[Foreign Language] Good morning, I am Helen Park, Head of IR at Samsung Fire & Marine Insurance. I would like to thank you all for taking the time to participate in today's 2025 year-end earnings results presentation.

[Foreign Language] Today's session will begin with an overview of the fiscal year 2025 business performance and 2026 outlook, followed by a Q&A session. The session is expected to last approximately 1 hour and 20 minutes.

[Foreign Language] With that, I will turn it over to the CFO for the presentation. [Foreign Language]

Good morning, this is Koo Young-Min. Allow me to present on the Samsung Fire & Marine Insurance's earnings results for fiscal year 2025 and strategies for this year.

[Foreign Language] Amid heightened market competition and fast-changing operational environment, SFMI in 2025 reported insurance profit of 1 trillion 559.8 billion, which was a decline of 17.4% year-over-year. On investment profit of 1 trillion 213.3 billion won, a growth of 43.5%, we achieved pre-tax profit of 2 trillion 783.3 billion won, up 1.4%.

[Foreign Language] Despite one-off impact from rise in corporate income tax rate, net profit attributable to majority interest reported 2 trillion 18.3 billion won, staying within 2 trillion net profit level for two consecutive years. [Foreign Language] On top of this, we've driven meaningful results implementing the value-up plan in stages, which was announced with an objective of shareholder return enhancement.

[Foreign Language] First round of treasury share cancellation was completed during the first half of the year, while in the second half we increased our stake in Canopius. Beyond simply getting the equity method gains, we were able to build the basis for future revenue stream, enabling practical business synergies, regional expansion, and commercial business portfolio expansion.

[Foreign Language] Now moving on to breakdown of business results. For long-term insurance in the second half of the year, with a shift towards margin-focused new business portfolio, we drove 1.7 times improvement in CSM multiple versus the first half of the year, generating stable new business CSM.

Thus, despite year-end assumption updates, CSM volume expanded to 14 trillion 167.7 billion won. [Foreign Language] Notwithstanding steady annual CSM amortization gains and efficient management of expenses, due to accumulation of claims variance contraction, insurance profit reported 1 trillion 507.7 billion won, down 4.4% year-over-year.

[Foreign Language] For auto insurance, while the market saw fierce price competition such as through offering of discount riders, supported by online channel competitiveness, insurance revenue came in at 5 trillion 565.1 billion won, similar to the level of last year. [Foreign Language] Insurance profit turned to -159 billion in deficit on the back of rate cut impact and continuing pressures from rise in claims cost.

[Foreign Language] For P&C insurance, we saw growth from both domestic and global businesses on the back of portfolio solution expansion and specialty insurance, which drove insurance revenue up 6.1% year-over-year. Due to increase in small to mid-scale claims, loss ratio increased 0.9 percentage point, driving annual insurance profit down slightly by 2.8 percentage to 170.8 billion won.

[Foreign Language] In terms of investments, on higher valuation gains secured from alternative investments and interest income, which was guided by a investment strategy around higher-yielding assets and book yield enhancement, investment return came in at 3.44%, up 0.22 percentage points year-over-year. On an AUM basis, we achieved 2 trillion 981.3 billion won in investment profit, recording a sizable growth of 13.8% versus last year.

[Foreign Language] Moving on to the company's key business strategies for 2026. Firstly, looking at the overall market environment, we expect profitability pressure will persist across the industry following the impact arising from last year's heightened competition and continuing uncertainties such as rising claims.

[Foreign Language] As such, we will go beyond simply responding to the market moves under the current competitive dynamic, but will fundamentally innovate business structure under a unwavering and consistent approach towards profitability, so as to solidify core competitiveness of the fundamental insurance business. [Foreign Language] First, for long-term business, which is the cornerstone of the company's revenue and profit, by shifting to business management with a clear focus on future value, we will establish a framework in generating sustainable and decisively dominant CSM.

[Foreign Language] Rather than simply growing new sales, we will drive quality improvement of new businesses through high value-added products and value-based underwriting per contract, and expand moral hazard detection, and implement claims automation as we make the shift towards profit-centric framework for assessment, support, and management of efficiency metrics. [Foreign Language] Through such efforts, we will be able to stabilize variability in CSM adjustment and experience variance, and focus on strengthening the capabilities around insurance profit management as we seek to achieve tangible growth.

[Foreign Language] For auto insurance, we plan to revamp the pricing framework to normalize insurance premium, and redefine customer value based on highly sophisticated data analytics. Through tailored products and marketing, we'll make the shift towards profit-centric portfolio.

Moreover, through stronger on-site execution for claims and tech-based efficiency innovation, we will establish a profit-making business structure that can withstand the market. [Foreign Language] Despite the fact that commercial insurance is the hallmark of P&C business, domestic growth has been stagnant.

We will regain profitability by rebalancing business portfolio, which include making bold changes in low-margin sectors and regaining self-resilience. At the same time, we will be broadening the basis for growth by discovering new businesses.

[Foreign Language] In the global market, while sustaining steady stream of revenue through Canopius and Samsung Re, we will be capturing new growth opportunities to fortify our business structure. Through such efforts, we will also be increasing the commercial line contribution to overall profit of the company.

[Foreign Language] We will continue to enhance investment yield based on a more active investment strategy. Under risk management framework, we will also be identifying new and higher-yielding assets and improve the quality of interest-bearing asset to make bigger contribution to the company's earnings.

[Foreign Language] Secondly, under a rapidly changing environment as a leading company, we will be quick and bold in driving change to relentlessly explore new and distinctive engine for growth. [Foreign Language] We are planning on global business to be the main engine that drives company-wide growth.

Canopius will make bigger profit contribution, while collaboration model will fuel regional expansion into North America and Europe as it works as a strategic base camp for pioneering into future markets. [Foreign Language] For Samsung Re, our plan is to solidify its presence in Asia by diversifying its business portfolio driven by market expansion and by identifying new insurance product line, and through stabilized foundation for profit underpinned by stronger risk management capacity.

[Foreign Language] Also, we are rebuilding operational foundation, one that is innovative and bold, capable of nimbly responding to the market, going beyond the traditional practice of the insurance industry. [Foreign Language] By making a distinction between organizational growth and marketing capacity, we will expand the scale through diversified adoption of tied agent organization, and will strengthen sales capabilities by innovating the system for fostering talent and build industry's top TA organization.

On the market-leading side, we will drive sales around high-quality policies and strengthen control of in-force contract with a view towards enhancing business efficiency. [Foreign Language] We will also fortify foundation for growth through new business expansion and corporate-wide process innovation.

Across healthcare, mobility, enterprise safety, we will be preemptively detecting newly emerging risks while strengthening the role as a social safety net, which is the essence of being an insurer, and at the same time create new revenue opportunities. [Foreign Language] We will also lead the innovation and enhancement in workflow productivity by actively adopting AI into business processes, AI which is accelerating the transformation across the industry.

We will bring AI across end-to-end claims process, particularly for auto and long-term insurance, thereby enhancing work efficiency as well as stepping up service quality. [Foreign Language] In 2026, SFMI will solidify its business fundamentals driven by bold changes implemented across the entire business domain, while embarking on challenge that will shift the market landscape as we lay down the foundation for new growth.

We will continue to endeavor to be a company worthy of trust by our shareholders, customers, and the greater society who have stood by us for many such years. Thank you.

[Foreign Language]

[Foreign Language] Good morning, I am Kim Myung-Wook from J.P. Morgan.

Thank you for taking my question. Would like to ask you two questions.

First one: as of the end of the year, we see that your solvency K-ICS ratio is at 260% and your core capital ratio has improved to 170%. Under this backdrop, I'm sure that the management team, and also as was alluded to by the CFO in the opening presentation, would be thinking about the efficient way to allocate your capital.

My question is this: do you plan to continue on with the current target ratio of 220%, and if you were to convert that on a core capital basis, how should we, the market, be interpreting what that implies? Above and beyond the target level, aside from making the investment for growth, would like to know as to what will be the size or the amount that could be used for allocating to the minority shareholders of the company?

Second question is on your loss ratio for the long-term business. Currently, the risk loss ratio is 97%, which is quite bad compared to your past trend as well as compared to the previous year.

Since long-term business is core pillar behind the company's earnings, would like to know as to to what extent would you be able to improve the loss ratio in the coming two to three years?

[Foreign Language] Yes, this is the Koo Young-Min responding to your first question. You are correct, as of the end of the year, our K-ICS ratio reported 263%, and if we were to convert that to a core capital basis, which will be implemented from most likely 2027, our internal calculation shows that it will be 171%.

You've mentioned whether we have any plans to make any changes to our mid to long-term target of 220%. Now, this target had been determined based upon the portfolio that we currently have, as well as in consideration of us maintaining the credit ratings that we are currently getting.

With regards to any potential for reducing the or making changes to the target level in light of the downward adjustment that was made by the supervisors, I can say that when a rating agency evaluates the adequacy of a creditworthiness of an entity, regardless of the statutory recommendation, they make that decision based upon the risk structure of the company's business and also consider many different business management related factors. As of this point, we do not have any particular plans to make changes to that target percentage.

In terms of the core capital-based target, when that regulation is applied in 2027, in accordance with that scheduling, we will be making an appropriate preparation as we go forward. Also, in terms of your question about shareholder return to the minority shareholders, as a shareholder return as a whole, inclusive of minority or majority, basically as per the disclosure that we've made back in January of 2025, when we made the value-up plan, our objective is to progressively increase our shareholder return to 50% by year 2028, and we will be working within that scope.

[Foreign Language] This is the team leader of Long-Term Insurance Strategy. In 2025, the loss ratio reported 97.2%, which it was an increase of 9.5 percentage points on a year-over-year basis.

Now, this is attributable to the base effect going back to first quarter of 2024 with the change in the IBNR-related rules. If we were to take away the IBNR changes, the impact of IBNR changes, the figure would stand at 92.6%, which is an year-over-year increase of 4.8 percentage points.

[Foreign Language] Now, such increase in loss ratio is mostly coming out of the indemnity products, the medical indemnity products, as well as the fire incident that took place at the South Yeongnam of the Yeongnam region, which were large claim events. Starting the second quarter, we took on a strategy focusing on profitability, and we discontinued the provision of the products that entailed high loss ratio and focused more on high-margin products.

We made the shift of our portfolio towards that direction, and so starting the second half of the year, we had seen loss ratios stabilize. [Foreign Language] And looking out into 2026, we will be expanding high-quality policies and exposure, and to the increases in the pricing, the insurance premium, we and make and also through acquisition of more new business, we expect that the loss ratio will start to improve.

Also there's been a change in the experience table, and we've made the adjustment and accordingly had increased the premium, the rate, the pricing of the products. As we go into 2026, there are rules in place for selective control on certain items for benefit items and non-benefit items in order to mitigate excessive treatment and excessive claims.

Hence, we think that in 2025 Well, in 2026, we will start to see stabilization or the coming down of the loss ratio, with '25 being the peak. [Foreign Language]

[Foreign Language] Thank you. I am Lee Byung-gun from DB Securities, asking you two questions.

The first question is actually a follow-up asking for a little more detail. We were disappointed at the DPS amount that you have announced on a year-over-year basis is 2.6% higher.

Also if you look at on a payout basis, the dividend payout is 5.4% on an year-over-year basis, and that also is quite disappointing. If you look at page 17 where it says that your payout ratio going forward in by 2028 is going to be 50%, since we only have about three years left, if you make the calculation, that means on a per annum basis, we need to expect about 6.9 percentage increase in DPS on an annual basis.

That seems to be quite reasonable. Also in light of the fact that the equity method gains you will get from Canopius is going to be higher, and also the dividend that you get paid for Samsung Electronics shares is going to go up, it seems on an annual basis your net profit is not going to go down.

Now, having said that, would that mean that at the current net profit level of '26, shouldn't we be expecting a DPS of 24,000 Korean won? Is that a reasonable calculation?

Is that something that we can reasonably expect? Can we expect 7% DPS increases going forward?

Second question, some more clarification on your loss ratio. I do see and agree that 2025 would have been your peak for your loss ratio, and afterwards there will be an annual decline in loss ratio.

I think the picture is a little different for your experience variance, especially for most recent underwriting years, the loss ratio seems to be bigger on that side, or as we get closer to the recent underwriting year. I would think that that would be very difficult to reflect that fully in the CSM adjustment.

My question is this: even if the loss ratio experience variance margin actually comes down, on an absolute basis still it may come down, but still it would be quite significant. Do you incorporate that, and how is that reflected on your business plans?

[Foreign Language] This is the team leader of Corporate Management Support team responding to your question. As our CFO has mentioned, based upon the value-up plan which we announced January a year ago, our objective is to reach the 50% payout ratio by 2028, and that plan stays the same.

There's no change to that. We would like you to also appreciate that despite the fact that our net profit had posted a negative growth, we expanded our payout ratio and increased our DPS as well.

Now, the way our value-up plan is set up is it is based upon the payout ratio, and you're asking whether we could actually, we should be paying out DPS of 24,000 won. In order for that to happen, there has to be a premise of us increasing and expanding the net profit of the company.

At this point, will be difficult to give you any definitive answer, but the company is endeavoring its utmost to make sure that we uptrend our net profit through such efforts as you've mentioned, gaining more equity method gains from Canopius and also strengthening the core insurance business of the company. We will be very much committed to increasing the net profit of the company so that we can, meet and satisfy the expectations that the market has.

In terms of also that 50% payout ratio target, we will continuously, work to achieve the objective for that progressive increase. [Foreign Language] Property insurance and that had an impact of driving down the experience variance, and the impact based upon the underwriting years for most recent versus the past, it's 50/50.

[Foreign Language] And also in 2026, we will be able to reflect appropriate level of claims cost, and also we will focus on our core products in terms of the strategic approach and focusing on My Fit product, and also with regards to the treatment-related claims and expenses. With the improvement in the overall regulatory rules and environment, we are looking forward to a structural improvement in loss ratio profile.

Also in January of 2026, there was adjustment in the rates, the pricing, and so going forward, we are looking forward to improvement in experience variance. [Foreign Language]

[Foreign Language] Thank you for taking my question. My question relates to your new business and onerous contract.

I feel that for the company to achieve a stable growth, new business CSM is very important. If you look at your past practices, your guidance has been around 3 trillion, but for this year it seems you've missed that level.

For 2026, should we expect 3 trillion to be the usual target? Second question is: what is the reason that we are seeing a different direction of where your onerous contract is moving as of Q4?

If you compare quarterly figures of the past two years, it seems to be quite different. To be a little more clear, would like to know as to the why we for this quarter we've seen the quarterly onerous contract actually come down, unlike the past.

[Foreign Language] Now, this is the Long-Term Insurance Strategy team leader. In terms of the new business CSM, in the first half of '25, the CSM multiple had deteriorated, and also in the second half of the year, we had seen stagnant new business sales.

On a 2025 and an annual basis, new CSM, new business CSM had actually fallen versus 2024. As we entered into the second quarter, we shifted to a margin-focused strategy which had an impact in improving the CSM multiple and which drove gradual recovery.

[Foreign Language] In 2026, we are going to take on a business approach focusing on creating future value, and we will focus on acquiring high-quality new business, which will drive a steady CSM profile. We will stay away from providing coverage for minor injuries which minor injury products, which actually entail high level of loss ratio, and focus more on high-margin CSM, providing protection for more major risks.

That will be where our sales capability will be focused on, so that we will be able to regain our positioning in terms of new business CSM as we've done in the past. [Foreign Language] Regarding the second question, with the loss component-related expense for Q4, there was a write-back or reversal of 17.3 billion, which is attributable to the adjustments made to medical indemnity pricing, having that impact being reflected on that quarterly figure.

[Foreign Language]

Thank you. My name is Jeong Tae-joon from Mirae Asset Securities.

Would like to understand as to the impact that you, the company, will have for this year with the changes in the guidelines for the loss ratio and expense ratio. What will the impact be for the company?

[Foreign Language] This is the team leader of the long-term insurance strategy team. Regarding your question about the actuarial assumption changes and also the recent press release that was made by the authorities on changes in the guideline for the loss ratio and the expense ratio.

For the loss ratio, it has to do with new protection, new coverage, and on the non-indemnity side increasing the relevant percentage to 90%. On the expense side, reflecting the actual inflation, as well as applying a common expense across the insurance period.

[Foreign Language] Regarding those two guidelines, it actually entails a significant amount of work scope, because we have to work from the basic statistics, the data, and making significant changes to the assumptions. There will be simulation that will be required.

Once the working standard or working rules are distributed, we will be able to make more in-depth analysis. At this point, we believe that there will be some mixed impact in terms of the loss ratio and the expense ratio.

[Foreign Language]

[Foreign Language] I have two questions. In the fourth quarter, there were quite a bit of one-time factors.

For instance, increase in the educational tax had impacted your CSM and also increased your indirect costs. Also with the adjustment upwards of the corporate income tax, there was also certain additional corporate tax that you have paid.

With on the CSM's adjustment side, there are multiple detailed factors, which if you could share would be quite helpful. Second question, I also am coming back to the dividend-related question, because the dividend that you have declared is lower than what the market had expected.

I would think that in 2025, the disposition gains that you got from Samsung Electronics shares, would like to know to what extent did that contribute to the distributable sources for dividend payout? I say this because we, as analysts, would have to make projection as to, the amount of dividend that would be paid out in 2026, which is based not just on earnings, but also the dividend that you get paid for Samsung Holdings.

I ask this question because in 2025, the dividend figure does not seem to be have included the Samsung Electronics-related, dividend payment. If so, because your previous position was that you will be using SEC-related dividend as distributable sources for payout, just would like to know whether that stance had changed.

[Foreign Language] This is the Head of Long-Term Insurance Strategy team responding to your question about 2025 CSM adjustment, which in the size of which was 1.7 trillion compared to the previous year's 1.6 trillion, it was an increase of 0.1 trillion Korean won. In Q4, it's because of the increase in the education tax of 300 billion, which was a one-off, and also change in the year-end assumption, which had an impact of increasing the CSM adjustment.

If we were to take out and exclude such one-time impact on an year-over-year basis, we see a stable trend. [Foreign Language] This is the Head of Corporate Management Support team responding to your second question about dividend.

The sale of the shares of Samsung Electronics and the proceeds from it is not captured under P&L, but it goes under retained earnings. When we make the calculation and decision on DPS based upon the distributable sources which reflect that retained earnings, yes, it is reflected.

Also going forward in 2026, if there were to be gains from the sales of the Samsung Electronics shares this year, it would also be reflected as well. [Foreign Language] Just to elaborate on the corporate income tax side, last year on a consolidated pre-tax basis, the amount was to around 2.7 trillion, and for this year it was for around 2.783 trillion.

On a pre-tax basis, there was an upward trend, while for the net profit there was a negative growth, which is attributable to that increase in the corporate tax rate. [Foreign Language]

[Foreign Language] Thank you. I have two questions.

First one relates to loss ratio. You've mentioned in 2025 the loss ratios for medical indemnities, long-term, and property insurance have gone up quite significantly, but I would also project that the loss ratio for the non-indemnity healthcare coverage would have also gone up quite significantly.

Just would like to double-check whether that understanding is correct, and if that is the case, what would be the reason behind that? Would also like to know as to what the impact of such healthcare coverage is for 20 the impact coming from it in 2024 and 2025, and also how would things play out as we move into 2026.

These are non-medical indemnity healthcare coverage. Second question is: you've mentioned that there is a significant increase, it seems there's a significant increase in corporate income tax rate in Q4 versus Q3.

Now, is this an outcome of a education tax impact, and how going forward should we be doing the accounting treatment for education tax?

[Foreign Language] Responding to your first question, I'm the Head of Long-Term Insurance Strategy. The total loss ratio had increased about 5% year-over-year basis, and for the non-medical indemnity, the living benefit coverage was also about that level.

It wasn't that for that coverage was more higher than what we've seen in terms of the total loss ratio profile. The main reason behind it is because of the shortfall in terms of the rate-making.

The rate had not been able to cover for the cost related to that protection. Not just on the medical indemnity side, but on the non-indemnity living benefit products, we have seen this level of loss ratio.

In order to respond to this, we have been developing a moral hazard detection system powered by AI, and also have very closely controlled the claims-related process with regards to these types of insurance policies. [Foreign Language] So this is the Head of Corporate Management Support team.

Yes, there's been an increase in the income tax rate at the top-notch segment. The tax rate had been increased from 24% to 25%.

That was finalized and confirmed, and it had an impact on the after the tax basis from an accounting perspective. [Foreign Language] And education tax is separate from corporate income tax.

In terms of the tax base, the base had increased from 0.5% to 1%. [Foreign Language] So education tax is going to be a factor that increases the expense on a pre-tax profit basis.

That's how we account for it. For 2026, that will be how it would be reflected in the P&L.

[Foreign Language]

[Foreign Language] Yes, I've wanted the opportunity to listen to the answers to other questions, I intentionally wanted to be the last person to be asking the question. My first question has to do with your core business.

When I look at CSM, I look at new CSM plus CSM adjustment, and I look at it on a net basis when I assess the Korean insurance industry, because the new CSM reflects the relevant cost, and then only when you actually put in the CSM adjustment factor would you actually be able to have a clear understanding of what the earnings capacity of a certain insurer is. In looking back from '23, I see on a net basis that your net CSM had actually fallen from 2.3 trillion down to 1.2 trillion.

The whole purpose of implementing IFRS 17 was for the higher transparency of accounting in the insurance industry, because that was not always ensured. Would like to know as to what the company's strategy is in reducing this variance in the CSM adjustment, because I would think that even if the net value is the same across different entities, basically if the net CSM is going net CSM with low amounts of adjustment is going to be higher in quality in terms of information.

Would like to gain the understanding of what the management's approach is to this. Second is on the shareholder return.

The market had high level of expectation for SFMI, because you are the first amongst the Samsung Group of companies to actually share a preemptive value-up plan. As other Samsung companies have announced their value-up plan, it seems like the speed at SFMI is quite slow, because of course the payout ratio itself is important, but since you have committed to the 220%, would like to understand and gain more color on the timeline with regards to this, because you closed the year with 270% K-ICS ratio, and even if you account for the Canopius share acquisition, which will have about 6% to 7% impact, your K-ICS ratio would still have increased on a core business basis.

What is the timeline going forward, because value-up plan seeks to improve the ROE, and how you're going to use this excess capital and return it to the shareholders is very important, especially for long-term investors like us. It's important that we hear as to what your thoughts are on this.

[Foreign Language] This is the Head of Long-Term Insurance Strategy team. Since the adoption of IFRS 17, in order to achieve resilient growth, the company had focused all of its efforts on profitability-driven product portfolio and channel portfolio.

[Foreign Language] In 2026, we will exert efforts to maximize the net CSM, and upon that objective, realign the value chain across that very objective. Rather than wanting to try to grow just the top-line volume, we're going to focus on the fundamentals so that we can acquire high-quality new business, improve on the efficiency metrics such as lapse ratio and expense ratio, so that the adjustments to the CSM could be stabilized, rising in the wake of any changes to the assumption.

We will focus more on maximizing total CSM.

[Foreign Language] Responding to your second question, this is the CFO. In terms of the recent efforts across the industry to focus more on profitability and with the adoption of the core KPIs, we are seeing a structural gap widening within the industry players.

We fully understand where you're coming from in terms of your interest on efficient use of the capital. After we announced our value-up plan last January, we also admit that we had lacked sufficient communication with the market.

At this point, we are in the midst of fine-tuning the ROE targets by each of our business, and also in order to achieve the target, we are focusing on realigning the capital allocation planning as we speak. We at SFMI, we place capital efficiency as our number one objective in further enhancing shareholder value.