Investor Relations 2019

2Q 2019 Earnings Results

This presentation has been prepared by Orange Life Insurance, Ltd. (the “Company”) solely for informational

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* IFRS9, 'Financial instruments' and IFRS 6, ‘Lease’ has been applied from reporting periods commencing on or

after January 1, 2019 unless otherwise stated. Financial information for prior periods has not been restated.

RBC ratio remains strong at 428% despite lower yields and tumbling KOSPI

Strong new sales continues – APE grew 21.7% yoy

Protection products diversification revitalized our FC channel by boosting their productivity

Continuing shareholder-driven dividend policy – BOD decided on an Interim dividend of

KRW 800 per share

Initiate strategic discussions to leverage Shinhan Financial Group’s large customer base,

as part of the One Shinhan vision

01. Key Financial Highlights

02. New Business Growth

03. VNB (Value of New Business) Growth

04. VNB (Value of New Business) Margin

05. Premium Income & Profits

06. Source of Earnings

07. Investment Results

08. Reserves / Crediting Rate

09. Efficiency

10. Capital Adequacy

11. Direction for Steering Business and Value in 2H19

12. Next Reporting Due Date

(Unit: KRW bln)

2Q 2019 2Q 2018 yoy YTD 2019 YTD 2018 yoy

Annualized Premium Equivalent (APE) 166.6 136.9 21.7% 348.5 286.8 21.5%

Value of New Business (VNB) 1) 20.4 30.8 -33.9% 50.8 61.7 -17.8%

Premium Income 2) 1,053.9 1,046.0 0.8% 2,142.6 2,089.6 2.5%

Operating Result Before Tax 3) & 4) 84.8 116.9 -27.5% 186.2 217.6 -14.4%

Profit After Tax (PAT) 4) 66.8 94.7 -29.5% 147.2 183.6 -19.9%

Total Assets 5) 32,659.3 31,537.5 n/m 32,659.3 31,537.5 n/m

Invested Assets 6) 26,078.1 24,964.8 n/m 26,078.1 24,964.8 n/m

Investment Yield 7) 3.9% 4.0% -0.1%p n/m n/m n/m

Shareholders' Equity 8) 3,233.5 3,590.9 n/m 3,233.5 3,590.9 n/m

RBC Ratio 428% 438% -10%p 428% 438% -10%p

Note 1) Prior year’s VNB has been restated based on 2018 year-end assumptions

Note 2) Includes premium income from variable business

Note 3) Operating Result Before Tax is Profit Before Tax excluding market variance (Realized capital & FX gains, losses/impairments)

Note 4) IFRS9(Financial instruments) and IFRS16(Lease) have been applied for reporting periods commencing on or after January 1, 2019 (Financial information for prior periods has not

been restated)

Note 5) 2Q19 Total Assets (IAS39 basis) grew 7.0% yoy to KRW 33.73 trn

Note 6) 2Q19 Invested Assets (IAS39 basis) grew 8.7% yoy to KRW 27.15 trn

Note 7) Adjusted investment yield & 12-month rolling basis: Net Investment Income/Invested Asset (Excludes Unrealized Gains and Losses)

Note 8) 2Q19 Shareholders’ Equity (IAS39 basis) grew 10.8% yoy to KRW 3.98 trn

Total APE rose 21.7% for the quarter and 21.5% on YTD basis

• Protection APE was 12.0% higher (FC +9.9%, GA +15.5%) yoy

• Savings APE rose 83.9% on high BA volumes, while Variable APE was 22.4% lower

Value of New Business declined by 33.9% for the quarter, and -17.8% on YTD, largely due to;

• an increase in the sales portion of low margin products including BA savings products

• a decline in margins in the course of revitalizing the FC channel with various sales initiatives

and diversifying the protection product portfolio

• downward adjustments of our investment return assumptions due to plunging interest rates

ORBT lower as declining bond yields negatively affect our investment income and lead to

additional GMxB reserves

• Net Profit was further lowered as net realized gains decreased

Total Assets, Invested Assets, and Shareholder’s Equity are up 7.0%,8.7% and 10.8%,

respectively on IAS39 basis (New accounting has been applied since the inclusion into the

Financial Group)

RBC ratio remains very strong at 428% after reflecting interim dividend (435% before dividend)

1,800

2,000

2,200

2,400

2,600

2,800

3,000

Jan-18 Jun-18 Dec-18 Jun-19

KOSPI

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

Jan-18 Jun-18 Dec-18 Jun-19

KTB 5yr KTB 10yr

-10.6%

2,131P (Jun 28, 2019)

-96bps

KTB 10yr

2.56% (Jun 29, 2018)

KTB 10yr

1.60% (Jun 28, 2019)

KTB 10yr

1.95% (Dec 31, 2019)

2,041P (Dec 28. 2018)

2,383P (Jun 29, 2018)

Bond yields decline sharply

Long-term bond yields drop sharply on

expected Fed rates and Bank of Korea

base rate cut in July

These low bond yields depressed the

Value of New Business, and negatively

impact P&L, including declines in

investment yield and delay in the release

of GMxB reserves to profits

Korean equities’ performance disappoints

The Korean equity market on a downturn

since 2nd half of 2018

Weak Korean equities’ performance has

led to impairments on our ETF assets and

higher GMxB reserves

• Outlook for equities remains uncertain

for the year, and our 2020 SAA equity

allocation has been reduced to 2% from

3%

Headwind in new sales as customer

demand for new variable policies

weakens

Note 1) APE: Annualized Premium Equivalent

Note 2) FC: Financial Consultant, BA: Bancassurance, GA: General Agency

62.4 52.2 51.1

39.2 36.3 33.3

126.5

84.3

67.4 63.3

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

152.9 148.9

69.6 130.6

64.3

68.9 286.8

348.5

YTD 2018 YTD 2019

72.3 67.5

33.3 63.3 31.2

35.8 136.9

166.6

2Q 2018 2Q 2019

FC BA GA

21.7%

2Q

2018

2Q

2019

YTD

2018

YTD

2019

21.5%

2017

2018

2019

Savings Foreign Currency Product (USD) Variable 2)

Total APE rose 21.7% (KRW +29.7 bln)

FC channel’s total APE reduced by 6.6%

as demand in Variable (annuities, savings)

weakened, but Protection sales were up

by 9.9%

• Protection mix higher from 70.4% to

82.8%

BA channel grew 89.9% contributing

KRW 30 bln APE yoy. The stellar growth

is attributable to the low base in 2Q18

GA APE increased 14.6%, sustaining a

higher Protection mix

• 99.8% Protection mix

BA Volume gradually on decline

BA Volume spiked in 3Q18 but has

gradually declined each quarter thereafter

• BA volume in 1H18 was held back as

the large players heated up market

competition

• From 3Q18, crediting rate competition

eased and we jumped back into the

Savings policies in a move to catch-up

• We managed to lower Korean won

Savings sales reduced significantly

from June 2019

We are steadily shifting our focus to

strategic higher margin BA products, such

as Variable and USD Savings policies,

while moving away from traditional

Savings

50.9 55.9

30.9 35.7

81.9 91.7

2Q 2018 2Q 2019

FC GA

103.7 124.5

63.6

68.7

167.2

193.2

YTD 2018 YTD 2019

APE: Annualized Premium Equivalent

FC: Financial Consultant, GA: General Agency

2Q

2018

2Q

2019

YTD

2018

YTD

2019

12.0%

15.5%

81.9 91.7

2Q 2018 2Q 2019

167.2

193.2

YTD 2018 YTD 2019

Whole Life Health

2Q

2018

2Q

2019

YTD

2018

YTD

2019

14%

86%

36%

64%

13%

87%

38%

62%

12.0%

15.5%

Protection APE by Channel

2Q Protection APE grew 12.0%

(KRW 9.8 bln)

• FC’s Protection up 9.9% (KRW 5.0 bln)

• GA’s Protection up 15.5% (KRW 4.8 bln)

On a YTD basis, Protection APE grew 15.5%

(KRW 26 bln)

• FC’s Protection up 20.1% (KRW 20.8 bln)

• GA’s Protection up 8.2% (KRW 5.2 bln)

Protection APE by Product

Strategic launching of multiple new health

products – Dementia in February and

cancer in June – boosted FC’s

productivity and captured meaningful

numbers of new customers

Health proportion grew within Protection

• 14% (2Q18) → 36% (2Q19)

• 13% (1H18) → 38% (1H19)

Steady growth of protection sales from FCs on the back of company-wide efforts to

increase customer base and revitalize the FC channel with diverse product offerings

VNB: Value of New business

21.5%

14.6%

-2.9%p

-3.3%p

-0.8%p

YTD2018

채널믹스

& 물량

상품믹스 금융시장 YTD2019

30.8

61.7

20.4

50.8

2Q YTD

-33.9%

-17.8%

2Q

2018

2Q

2019

YTD

2019

YTD

2018

YTD

2018

YTD

2019

Channel

Mix &

Volume

Business

Mix

Market

YTD VNB margin declined -7%p to 14.6%

Total APE was higher but large volumes from

the low margin BA channel lowered company-

level VNB margin by 2.9%p

• Expect a drop in 2H BA volume and lower

BA channel mix

During 1H19, high-margin Whole life mix

dropped, while there was strong demand for

low-margin products, such as Dementia, which

were offered to vitalize FC activity. This

resulted in a 3.3%p drop in VNB margin

• Expect business mix to improve in 2H as

company focus is back on high margin

products

VNB margin reduced by 0.8%p economic

assumption changes from lower market rates

• NIER1): 2.90% (18YE) 2.65% (2Q19)

• RDR2): 8.5% (18YE) 8.1% (2Q19)

KRW 10.5 bln lower VNB for the quarter

Total APE grew 21.7%, but high margin

FC channel APE dropped by 6.6%

Whole life product mix have declined

within Protection

But new product offerings and multiple

sales initiatives supported FCs activities

and captured new customers, thereby

stabilizing the channel

• Active FC ratio is 70.0% in 1H19 up

from 65.6% in 2H18

Note 1) NIER: Net Investment Earnings Rate, Note 2) RDR: Risk Discount Rate

34.6%

4.9%

0.9%

23.5%

3.4% 3.5%

Protection Savings Variable

YTD 2018 YTD 2019

34.9%

4.3%

8.3%

25.9%

2.7%

12.6%

FC BA GA

YTD 2018 YTD 2019

Variable Savings Protection

VNB margin by product

Protection VNB Margin dropped to 23.5%

due to a higher mix of low-ticket Health

business including Dementia and lower

whole-life mix

Despite the rise in savings volume, savings

margin has been squeezed 1.5%p on lower

NIER

Variable margin is up 2.5%p due to repricing

in April 2019 and lower expenses (there was

a Variable Sales Campaign in 1H18)

VNB margin by channel

FC channel’s VNB margin declined to

25.9% on reduced margin of protection

business

BA volumes grew significantly, but the

lower NIER led to a margin drop of 1.6%p

GA channel’s VNB margin was higher

(+4.3%p) due to repricing and business

mix improvement

Premium income includes variable business

Operating Result Before Tax: Profit Before Tax excludes market variance

(Realized capital & FX gains and losses/Impairments)

116.9

84.8

94.7

66.8

2Q 2018 2Q 2019

217.6

186.2

183.6

147.2

YTD 2018 YTD 2019

888.0 931.7

158.0 122.2 1,046.0 1,053.9

2Q 2018 2Q 2019

1,800.6 1,868.9

289.0 273.7

2,089.6 2,142.6

YTD 2018 YTD 20192Q

2018

2Q

2019

YTD

2018

YTD

2019

-27.5%

ORBT

2Q

2018

2Q

2019

Operating Result Before Tax Profit After Tax

YTD

2018

YTD

2019

-14.4%

ORBT

Regular Single

0.8%

2.5%

Premium Income up 0.8%

Premium income up 0.8%, KRW 7.9 bln,

and on YTD basis 2.5%, KRW 53 bln.

While single premium income reduced on

lesser BA single savings sales, higher

regular premium income led premium

income increase for the quarter

Lower ORBT and profits

ORBT which excludes market variances

(net realized gains and impairments, and etc.)

was KRW 32.1 bln lower yoy

• Investment margin reduced from lower

interest rates

(2Q18 One-off dividend income: KRW 4.8 bln)

• GMxB reserving due to weak stock market

performance with falling interest rates

• Increase in IBNR and higher claims

• Expenses increased with advertising

* Please refer to ‘06. Sources of Earnings’ slides (P19-20) for more

details

51.7 40.6

41.7 34.1

35.5

16.8

128.9

91.5

2Q2018

2Q2019

Note 1) Other Margins includes Reserves, Lapses, Surrenders, Policyholders’

Profit Share, and others

Note 2) Expenses: Acquisition and Maintenance Expenses – Other Margins

Note 3) PBT: Profit Before Tax

투자수익

+235.8

투자비용

-223.0

사업비 등 2)

-132.0

PBT 3)

201.1

Investment

Credited

-451.5

Investment

Return

+481.1 Expenses 2)

-282.9

Loadings

+383.2

Claims

-303.7

Risk Premium

+374.9

100.3

71.2

29.6

105.8 100.3

76.2 71.2

66.9

29.6

248.9

201.1

YTD2018

YTD2019

Investment Margin

Mortality &Morbidity Margin

Expense & OtherMargins1)

Investment margin decline led to lower PBT in 2Q

Investment margin dropped by KRW 18.7 bln

• Lower interest rates continues to dilute new money rate

• Less net realized gains (KRW -5.3 bln) and less dividend income (KRW 4.8 bln one-off

dividend income recorded in the previous year)

Mortality and Morbidity margin reduced by KRW 7.5 bln

• Recent increase in disability claims volatility drove IBNR to increase by KRW 4.3 bln for

the quarter (compared to a KRW 0.8 bln release in 2Q18), leading to net reduction of

KRW -5.1 bln

• Morbidity claims increased

Expense & Other margins declined by KRW 11.1bln, after reflecting additional GMxB

reserves and Advertising cost

• 2Q19 Advertising cost was KRW 4.1 bln against zero spending in 2Q18

• 2Q19 GMxB reserving was KRW 4.2 bln, while additional KRW 0.9 bln was reserved in

2Q18, which resulted in net effect of KRW -3.3 bln

82.6% 81.2%

9.7% 9.2%

2.3%

1.9%

1.8% 3.7%

3.1% 3.5%

0.4% 0.5%

2Q 2018 2Q 2019

Domestic Stock

Investment Funds

Overseas Securities

Cash & Cash Equivalent

Loans

Domestic Bonds

Note 1) Adjusted investment yield & 12-month rolling basis: Net Investment Income/Invested Asset

(Excludes Unrealized Gains and Losses)

Note 2) Arithmetic mean of 24 life insurance companies(including Orange Life).

2Q 2019 results not yet available

4.0% 4.0%

4.0% 4.0% 3.9% 3.9%

3.6% 3.6% 3.5% 3.5% 3.6%

1Q2018

2Q 3Q 4Q 1Q2019

2Q

Orange Life

Industry Average(Simple)

2Q

2018

2Q

2019

Asset Duration 10.0 10.4

Yield-enhancing

Investments3)

+Foreign Bonds: 7.7%

2)

Note 3) Yield-enhancing Investments: Alternative Investments and listed stocks

Investment return remains above industry

average

Although lower bond yields continue to

pressure our investments yield, it remained

strong at 3.9%

Asset portfolio remains low-risk

Asset duration was lengthened further for

ALM purposes

• 2Q19 Asset Liability Duration gap -0.65

Yield-enhancing Assets (Alternatives and

Listed equities) and Foreign bond have

reached 5.1%, 2.6% of Invested Assets,

respectively (2Q18 Yield-enhancing Assets

4.1%, Foreign bond 1.2%)

New money KRW 115.7 bln was invested

into overseas real estate and infrastructure

funds (on a commitment basis)

Loans account for 9.2% largely composed

of policy loans

21,077 22,729

4.0% 3.9%

2Q 2018 2Q 20192Q

2018

2Q

2019

Reserves Crediting Rate

49.9% 49.7%

50.1% 50.3%

9.8%

2Q 2018 2Q 20192Q

2018

2Q

2019

Fixed Crediting Rate Reserves

Fixed Crediting Rate 6% or higher

Floating Crediting Rate Reserves

10.0%

Crediting rate has been managed lower

Average crediting rate of fixed

guarantee reserves decreased by 4bps

from 4.94% to 4.90%

Average crediting rate of floating rate

reserves was reduced 8bps from

3.01% to 2.93%

Maintaining a sound reserve composition

Fixed reserve portion remains close to

50% while the share of reserves with high

guarantees of 6% or higher has fallen to

9.8%

The mix of floating crediting rate reserves

increased slightly (by 0.2%p) as a result of

high new business volumes from the BA

channel

5,187 4,999 5,407

14,228 14,993 14,585

19,416 19,992 19,992

4Q 2018(UFR 4.2%)

2Q 2019(UFR 4.2%)

2Q 2019(UFR 5.2%)

Tested Reserves LAT Surplus Gross Premium Valuation

1)

Note 1) UFR: Ultimate Forward Rate

KRW 5.4 trn LAT Surplus suggests that even upon further market rate declines,

additional reserving will not be a likely scenario

LAT Surplus represents the amount of statutory reserves held in excess of the GPV (Gross

Premium Valuation) reserves. Regulators require insurers to disclose LAT results twice a

year

LAT Surplus drop of KRW 188.8 bln was expected with end-June 2019 market interest rate

fall. But as the Financial Supervisory Service changed the Ultimate Forward Rate used to

calculate the discount rate applied, LAT Surplus increased KRW 219.3 bln from year-end

2018

Interest rate scenario is provided by the regulator and uniformly applied to all insurers

• [4Q 2018] LAT Surplus KRW 5.2 trn

LAT discount scenario = +82.4bps (Industry spread* × 80%), UFR 4.2%)

• [2Q 2019] LAT Surplus KRW 5.4 trn

LAT discount scenario = +88 bps (Industry spread* × 80%), UFR 5.2%)

* Industry spread = Liquidity premium + Credit spread

1,227 1,217

81.0% 78.4%

61.8% 59.6%

2Q 2018 2Q 2019

5.1% 5.9%

2Q 2018 2Q 2019

5.1% 5.5%

YTD 2018 YTD 2019

43.0% 40.6%

91.4% 96.4%

72.8% 78.2%

2Q 2018 2Q 2019

43.9% 42.4%

93.5% 96.8%

YTD 2018 YTD 2019

Expense Ratio (Maintenance Cost / Premium Income)

Loss Ratio (Claims/Risk Premium)

-2.5%p

-2.2%p

YTD

2018

YTD

2019

2Q

2018

2Q

2019

2Q

2018

2Q

2019

Mortality Total Morbidity

Number of customers

Persistency – 13th month

Persistency – 25th month

YTD

2018

YTD

2019

YTD

2018

YTD

2019

75.0% 77.7%

Expense/Loss ratio

Expense ratio increased to 5.9% mainly

due to advertising costs for the quarter,

but the YTD expense ratio was flat at

5.5%

Loss ratio hiked to 78.2%, as Morbidity

loss ratio was higher and as additional

incurred but not reported reserves have

increased. But Mortality loss ratio was

lower for the quarter

(YTD loss ratio was 77.7%)

Persistency/Number of customers

Persistency dropped slightly from previous

year

•13th month persistency dropped due to an

increase in sales of protection products

(which generally have lower persistency),

along with higher sales coming from newly

joined FCs in their 20s – which tend to

record lower persistency than business from

experienced FCs

• 25th month persistency is lower due to early

surrenders of business from the GA

channel, where upfront commission was

offered when initially entering the market

→ Management took actions to improve

persistency by shifting to a more leveled-

commission scheme for the GAs.

Commission payment period was

lengthened from 1H17

Note 3) RBC Ratio: Risk Based Capital Ratio

Note 1) IFRS9 (Financial Instruments) has been applied for reporting periods commencing

on or after January 1, 2019 (Financial information for prior periods has not been restated)

Note 2) OCI: Other Comprehensive Income

3,591 3,234

-773

+275 -213 +354

2Q 2018 IAS39to IFRS9

PAT Dividend OCI 2Q 2019

3,588

4,019

819 939

438% 428%

2Q 2018 2Q 20192Q

2018

2Q

2019

2Q

2018

2Q

2019

Required Capital Available Capital RBC ratio

One-t

ime tra

nsitio

n im

pact

as a

t Jan 1

, 2019

OCI 2) &

Others

Dividend PAT

1)

Shareholders’ Equity decreased after

applying accounting changes

As a member of a Financial Holding

Group, IFRS9 accounting applies for

financial instruments, replacing the

previous IAS39 accounting standard – the

one-time impact on Shareholders’ Equity

was a reduction of KRW 773 bln;

excluding this one-time impact,

Shareholders’ Equity would have

increased by KRW 416 bln

YTD 2019 ROE was 9.4%

(based on average Shareholders’ Equity

of KRW 3,116 bln (IFRS9 basis))

• ROE excluding valuation gains on

assets was 11.7%

(based on ‘adjusted’ average Shareholders’

Equity of KRW 2,518 bln)

RBC remains strong at 428%

Available Capital increased 12.0% from

KRW 3.6 trn to KRW 4.0 trn, while

Required Capital increased further by

14.7% from KRW 819 bln to KRW 939

bln from a year ago

RBC ratio was 435% before interim

dividend

Business

Steering

Value

Steering

Business Focus

New Product

Revitalize FC channel

Build Strong customer base

Health (Dementia, Cancer)

Active FC ratio1) 1 Number of FCs2) 2 # of In-force Policyholders 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18’18.1 ’18.6 ’18.12 ’19.3 ’19.6

70%

77%

62%

71% 71%

(명) (천명)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17’18.1 ’18.6 ’19.1 ’19.6

1,231

1,227

1,213

1,217

* Feb~June ’19: 17,802 new customers joined from

new product launch - Dementia product

1H 2H

Whole-life and

Foreign Currency

Products

Increase Upselling

Improve margin for

Protection policies

18.1 18.6 18.12 '19.3 '19.6

5,265 5,348

5,087

4,938 4,922

1H19: Focus on stabilizing FC channel by diversifying product portfolio and broadening

customer base

2H19: Upselling to new customers leading to improved VNB, and closely monitor macro

headwinds

Note 1) Ratio of FC selling one or more polices per month,

excluding managerial FCs (Sales and Branch Managers)

Note 2) Registered number of FCs which includes

managerial FCs (Sales and Branch Managers)

(in Thousands)

1H Strategic Initiatives and Results

Successfully picked up momentum for FC channel by offering multiple sales initiatives and

new products and broadening customer base

• The trend since 3Q18 of lower activity and stagnant number of FCs has bottomed out

• New product launches led to an increase in number of customers

2H Strategic Initiatives and Directions

Upsell to newly captured policyholders in 1H19

Focus on increasing Value of New Business by improving protection margins

Offer diversified products with higher margin whole-life policies and foreign currency

savings policies

Closely monitor highly volatile financial markets and proactively steer our strategies

3Q 2019 Earnings Results will be released in November 2019