat industry averagFY08 premium growth slows, but continues to beat industry averagFY08 premium growth slows, but continues to beat industry averageeeeeeee
9.8%9.8%9.8%9.8%
10.7%10.7%10.7%10.7%
16.2%16.2%16.2%16.2% 16.2%16.2%16.2%16.2%
14.3%14.3%14.3%14.3%
8.2%8.2%8.2%8.2% 9.5%9.5%9.5%9.5%
14.5%14.5%14.5%14.5%14.8%14.8%14.8%14.8%
10.6%10.6%10.6%10.6%
Premium,Premium,Premium,Premium,
market sharemarket sharemarket sharemarket share
10101010
2 2 2 2 ---- 1. Asset1. Asset1. Asset1. Asset
FY07FY05 FY06
3,110.0bn3,110.0bn3,110.0bn3,110.0bn
7.4%7.4%7.4%7.4%
3,747.8bn3,747.8bn3,747.8bn3,747.8bn
7.8%7.8%7.8%7.8%
4,564.5bn4,564.5bn4,564.5bn4,564.5bn
8.1%8.1%8.1%8.1%
FY08FY08FY08FY08FY08FY08FY08FY08FY04
2,676.1bn2,676.1bn2,676.1bn2,676.1bn
7.2%7.2%7.2%7.2%
5,265.5bn5,265.5bn5,265.5bn5,265.5bn
8.5%8.5%8.5%8.5%
� FY08 total assets exceed W5t (invested assets W4.1t)FY08 total assets exceed W5t (invested assets W4.1t)FY08 total assets exceed W5t (invested assets W4.1t)FY08 total assets exceed W5t (invested assets W4.1t)�� FY08 total assets exceed W5t (invested assets W4.1t)FY08 total assets exceed W5t (invested assets W4.1t)FY08 total assets exceed W5t (invested assets W4.1t)FY08 total assets exceed W5t (invested assets W4.1t)FY08 total assets exceed W5t (invested assets W4.1t)FY08 total assets exceed W5t (invested assets W4.1t)FY08 total assets exceed W5t (invested assets W4.1t)FY08 total assets exceed W5t (invested assets W4.1t)
Total assets,Total assets,Total assets,Total assets,
� Stable growth compared to topStable growth compared to topStable growth compared to topStable growth compared to top----4 average4 average4 average4 average�� Stable growth compared to topStable growth compared to topStable growth compared to topStable growth compared to topStable growth compared to topStable growth compared to topStable growth compared to topStable growth compared to top--------4 average4 average4 average4 average4 average4 average4 average4 average � 7777% edge vs top% edge vs top% edge vs top% edge vs top----4 4 4 4 for more than 5 years for more than 5 years for more than 5 years for more than 5 years �� 77777777% edge vs top% edge vs top% edge vs top% edge vs top% edge vs top% edge vs top% edge vs top% edge vs top--------4 4 4 4 4 4 4 4 for more than 5 years for more than 5 years for more than 5 years for more than 5 years for more than 5 years for more than 5 years for more than 5 years for more than 5 years
� Combined ratio outperforming industry peers since FY06Combined ratio outperforming industry peers since FY06Combined ratio outperforming industry peers since FY06Combined ratio outperforming industry peers since FY06
� C/R 2.7%p lower than top 4 in FY08 due to lower burden from higC/R 2.7%p lower than top 4 in FY08 due to lower burden from higC/R 2.7%p lower than top 4 in FY08 due to lower burden from higC/R 2.7%p lower than top 4 in FY08 due to lower burden from highhhh----yield legacy products, yield legacy products, yield legacy products, yield legacy products,
sales sales sales sales focus on protectionfocus on protectionfocus on protectionfocus on protection----type products (lower loss ratio)type products (lower loss ratio)type products (lower loss ratio)type products (lower loss ratio)
� ProtectionProtectionProtectionProtection----type insurance: slightly higher expense ratio, but lower loss ratype insurance: slightly higher expense ratio, but lower loss ratype insurance: slightly higher expense ratio, but lower loss ratype insurance: slightly higher expense ratio, but lower loss ratiotiotiotio
� Combined ratio outperforming industry peers since FY06Combined ratio outperforming industry peers since FY06Combined ratio outperforming industry peers since FY06Combined ratio outperforming industry peers since FY06
� C/R 2.7%p lower than top 4 in FY08 due to lower burden from higC/R 2.7%p lower than top 4 in FY08 due to lower burden from higC/R 2.7%p lower than top 4 in FY08 due to lower burden from higC/R 2.7%p lower than top 4 in FY08 due to lower burden from highhhh----yield legacy products, yield legacy products, yield legacy products, yield legacy products,
sales sales sales sales focus on protectionfocus on protectionfocus on protectionfocus on protection----type products (lower loss ratio)type products (lower loss ratio)type products (lower loss ratio)type products (lower loss ratio)
� ProtectionProtectionProtectionProtection----type insurance: slightly higher expense ratio, but lower loss ratype insurance: slightly higher expense ratio, but lower loss ratype insurance: slightly higher expense ratio, but lower loss ratype insurance: slightly higher expense ratio, but lower loss ratiotiotiotio
2 2 2 2 ---- 3. Auto Insurance3. Auto Insurance3. Auto Insurance3. Auto Insurance
[Auto loss ratio trend][Auto loss ratio trend][Auto loss ratio trend][Auto loss ratio trend]
� Loss ratio shrinking since Loss ratio shrinking since Loss ratio shrinking since Loss ratio shrinking since FY07FY07FY07FY07
---- Rising average premium leads to improvement in FY07 loss ratioRising average premium leads to improvement in FY07 loss ratioRising average premium leads to improvement in FY07 loss ratioRising average premium leads to improvement in FY07 loss ratio
---- Rapid improvement in Rapid improvement in Rapid improvement in Rapid improvement in ““““loss cost,loss cost,loss cost,loss cost,”””” lower FY08 loss ratio lower FY08 loss ratio lower FY08 loss ratio lower FY08 loss ratio →→→→ suggests further improvementsuggests further improvementsuggests further improvementsuggests further improvement
�� Loss ratio shrinking since Loss ratio shrinking since Loss ratio shrinking since Loss ratio shrinking since Loss ratio shrinking since Loss ratio shrinking since Loss ratio shrinking since Loss ratio shrinking since FY07FY07FY07FY07FY07FY07FY07FY07
-------- Rising average premium leads to improvement in FY07 loss ratioRising average premium leads to improvement in FY07 loss ratioRising average premium leads to improvement in FY07 loss ratioRising average premium leads to improvement in FY07 loss ratioRising average premium leads to improvement in FY07 loss ratioRising average premium leads to improvement in FY07 loss ratioRising average premium leads to improvement in FY07 loss ratioRising average premium leads to improvement in FY07 loss ratio
-------- Rapid improvement in Rapid improvement in Rapid improvement in Rapid improvement in Rapid improvement in Rapid improvement in Rapid improvement in Rapid improvement in ““““““““loss cost,loss cost,loss cost,loss cost,loss cost,loss cost,loss cost,loss cost,”””””””” lower FY08 loss ratio lower FY08 loss ratio lower FY08 loss ratio lower FY08 loss ratio lower FY08 loss ratio lower FY08 loss ratio lower FY08 loss ratio lower FY08 loss ratio →→→→→→→→ suggests further improvementsuggests further improvementsuggests further improvementsuggests further improvementsuggests further improvementsuggests further improvementsuggests further improvementsuggests further improvement
[Commercial loss ratio trend][Commercial loss ratio trend][Commercial loss ratio trend][Commercial loss ratio trend]
� Even without captive market, commercial loss ratio has remained Even without captive market, commercial loss ratio has remained Even without captive market, commercial loss ratio has remained Even without captive market, commercial loss ratio has remained at only 2%p higher than top 4at only 2%p higher than top 4at only 2%p higher than top 4at only 2%p higher than top 4�� Even without captive market, commercial loss ratio has remained Even without captive market, commercial loss ratio has remained Even without captive market, commercial loss ratio has remained Even without captive market, commercial loss ratio has remained Even without captive market, commercial loss ratio has remained Even without captive market, commercial loss ratio has remained Even without captive market, commercial loss ratio has remained Even without captive market, commercial loss ratio has remained at only 2%p higher than top 4at only 2%p higher than top 4at only 2%p higher than top 4at only 2%p higher than top 4at only 2%p higher than top 4at only 2%p higher than top 4at only 2%p higher than top 4at only 2%p higher than top 4
43.5%43.5%43.5%43.5%
49.1%49.1%49.1%49.1%
53.0%53.0%53.0%53.0%
59.8%59.8%59.8%59.8% 60.2%60.2%60.2%60.2%
48.5%48.5%48.5%48.5%47.0%47.0%47.0%47.0%
50.9%50.9%50.9%50.9%
54.2%54.2%54.2%54.2%
58.4%58.4%58.4%58.4%
-5.0%-5.0%-5.0%-5.0%
1.8%1.8%1.8%1.8%
5.6%5.6%5.6%5.6%
2.1%2.1%2.1%2.1%2.1%2.1%2.1%2.1%
FY2004 FY2005 FY2006 FY2007 FY2008.2
Meritz Top 4 Gap
43.5%49.1%
53.0%59.8%
189.9%
61.1%
FY2004 FY2005 FY2006 FY2007 FY2008 (Before RG)
[Industry loss ratio][Industry loss ratio][Industry loss ratio][Industry loss ratio]
% in portfolio% in portfolio% in portfolio% in portfolioAssetAssetAssetAsset(Unit: Wbn)(Unit: Wbn)(Unit: Wbn)(Unit: Wbn)
[Investment income excluding one[Investment income excluding one[Investment income excluding one[Investment income excluding one----off items]off items]off items]off items]
[FY02~FY08 Average Investment Yield][FY02~FY08 Average Investment Yield][FY02~FY08 Average Investment Yield][FY02~FY08 Average Investment Yield]
[FY02~FY08 Volatility of Investment Yield][FY02~FY08 Volatility of Investment Yield][FY02~FY08 Volatility of Investment Yield][FY02~FY08 Volatility of Investment Yield]
Note: FY08 = Apr 2008~Feb 2009 data; volatility is standard deviation
5.5 5.3
MeritzMeritzMeritzMeritz Top 4Top 4Top 4Top 4
Note: Figures for FY08 are cumulative data over Apr 2008~Feb 2009
� FY08 investment yield plummets due to:FY08 investment yield plummets due to:FY08 investment yield plummets due to:FY08 investment yield plummets due to:�� FY08 investment yield plummets due to:FY08 investment yield plummets due to:FY08 investment yield plummets due to:FY08 investment yield plummets due to:FY08 investment yield plummets due to:FY08 investment yield plummets due to:FY08 investment yield plummets due to:FY08 investment yield plummets due to:
1) high concentration of overseas investment1) high concentration of overseas investment1) high concentration of overseas investment1) high concentration of overseas investment
1) high concentration of overseas investment1) high concentration of overseas investment1) high concentration of overseas investment1) high concentration of overseas investment
2) securities classified into trading securities,2) securities classified into trading securities,2) securities classified into trading securities,2) securities classified into trading securities,
where profit directly related to bottom linewhere profit directly related to bottom linewhere profit directly related to bottom linewhere profit directly related to bottom line
2) securities classified into trading securities,2) securities classified into trading securities,2) securities classified into trading securities,2) securities classified into trading securities,
where profit directly related to bottom linewhere profit directly related to bottom linewhere profit directly related to bottom linewhere profit directly related to bottom line
---- Deserves its place in 2nd tier, even with RG loss (2ndDeserves its place in 2nd tier, even with RG loss (2ndDeserves its place in 2nd tier, even with RG loss (2ndDeserves its place in 2nd tier, even with RG loss (2nd----tier average: 190.7%) tier average: 190.7%) tier average: 190.7%) tier average: 190.7%)
-------- Deserves its place in 2nd tier, even with RG loss (2ndDeserves its place in 2nd tier, even with RG loss (2ndDeserves its place in 2nd tier, even with RG loss (2ndDeserves its place in 2nd tier, even with RG loss (2ndDeserves its place in 2nd tier, even with RG loss (2ndDeserves its place in 2nd tier, even with RG loss (2ndDeserves its place in 2nd tier, even with RG loss (2ndDeserves its place in 2nd tier, even with RG loss (2nd--------tier average: 190.7%) tier average: 190.7%) tier average: 190.7%) tier average: 190.7%) tier average: 190.7%) tier average: 190.7%) tier average: 190.7%) tier average: 190.7%)
Best Best Best Best Best Best Best Best underwritingunderwritingunderwritingunderwritingunderwritingunderwritingunderwritingunderwriting
company company company company company company company company
(Year of new take(Year of new take(Year of new take(Year of new take(Year of new take(Year of new take(Year of new take(Year of new take--------off)off)off)off)off)off)off)off)
StableInvestment
return
StableStableInvestment Investment
returnreturnProfessional
Risk ManagingProfessionalProfessional
Risk ManagingRisk Managing
Under 100%Combined ratioUnder 100%Under 100%Combined ratioCombined ratio
fire, cargo, engineering: shrinking global trade and capex, severe price competition
aviation, casualty/liability: demand from low-end airlines, boost in product liability market
Downside
• Life insurers refocus on protection insurance from financial type
• Falling bancassurance market, burdensome high growth in FY08Downside
• Reallocation of marketing resources from commercial/auto to long-term
• Smoother solicitor recruitment due to recession and unemploymentUpside
LongLongLongLong----termtermtermterm
new contractnew contractnew contractnew contract
• Recession → stagnant car sales
• On-line market expansion Zero or negative growth
• Contribution from ‘hit-and-run’ accident relief fund will be reduced
AutoAutoAutoAuto
UpsideCommercialCommercialCommercialCommercial
Market outlookMarket outlookMarket outlookMarket outlook
33333333
3 3 3 3 ---- 3. Long3. Long3. Long3. Long----term Insurance Loss Ratio (1)term Insurance Loss Ratio (1)term Insurance Loss Ratio (1)term Insurance Loss Ratio (1)
[Long[Long[Long[Long----term premium mix, L/R trend and forecast]term premium mix, L/R trend and forecast]term premium mix, L/R trend and forecast]term premium mix, L/R trend and forecast]
3 3 3 3 ---- 3. Long3. Long3. Long3. Long----term Insurance Loss Ratio (2)term Insurance Loss Ratio (2)term Insurance Loss Ratio (2)term Insurance Loss Ratio (2)
[Long[Long[Long[Long----term risk premium loss ratio trend and forecast]term risk premium loss ratio trend and forecast]term risk premium loss ratio trend and forecast]term risk premium loss ratio trend and forecast]
80.6%80.5%77.1%78.2%82.2%Loss ratioNet premium written
81.0%80.8%77.6%78.8%82.7%Loss ratioGross premium total
[Long[Long[Long[Long----term savings premium loss ratio trend and forecast]term savings premium loss ratio trend and forecast]term savings premium loss ratio trend and forecast]term savings premium loss ratio trend and forecast]
�� Average rate drop 53bps Average rate drop 53bps Average rate drop 53bps Average rate drop 53bps Average rate drop 53bps Average rate drop 53bps Average rate drop 53bps Average rate drop 53bps →→→→→→→→ interest cost savings interest cost savings interest cost savings interest cost savings 19bn 19bn 19bn 19bn 19bn 19bn 19bn 19bn →→→→→→→→ change in change in change in change in L/R: L/R: L/R: L/R: L/R: L/R: L/R: L/R: --------1.4%p ( 102.9% 1.4%p ( 102.9% 1.4%p ( 102.9% 1.4%p ( 102.9% 1.4%p ( 102.9% 1.4%p ( 102.9% 1.4%p ( 102.9% 1.4%p ( 102.9% →→→→→→→→ 101.5%)101.5%)101.5%)101.5%)101.5%)101.5%)101.5%)101.5%)
3 3 3 3 ---- 3. Long3. Long3. Long3. Long----term Insurance Loss Ratio (3)term Insurance Loss Ratio (3)term Insurance Loss Ratio (3)term Insurance Loss Ratio (3)
36363636
3 3 3 3 ---- 3. Auto Loss Ratio 3. Auto Loss Ratio 3. Auto Loss Ratio 3. Auto Loss Ratio
� Loss cost not expected to change in big scaleLoss cost not expected to change in big scaleLoss cost not expected to change in big scaleLoss cost not expected to change in big scale
� 70% or less is achievable loss ratio 70% or less is achievable loss ratio 70% or less is achievable loss ratio 70% or less is achievable loss ratio
→→→→ Target for Target for Target for Target for MeritzMeritzMeritzMeritz at the same timeat the same timeat the same timeat the same time
�� Loss cost not expected to change in big scaleLoss cost not expected to change in big scaleLoss cost not expected to change in big scaleLoss cost not expected to change in big scaleLoss cost not expected to change in big scaleLoss cost not expected to change in big scaleLoss cost not expected to change in big scaleLoss cost not expected to change in big scale
�� 70% or less is achievable loss ratio 70% or less is achievable loss ratio 70% or less is achievable loss ratio 70% or less is achievable loss ratio 70% or less is achievable loss ratio 70% or less is achievable loss ratio 70% or less is achievable loss ratio 70% or less is achievable loss ratio
→→→→→→→→ Target for Target for Target for Target for Target for Target for Target for Target for MeritzMeritzMeritzMeritzMeritzMeritzMeritzMeritz at the same timeat the same timeat the same timeat the same timeat the same timeat the same timeat the same timeat the same time
[Premium rate per unit: 1.5% up][Premium rate per unit: 1.5% up][Premium rate per unit: 1.5% up][Premium rate per unit: 1.5% up]
� Portfolio review for group casualty linePortfolio review for group casualty linePortfolio review for group casualty linePortfolio review for group casualty line
Reasons for lower commercial loss ratioReasons for lower commercial loss ratioReasons for lower commercial loss ratioReasons for lower commercial loss ratioReasons for lower commercial loss ratioReasons for lower commercial loss ratioReasons for lower commercial loss ratioReasons for lower commercial loss ratio
� Wages: to be reduced via cooperation of management and labor (frWages: to be reduced via cooperation of management and labor (frWages: to be reduced via cooperation of management and labor (frWages: to be reduced via cooperation of management and labor (freeze on FY09 salaries, changeeeze on FY09 salaries, changeeeze on FY09 salaries, changeeeze on FY09 salaries, change
in severance scheme (progressivein severance scheme (progressivein severance scheme (progressivein severance scheme (progressive→→→→ single), expense ratio 1.1% single), expense ratio 1.1% single), expense ratio 1.1% single), expense ratio 1.1% ↓↓↓↓))))
� General administration: gen admin expense ratio to decrease 0.1General administration: gen admin expense ratio to decrease 0.1General administration: gen admin expense ratio to decrease 0.1General administration: gen admin expense ratio to decrease 0.1%p on lower fixed costs%p on lower fixed costs%p on lower fixed costs%p on lower fixed costs
�� Wages: to be reduced via cooperation of management and labor (frWages: to be reduced via cooperation of management and labor (frWages: to be reduced via cooperation of management and labor (frWages: to be reduced via cooperation of management and labor (frWages: to be reduced via cooperation of management and labor (frWages: to be reduced via cooperation of management and labor (frWages: to be reduced via cooperation of management and labor (frWages: to be reduced via cooperation of management and labor (freeze on FY09 salaries, changeeeze on FY09 salaries, changeeeze on FY09 salaries, changeeeze on FY09 salaries, changeeeze on FY09 salaries, changeeeze on FY09 salaries, changeeeze on FY09 salaries, changeeeze on FY09 salaries, change
in severance scheme (progressivein severance scheme (progressivein severance scheme (progressivein severance scheme (progressivein severance scheme (progressivein severance scheme (progressivein severance scheme (progressivein severance scheme (progressive→→→→→→→→ single), expense ratio 1.1% single), expense ratio 1.1% single), expense ratio 1.1% single), expense ratio 1.1% single), expense ratio 1.1% single), expense ratio 1.1% single), expense ratio 1.1% single), expense ratio 1.1% ↓↓↓↓↓↓↓↓))))))))
�� General administration: gen admin expense ratio to decrease 0.1General administration: gen admin expense ratio to decrease 0.1General administration: gen admin expense ratio to decrease 0.1General administration: gen admin expense ratio to decrease 0.1General administration: gen admin expense ratio to decrease 0.1General administration: gen admin expense ratio to decrease 0.1General administration: gen admin expense ratio to decrease 0.1General administration: gen admin expense ratio to decrease 0.1%p on lower fixed costs%p on lower fixed costs%p on lower fixed costs%p on lower fixed costs%p on lower fixed costs%p on lower fixed costs%p on lower fixed costs%p on lower fixed costs
� Focus on fixedFocus on fixedFocus on fixedFocus on fixed----income asset for stable investment incomeincome asset for stable investment incomeincome asset for stable investment incomeincome asset for stable investment income
� PerforPerforPerforPerformance based, stock asset prudenmance based, stock asset prudenmance based, stock asset prudenmance based, stock asset prudently invested according to 2H macro economytly invested according to 2H macro economytly invested according to 2H macro economytly invested according to 2H macro economy
�� Focus on fixedFocus on fixedFocus on fixedFocus on fixedFocus on fixedFocus on fixedFocus on fixedFocus on fixed--------income asset for stable investment incomeincome asset for stable investment incomeincome asset for stable investment incomeincome asset for stable investment incomeincome asset for stable investment incomeincome asset for stable investment incomeincome asset for stable investment incomeincome asset for stable investment income
�� PerforPerforPerforPerforPerforPerforPerforPerformance based, stock asset prudenmance based, stock asset prudenmance based, stock asset prudenmance based, stock asset prudenmance based, stock asset prudenmance based, stock asset prudenmance based, stock asset prudenmance based, stock asset prudently invested according to 2H macro economytly invested according to 2H macro economytly invested according to 2H macro economytly invested according to 2H macro economytly invested according to 2H macro economytly invested according to 2H macro economytly invested according to 2H macro economytly invested according to 2H macro economy
[Net income change from FY08 to FY09 ][Net income change from FY08 to FY09 ][Net income change from FY08 to FY09 ][Net income change from FY08 to FY09 ]
FY08FY08FY08FY08FY08FY08FY08FY08 FY09FY09FY09FY09FY09FY09FY09FY09 ChangeChangeChangeChangeLongLongLongLong----term term term term underwriting underwriting underwriting underwriting
“Normal 3” total : 22 ships (RG Exposure : US$90.6mn)
☞☞☞☞ As of Mar 09, insolvent 3 recorded as losses As of Mar 09, insolvent 3 recorded as losses As of Mar 09, insolvent 3 recorded as losses As of Mar 09, insolvent 3 recorded as losses (W181.7bn)(W181.7bn)(W181.7bn)(W181.7bn) assuming total claimassuming total claimassuming total claimassuming total claim