the global pioneer

THE GLOBAL

PIONEER

SAMSUNG FIRE & MARINE INSURANCE

ANNUAL REPORT 2011

SF & MI _ ANNUAL REPORT 2011 1

Six StorieS that enabled 60 YearS

sTORIEs6

1

ONE HEART

02 Global Management

24 Financial highlights

26 Ceo’s Message

30 Vision and Strategy

32 Corporate Governance/

bod.Management

34 2011-2012 at a glance

2

TwO CHALLENGE

36 Core achivement

3

THREE PROmIsE

44 review of operation

4

FOuR PRIdE

54 Management infra

5

FIvE LOvE

64 Sustainability Management

6

sIx vALuE

74 Financial Section

CONTENTS

SixTy yEarS Of Sf&Mi

Beautiful Accompaniment

with Our Customers



sTORIEs6

1

ONE HEART

02 Global Management

24 Financial highlights

26 Ceo’s Message

30 Vision and Strategy

32 Corporate Governance/

bod.Management

34 2011-2012 at a glance

2

TwO CHALLENGE

36 Core achivement

3

THREE PROmIsE

44 review of operation

4

FOuR PRIdE

54 Management infra

5

FIvE LOvE

64 Sustainability Management

6

sIx vALuE

74 Financial Section

drawing on our 60 years of history filled with challenges and innovations, we are ready to make the leap forward to become the world’s top insurer.SixTy yEarS Of Sf&Mi


stories6

in 1952 amid the Korean War, anbo Fire & Marine insurance was

founded and the roots of SF&Mi were planted. Struggling against

the challenges of a post-war society, we built our business with a

focus on fire and marine insurance. after six long years we finally

turned a profit in 1958, stabilizing the business and setting the pace

for our future. in 1963, we acquired and merged with ankuk Fire &

Marine insurance, adopting their name and becoming a member of

the Samsung Group.

Since then, we have led the development and sales of special

insurance, long-term insurance, and casualty insurance, contributing

to diversification and popularization of the insurance industry. in

the 1970s, we focused on consolidating management and further

strengthened our operation by creating sales offices and reinforcing

solicitors. We successfully completed our initial public offering in

1975. taking advantage of Samsung Group’s computing center, we

actively promoted the computerization of our business processing

and became Korea’s first non-life insurer to operate the computing

system in 1980. this accelerated the advancement of our business

and enhanced management efficiency.100billion

KrW

1963. 03. 02.Changed company name to Ankuk Fire & Marine Insurance Co., Ltd.

1978. 05. 25.Opened the London office (Great Britain)

1985. 03. 31.Assets topped KRW 100 billion

1952. 01. 26.Founded as Anbo Fire & Marine Reinsurance Co., Ltd.

in the 1980s, our long-term insurance business began to expand.

SF&Mi expanded the insurance consulting offices and developed

a wide range of customer service solutions. in 1983, the company

secured branch offices and designated maintenance shops and

hospitals across the country, entering the full-fledged automobile

insurance operation. With an interest in overseas markets, the

company established an office in london, england in 1978. they also

opened an office in new York, U.S.a, laying down the foundation to

do business in more advanced insurance markets. For 30 years after

its foundation, SF&Mi continued to challenge new businesses and

explore new markets. during this time we have grown into a leader

of the non-life insurance industry and contributed to economic

growth in Korea, improving living standards for people across the

country.

1952~1985Period oF Challenge and exploration


stories6

1986~2000Period oF leap and growth in 1988, Samsung Group decided to build on its already sturdy

foundation by innovating its management practices. We have been

active participants in this innovation. We welcomed the declaration

of new management strategies by Samsung Group in 1993 and

pursued these strategies in all sectors of our business, including

operation, human resources, and customer service. a change in

management called for a change in name. We became known as

Samsung Fire and Marine insurance and started the challenge of

becoming the world’s top insurer.

in the 1990s, when long-term insurance and automobile insurance

expanded, the company established customer satisfaction as a core

value shared by all executives and employees. thus, we unfolded

a wider range of customer service initiatives. Stepping up efforts

to develop new products, we released more customer-oriented

products, such as ‘new age Comprehensive insurance’, ‘ten-million

driver insurance’, ‘Save My house insurance’, and ‘My Favorite

Cancer insurance’. our new products gained popularity, allowing us

to strengthen operations by opening up regional headquarters and

reinforcing our operation infrastructure. We focused our efforts

on fostering a competent human resources sector. We established

a systematic education system and opened the fully equipped

Yuseong training Center.

recognizing social contribution activities as the core element of

management, the company launched a community service team

composed of executives and employees in 1994. the new traffic

Culture campaign became the focus of our social contribution

activities. With a focus on service for the blind, sports, and culture,

we developed a guide dog project, founded the SF&Mi volleyball

team, and established the world baduk championship. SF&Mi

established offices in indonesia, Japan, China, and Vietnam and

cooperated with other world-renowned non-life insurers. this

further strengthened our exploration of the overseas market.

responding wisely to fluctuations at home and abroad, SF&Mi

has consolidated its position as an industry leader and built a solid

foundation to leap forward as a global non-life insurer.

1990. 04. 01.Opened the U.S. office

1993. 12. 06.Changed company name to Samsung Fire & Marine Insurance Co., Ltd.

1996. 06. 17.Founded World Masters Baduk for the Samsung Cup

1987. 10. 17.Completed the headquarters building


stories6

2001~2012Period oF ChangeS and innovationS

Celebrating the 50th anniversary of its foundation in 2002, SF&Mi

established Vision 2010 and proclaimed ethical management and

fair operation at home and abroad. We made great effort to become

a company trusted by its customers. We continued to introduce

new management innovation programs, such as Six Sigma and

knowledge management, to strengthen the core of the company.

in 2010, we made a new leap forward with the announcement of

Vision 2020, a declaration that we will grow into one of the world’s

top 10 non-life insurance companies by 2020. We have stayed on

top of life style trends and grown our reputation by continuing

to release innovative products including: Samsung anycar auto

insurance, an unmatched automobile insurance product; Samsung

Super insurance, the first comprehensive insurance product; My

anycar, an internet only automobile insurance product; and Super

Plus, a comprehensive insurance product. We’ve also kept one

step ahead in our brand marketing. in 2002, we unveiled ‘anycar’,

the representative automobile insurance brand, and launched our

service brand, ‘think next’, in 2010.

We maintain high standards for customer satisfaction. to that

end, we operate a number of customer satisfaction programs,

such as the Voice of Customers (VoC). additionally, we instituted

a customer panel system, announced the new customer service

charter, and established a 24/7 customer service center. With this in

mind, venturing into the overseas market was accelerated.

SF&Mi established corporations in Vietnam, China, and brazil

between 2001 and 2010. We later opened offices in Singapore, india,

and dubai. in 2011, the company established a corporation in europe

and a management corporation in the U.S., and built a reinsurance

company in Singapore in 2012. this allowed us to strengthen our

global management and secure a global network in eight strategic

regions including asia, america, the eU, the Middle east, and

africa. Celebrating the 60th anniversary of its foundation, SF&Mi

has secured its title as Korea’s best non-life insurer, recognized

worldwide and loved by its customers. We will continue the change

and innovate as we leap forward to become the world’s top insurer.

2002. 04. 02.Launched anycar, a representative auto insurance brand

2011. 03. 30.Established the European subsidiary

2003. 12. 10.Released Samsung Super Insurance, the first comprehensive insurance in the insurance industry

2011. 06. 23.Established a management company in the U.S.

2005. 02. 03.Expanded and reorganized Samsung Loss Control Center

2012. 01. 19.Established a reinsurance company in Singapore

2001. 07. 01.Established the Samsung Traffic Safety Research Institute

2005. 04. 25.Established Samsung Fire & Marine Insurance (China), the first local subsidiary established by a foreign insurer in China


stories6



sTORIEs6

story 1 : oNE HEArt 2 SF & MI _ AnnuAl RepoRt 2011 3

SF&Mi’S iS well underwaY in itS MiSSion to becoMe the top global inSurer. the coMpanY provideS diStinguiShed productS and ServiceS via 21 baSeS in 10 countrieS in aSia, europe, the Middle eaSt, and the u.S. it will Soon be one oF the top 10 global inSurerS. SF&Mi’S paSSion and eFFortS to deliver security and happiness in eMerging MarketS aS well aS advanced MarketS will Make liFe healthier and More aFFluent For cuStoMerS acroSS the world.

ONEHEART

StorY 1 : global management

our heart is always with our customers.

Single-mindedly caring for our customers,

SF&Mi has steadfastly worked for

its customers’ security and happiness for the

past 60 years. Starting another 60 years,

we are meeting customers across the world

with the same determination to serve them

we have always had.

security and happiness for all Mankind


our heart is always with our customers.

Single-mindedly caring for our customers,

SF&Mi has steadfastly worked for

its customers’ security and happiness for the

past 60 years. Starting another 60 years,

we are meeting customers across the world

with the same determination to serve them

we have always had.

ONEHEART

StorY 1 : global management

security and happiness for all Mankind

SF&Mi’S iS well underwaY in itS MiSSion to becoMe the top global inSurer. the coMpanY provideS diStinguiShed productS and ServiceS via 21 baSeS in 10 countrieS in aSia, europe, the Middle eaSt, and the u.S. it will Soon be one oF the top 10 global inSurerS. SF&Mi’S paSSion and eFFortS to deliver security and happiness in eMerging MarketS aS well aS advanced MarketS will Make liFe healthier and More aFFluent For cuStoMerS acroSS the world.


shanGhai

BeijinG

tianjin

shenzhen

QinGdao

suzhou

global Management

CHINA1

We anticipate chineSe cuStoMerS' needS

china is now the world's second biggest economy. it is already the largest automobile

market, and the number of vehicles on the road is still rising by leaps and bounds.

china's auto insurance market is growing sharply every year. SF&Mi started business

in the chinese market in response to auspicious changes in the chinese auto

insurance market including tightening of sales commission rules and establishment

of transparency in management of insurance premiums. For greater driving pleasure

and convenience in china, SF&Mi will answer chinese customers' needs even better.


Shanghai, china

and we anSwer with optimal SolutionS

SF&Mi is accelerating its advancement in china. it is the one foreign-invested non-life

insurer with locations in the most cities including beijing, Shanghai, Shenzhen, Suzhou ,

tsingtao , and tianjin, and it continues to extend its network across china. based on its

competence and expertise in auto insurance long accumulated in the korean market, the

company meets customers’ needs with high-quality products and services in the rapidly

growing chinese auto insurance market.


london, uK

France

Spain

global Management

EUROPE2

We hear our european cuStoMerS

it is reportedly difficult for non-life insurers to venture into europe, where non-life

insurance began. the insurance industry is already highly advanced and competitive

in europe, and SF&Mi needed to move aggressively to take maximum advantage of

the new Free trade agreement (Fta) between korea and the eu. the Fta promises

a huge expansion in trade volume and investment, and SF&Mi decided that the time

was right to start its business in europe. to enter the advanced market successfully,

we will duly hear our european customers with the utmost care.


london, united kingdom

and we propoSe unique alternativeS

SF&Mi is steadily building its competitiveness in the european market. it established

its european corporation in london and is setting up its operations in earnest including

partnerships with world-class insurance companies such as axa of France and Mapfre of

Spain. Starting with corporate insurance for korean companies operating in europe, the

company will venture into the local market and enhance capabilities to compete effectively

in the advanced financial market.


global Management

ASIA3

Singapore

vietnam

japan

indoneSia

We see toMorroW For aSian cuStoMerS

demand in asia for non-life insurance is naturally rising in

tandem with the accelerating economic growth and rising

standards of living. SF&Mi early recognized potential of the

asian market and began venturing into it in the 1990s, offering

products and services suiting the needs of asian customers.

SF&Mi is clearing the way for a better, richer future for all its

customers in asia.


jakarta, indonesia

and we oFFer a new poSSibility

in the emerging markets including asia, SF&Mi's efforts are bearing fruit. the company

has ventured into the emerging markets in asia such as indonesia and vietnam and

steadily increased its market share by its outstanding localization strategy. in 2012, the

company began business in earnest by establishing a reinsurance company in Singapore,

the financial hub of asia. SF&Mi is thoroughly exploring the emerging markets and

expanding the reinsurance business to build a solid business foundation in asia.


new yorK

loS angeleS

global Management

USA4 We sense u.S.

cuStoMerS’ changing needS

the u.S. is an advanced insurance market. the insurance market is

more than 100 years old, and numerous global insurance companies are

locked in fierce competition. SF&Mi entered the u.S. market in 1980

and has been expanding its market share and customer base while

studying advanced insurance techniques and developing products

and services. to innovate the u.S. insurance market, we will identify

changes in customers' needs more precisely.


SF&Mi is making a move in the u.S. market. Starting with the new York office

established in 1985, we have expanded our market for local companies and

individual customers as well as korean companies operating in the u.S. we set

up the l.a. office in 2003 and launched a major campaign in the western u.S.

we established a management corporation in 2011 to secure an independent

management base, expanding business in the u.S. market more actively.

new york, united States of america

and we create innovative value


global Management

BRAZIL5

São paulo

rio de janeiro

We study the needS oF brazilian cuStoMerS

brazil is one of the most rapidly growing countries in South america

and in the world. the country has a tremendous potential. SF&Mi sees

brazil as its beachhead for venturing into the South american market

and established its local corporation to research the local insurance

market, focusing on development of new business opportunities. we

will study brazilian customers' needs more thoroughly to offer them

the best products and services.


Sao paulo, brazil

and we maKe a FreSh

impreSSion

SF&Mi is consolidating its foundation in brazil, the largest insurance market in central and

South america. we established a brazilian subsidiary in 2009 and have focused on collecting

information on the local insurance market and building a network. we are establishing

a foundation for full-fledged operation while providing insurance consulting services for

products of korean companies doing business in the local market. Starting in brazil, we

intend to make strategic preparations to enter the central and South american market.


backed by improved loss ratios in automobile insurance and long-term insurance, net profit rose 16% in 2011

to krw 784.5 billion. the average growth rate for the past two years was 21.5%, which was in excess of

the increase in sales. total assets rose 19.7% to krw 38,621.2 billion, and the solvency margin ratio reached

450.7%, further bolstering the company’s financial condition.

Financial highlightS

[unit: krw billions]

direct premiums written 14,585 14.2%

underwriting profit -260 n/a%

investment profit 1,361 10.4%

operating profit 1,101 17.6%

adjusted epS (in krw) 17,928 15.8%

summary of income statement [unit: krw billions]

invested asset 32,489 20.5%

total assets 38,621 19.7%

total liabilities 30,926 20.6%

Shareholder's equity 7,695 16.2%

catastrophe reserve 1,285 8.1%

summary of financial position [unit: krw billions]

cf) based on k-iFrS Separate Financial statements

total assets26,656

32,272

38,621

net profit525

676

785

direct premiums written 10,895

12,771

14,585

2009 2010 2011


A.M.BeSt

a++ Korea Service Grand prix

‘hall of fame’

KCSMA

dear customers and shareholders of SF&Mi,

let me first express my sincere appreciation for the keen interest and support you

have rendered us over the past year. in the 2011 fiscal year, we witnessed many natural

disasters around the world, including the great east Japan earthquake and floods in

thailand. the financial crisis that began in some european countries, such as greece and

italy, has spread throughout the entire euro zone and hangs as a dark threat over the

global economy. the non-life insurance industry in korea also experienced a harder time

last year than ever before as products and channels diversified and proliferated at a rapid

pace, and this in turn led to even fiercer competition, mainly between big companies in

their mad dash to carve out larger market shares. despite such difficult management

circumstances, i am pleased to say that SF&Mi made the following achievements backed

by our shareholders’ unsparing support and endeavors of our executives and employee:

first, sf&Mi realized the highest performance ever in sales and profits. premium

revenues stood at krw14,584.6 billion last year, up 14.2% from the previous year, and profits

reached a record krw784.5 billion. total assets stood at krw38,6.212 billion, up krw6,671.6

billion from a year earlier. the risk-based solvency margin ratio reached approximately 450%,

showing the most robust financial soundness in the insurance industry.

second, we received the world’s highest credit rating and the best evaluation of cs in

korea. in november last year, a.M. best, a u.S. credit rating agency, granted SF&Mi the

best credit rating of a++, making the company stand shoulder to shoulder with world-

class insurance companies. in cS evaluation in korea, SF&Mi became the first company in

the non-life insurance industry to be inducted into the ‘hall of Fame’ of the korea Service

grand prix, solidifying its status as the nation’s top insurance company.

third, we laid the groundwork for expanding overseas business in earnest. in order to

venture into the global reinsurance market, we established Samsung re in Singapore

and set up an independent management system in our subsidiary in the united States.

SF&Mi also reinforced its push into overseas business by constructing a global it system

in its subsidiaries in indonesia, vietnam. and Singapore following britain and by setting

up a new consultation body on overseas business risk management.

MeSSage FroM ceo


respected customers and shareholders!

this year, the global financial market still remains uneasy and unstable, and countries

continue to adhere to austerity. under these circumstances, the korean economy is

expected to have difficulty pulling out of economic downturn due to falling consumer

confidence caused by low economic growth. in the domestic market, the insurance

industry is entering the mature phase and competition to eliminate the barriers between

different lines of business is increasingly fierce due to development of communications

technology. there are also some factors that may upend the competitive landscape in

the industry, such as M&as.

all of SF&Mi’s executives and employees are determined to take advantage of this

rapidly changing environment to grow further and intend to fulfill the following tasks to

achieve our vision: “global top 10 insurer by 2020”.

first, we will firmly maintain our no. 1 standing in the korean market through qualitative

growth based on profitability. this will partly entail realizing substantial growth by

marketing and product strategies that consider both profitability and marketability. our

recruiting and education systems will be renewed to boost the competitiveness of the

face-to-face exclusive channel.

non-exclusive sales channels are becoming more important, so we will improve our

organization operation system for careful on-site management. besides, we will develop

bundled products incorporating services that provide new values to drive our exploration

of new markets and expansion of our customer base.

second, sf&Mi will concentrate on overseas business to ensure growth well into

the future. the korean insurance market is expected to become more challenging as it

matures and approaches saturation. one way we intend to overcome the growth limits is

by conducting business in various regions around the world. this year, we intend to focus on

asia and establish successful operations there and then expand to other regions, thereby

promoting stable growth. we will consolidate the position of Samsung re, launched

last year, in the reinsurance market and secure an unmatched competitive edge to enter

the chinese auto insurance market. to support these initiatives, we complete the global

management information system and reinforce the core manpower for overseas business.

third, sf&Mi will firmly establish compliance management and project an image of

an enterprise that fulfills its social responsibilities. customers and the markets now

demand that companies uphold very high standards of ethics and compliance. keeping

in mind that even a seemingly minor illegality can deal a serious blow to overall company

management, we will strengthen our preventive education and regularly monitor

activities to ensure that fairness and customer information protection become a truly

integral part of management. in order to fulfill our social responsibilities, we will redouble

our social responsibility efforts.

we will solidify the existing programs for contribution to society, such as donation of

guide dogs to the blind, improvement of housing, and support for prevention of child

traffic accidents. Simultaneously, we will start a new educational assistance project

for children of firefighters who died in the line of duty and establish the Sustainability

Management committee for more systematic social responsibility management.

respected customers and shareholders!

this year, SF&Mi is celebrating the 60th anniversary of its establishment thanks to

the support and encouragement of our customers and shareholders. in asian culture,

60 years means the completion of a complete cycle and, by definition, the start of the

next cycle. we hereby renew our promise to our customers and shareholders to pursue

constant innovation and challenge and to build upon the robust foundation we have

consolidated over the past six decades that we may become one of the global top 10

insurance companies with sales of krw34 trillion and assets of krw100 trillion by 2020.

we wish our customers and shareholders the greatest happiness and prosperity.

thank you.

no.1

3

aSia

Samsung re

2

MeSSage FroM ceo

kim, chang Sooceo & president


SF&Mi is pursuing sustainable growth with an eye on the road map of global top 10, which calls for our

evolution into one of the world’s top non-life insurers with sales of krw34 trillion and assets of krw100

trillion by 2020,. in 2012, the company reinterprets its business from the perspective of customers as a

‘risk solution business to give relief to customers’, and consolidates the foundation for robust growth by

expanding beyond the already mature domestic market into the vast overseas market.

· Sales krw 15 trillion

· improve domestic operation capabilities

· ratio of overseas business: 4%


· expand new financial service businesses actively



· transform into an insurance service company


· innovate domestic businesses (channel, product, and service)

· create successful business experiences in overseas markets

· provide distinguished services in health, disaster prevention, and automobile

· perform M&a in overseas markets focused on emerging markets

· provide service-oriented products

· venture into niche markets in advanced countries

· Strengthen market status in emerging markets

· Secure capabilities for overseas relocation

· establish a global management system

· Secure professionals for overseas businesses

· Secure business capabilities in local insurance markets (localization)

· apply global management infrastructure to local markets

· complete the worlds' top level business capabilities and management infrastructure

Core Competencies

Customer/Market

target

KoreaSales in 2020: Krw 28 trillion (82%)

· venturing into new markets· convergence of products and services

overSeaSSales in 2020: Krw 6 trillion (18%)

· active business operations in overseas markets backed by globalization of core capabilities in the domestic market

Sales Krw 34 trillion / assets Krw100 trillion

| Vision Map 2020 |

| road map by stage top 10 |

2020 global top 10total risk Solution partner

global top 20global top 15

global top 10

Stage 1 ( ~2012 )reinforce foundation for growth

Stage 2 ( ~2015 )pursue active growth

Stage 3 ( ~2020 )achieve global levels

grow into the world’S top non-liFe inSurance coMpanY

1

vision

2020


the board of directors (bod) is the highest decision-making body which sets SF&Mi’s key management policies

and strategies. SF&Mi maximizes shareholder value through transparent and independent management of

the bod and fulfills its social responsibilities. the bod is composed of three inside directors and four outside

directors, who have expertise and extensive experience in insurance, economics, management, and law. the

chairperson of the bod and the ceo are appointed by the bod, and only an outside director can serve as the

chairperson.

the regular meeting of the bod is held on a quarterly basis, and extraordinary meetings are held to deliberate

and make decisions on major legal issues and the bylaws or issues crucial to management of the company.

the bod has five separate committees: Management committee, audit committee, independent director

recommendation committee, risk Management committee, and related party transactions committee.

they ensure professional and reasonable decision making.

ceo & presidentKim, Chang Soo

full-tiMe

ceo & presidentoversight of all business operations

kim, chang soo

Vice presidentdirector of the Management Support division

jeon, yong Bae

full-time inspection commissionerinspection commissioner

lee, jae sik

part-tiMe

outside directorchairperson of the bod

kim, kang chung

outside directorchairperson of the audit committee

lee, Won chang

outside directorinspection commissioner

shin, heon cheol

outside directoroutside director

shin, dong youb

Managing director

kim, Jong woo oh, hoon taek park, choon weon lee, beomkang, hyung koo lee, Sang kyungJeong, hyun Jun kim, Sang wookkim, You Sang Sung, ki Jaekwon, dae Young lee, Myeong holee, deok Jae lee, Jong Youngcho, hee Jong kim, Suk taeoh, Sang hoon hwang, Seong Yonghwang, Seung Mok kim, Man YongShin, dong gu lee, Soon koochang, duk hee oh, Jae ukkim, ung Min Friedhelm Schnitzlerlee, Jong Soo kang, Shin hongYoo, in keun koo, bon Yeullee, doo Yeul nam, Yeong wooYoo, woo keun

executive advisor

You, Young Jin christopher haarmanalfred Fackler Sam k. lee

Vice president

nam, Jae hoJean paulJeon, Yong bae

inspection commissioner

lee, Jae Sik

senior Managing director & cfo

Yoh, nam ku park, Jae hong rhee, Jong Sung hwang, hai Sun ko, Young chang han, kyu Son kim, Youn gil choi, Seong Sikkim, Jeong cheol choi, Young Moochoi, Young kap kim, Sung gyu

executive director

kang, kye wook lee, ho kyukoh, Myung Jib kim, nam Jaelee, Sang bong lee, Sang cheolSeo, kwang Seo kim, kyu hyeongkim, Jung ki park, kyeung gugMoon, Jang Seop Swon, eul SeekJeon, byoung lok park, Joon hyeonpark, Sang don

three inside directors & Four outside directorsBod / Management

executives2

corporate

governance

with the board oF directorS taKing the lead

FulFill reSponSible and tranSparent management,


2011

10

01

04

07

Jul AuG/Sep oCt oCt oCt DeC

08/0

9

12 0510

01

hired the world’s leading experts

in order to enhance its global capabilities,

SF&Mi focused on employing the best

experts in each domain in 2011. the

company hired Friedhelm Schnitzler, who

had worked in europe and was recognized

as the world’s leading expert in health

insurance, and appointed him as director

of the product r&d center. it hired Jean-

paul brubach, one of the world’s most

outstanding experts in overseas business

and insurance risk management, as vice

president in charge of overseas business in

Southeast asia.

established a management

corporation in the united states

in december 2011, SF&Mi set up a

management corporation in new York

for its u.S. offices. under applicable

u.S. law requiring that a foreign

insurance company have a separate

management company for its branch

offices, SF&Mi previously entrusted the

branch management to a local insurance

company. the establishment of a separate

management company is in preparation

for expanding business in earnest in the

future. through this new management

corporation, we will strengthen branch

management and enhance customer

service capabilities, thereby securing an

independent business base.

Became the first company in the

financial industry to acquire the

international standards for an energy

management system

in May 2012, SF&Mi became the first

company in the financial industry to

obtain iSo 50001 certification, the

international standards for an energy

management system. SF&Mi had

been carrying out various initiatives to

save energy and cut greenhouse gas

emissions, and it established an energy

management system. the company also

voluntarily disclosed information on its

greenhouse gas emissions and had this

information verified by a third party. as

a result, the company now has the most

advanced carbon management system

of any korean financial company.

cited as the “Best ir company”

in asia by Institutional Investor

SF&Mi ranked at the top in the category

of best investor relations among asian

insurance companies in the all-asia

executive team survey conducted by

institutional investor, the world’s leading

financial monthly. this put the company in

the 8th place out of 1,150 enterprises from

eight asian countries. Faring so well in this

survey against global financial institutions

proves SF&Mi’s credibility and transparency

once again. established tianjin office, china

in october 2011, SF&Mi opened the tianjin

office, the company’s fifth office in china.

with the establishment of this office,

SF&Mi not only provided insurance services

to korean enterprises in the bohai rim

economic circle including three provinces

in the northeastern part of the country,

but also ventured into the local market in

full scale. with the tianjin office, SF&Mi

now has more footholds in china than any

other foreign-invested non-life insurance

company.

cited as the carbon Management industry

leader in the financial sector by the

carbon Management Global leaders’ club

SF&Mi was cited as the carbon

Management industry leader in the

financial (non-banking) domain of the

carbon Management global leaders’ club

that is assessed by the carbon disclosure

project (cdp) korean committee for korea’s

top 200 companies in terms of koSpi

market capitalization. the committee duly

recognized the company’s low-carbon green

management, which entails substantial

reduction in energy consumption, lowering

of greenhouse gas emissions, and provision

of eco-friendly products and services.

set up samsung re,

a reinsurance company,

in singapore

in January 2012, SF&Mi established

Samsung reinsurance pte. ltd. in

Singapore, the financial hub of asia,

and began business in Singapore in

full scale. Samsung re’s initial capital

is krw60 billion, and SF&Mi owns

this reinsurance company 100%.

using Singapore as its foothold,

the company will gradually expand

into reinsurance articles including

properties, technologies, and cargos in

the asian region.

the happiness Volunteers team

received a citation from the

Minister of health and Welfare.

in celebration of disabled persons’s day,

the ‘happiness volunteers,” a volunteer

work group of SF&Mi’s risk consultants

(rcs), received a citation from the Minister

of health and welfare on april 19, 2012.

the volunteer team was awarded this prize

for its contribution to raising awareness

towards physically challenged people and

improving general safety through activities

such as the “500-won gift of hope,” a

project designed to improve the housing

environment for physically challenged

people, and the “happy School campaign” to

prevent safety accidents involving children.

staged a long march,

“sympathy companion 2020”

For smoother communications between

executives and employees and to bolster

their spirit toward realizing the company’s

mid- to long-term vision, global top 10

by 2020, SF&Mi carried out a long march

called “Sympathy companion 2020” from

october 17 to november 30. about 1,630

executives and employees participated in

the march, walking together on a long path

of 2,020 km which linked the company’s

major departments across the nation. while

walking, they shared views on each other’s

business affairs, and they later took part

in various activities, such as promotion of

new products, land cleanup campaigns, and

fund-raising for the underprivileged.

launched a service brand,

‘My own Business’

celebrating the 60th anniversary of

its foundation, SF&Mi unveiled a new

service brand, ‘My own business’, and

decided to integrate all its services into a

single service identity in order to improve

customer value. this new service brand

pursues three core values: service with

sincerity (Sincerity), careful customer

management (caring), and simple and

swift handling of business (Simplicity),

and represents the attitude of SF&Mi’s

executives and employees that they

would “do their best to serve customers

as if SF&Mi were their own business”.

2011-12 at a glance

best ir companyno.1

2012

co2

10JAn JAn ApR MAY

story 2 : two Challenge 36 SF & MI _ AnnuAl RepoRt 2011 37

ultiMatelY, it iS custoMers and society that have enabled SF&Mi'S treMendouS growth over the paSt 60 YearS. in celebration oF the 60th anniverSarY oF itS Founding, the coMpanY launched a new Service brand called 'MY own buSineSS' in 2012 to iMprove cuStoMer SatiSFaction ManageMent and Staged the 'SixtY daYS oF Sharing' caMpaign to reach out and grow together with the coMMunitY, acknowledging itS Strong concern For cuStoMerS and SocietY and renewing itS deterMination to be the beSt. SF&Mi MarcheS conFidentlY into itS next 60 YearS in order to realize cuStoMer value and grow together with SocietY.

TwOCHALLENgE

StorY 2 : core achievement

our spirit of challenge hastens the

realization of our vision.

SF&Mi has taken on the dual challenges of

expanding market share further in korea and

developing new overseas markets to grow into

the top global non-life insurance company. the best

credit rating, highest customer satisfaction,

and world-recognized competence bring the

company one step closer to realization of its vision.

carinG deeply for custoMers and society


TwOCHALLENgE

StorY 2 : Key perFormance

our spirit of challenge hastens the

realization of our vision.

SF&Mi has taken on the dual challenges of

expanding market share further in korea and

developing new overseas markets to grow into the

top global non-life insurance company. the best

credit rating, highest customer satisfaction, and

world-recognized competence bring the company

one step closer to realization of its vision.

carinG deeply for custoMers and society

ultiMatelY, it iS custoMers and society that have enabled SF&Mi'S treMendouS growth over the paSt 60 YearS. in celebration oF the 60th anniverSarY oF itS Founding, the coMpanY launched a new Service brand called 'MY own buSineSS' in 2012 to iMprove cuStoMer SatiSFaction ManageMent and Staged the 'SixtY daYS oF Sharing' caMpaign to reach out and grow together with the coMMunitY, acknowledging itS Strong concern For cuStoMerS and SocietY and renewing itS deterMination to be the beSt. SF&Mi MarcheS conFidentlY into itS next 60 YearS in order to realize cuStoMer value and grow together with SocietY.


core achieVeMent

credit rating

the world recognizeS SF&mi

no.1the world’s confidence in SF&Mi is growing. a.M. best of the u.S., a world-class credit

rating authority specialized in rating insurance companies, granted SF&Mi its highest

raging: a++ (Superior). the a++ rating is granted only to the world’s top insurance

companies. only one other company in asia has been so recognized: tokio Marine &

nichido Fire insurance of Japan. this is the strongest possible evidence that the world

clearly recognizes SF&Mi’s robust capital condition, outstanding market power, stable

profit structure, and excellent risk management. this is especially significant in that the

company’s rating was upgraded amid the global economic crisis. SF&Mi was also granted

a+ (Stable), the highest credit rating among private companies in korea, from S&p, the

world’s biggest credit rating institution, for a ninth consecutive year. the confidence of

world-class rating authorities lends strong support for SM&Mi to grow into a global non-

life insurance company.

credit ratinga++ (Superior), the highest credit rating by a.M. besta++

the world’s best credit rating gives us a strong beachhead to expand into the global market as well as the Southeast asian market. we will concentrate on developing the asian market with greater confidence.Jean-paul brubach, vice president of SF&Mi

Jean-paul Brubach, Vice president of SF&MI, worked at world-class insurance companies such as Allianz General Insurance and

AGF for more than 30 years and is recognized as the best expert in the regional business of Southeast Asia and in insurance

risk management. utilizing advanced underwriting expertise and extensive local networks, he is a very effective vice

president of overseas business in Southeast Asia and plays an important role in SF&MI’s expansion into the Asian market.

the world recognizes SF&Mi’s outstanding capabilities and achievements.


core achieVeMent

we impreSS our cuStomerS

customers' satisfaction with SF&Mi is deepening. SF&Mi was rated the very best in major

customer satisfaction evaluations in 2011, achieving a grand Slam and being recognized

as the best customer-oriented company in the insurance industry. the company ranked

first in the non-life insurance domain by the national consumer Satisfaction index (ncSi)

for an 11th year in a row and topped in the korean Standard Service Quality index (kS-SQi)

for a tenth consecutive year. it was also ranked first by the korean customer Satisfaction

index (kcSi) for 14 consecutive years and received the first prize in the good insurance

company awards by the korea insurance consumer Federation. SF&Mi was inducted into

the hall of Fame simultaneously by the customer Satisfaction Management awards and

the korea Service grand prix. these evaluations evidence customers' recognition of the

company’s excellent customer satisfaction management, and indicate that customers

have increasing expectations of service. SF&Mi intends to manage customer satisfaction

even more actively.

evaluation of customer Satisfactionachieving a grand Slam in customer Satisfaction evaluation in 20111st

i am responsible for investing the precious premiums of our customers, so i do my best to manage risks thoroughly. i keep my eye on long-term outcomes and make a sincere effort to create stable investment profits.Shin, Yeon hee _ asset portfolio Strategy dept, accountant

the pF strategy division of the asset investment unit where Yeonhee Shin, a Senior professional, is working engages in project financing. they give loans to large-scale development and construction projects. the pF division participates from the early stages of development projects to examine project profitability and performance of their managing companies. the pF division determines investment viability only after thorough inspection. they turn over stable profits by effectively managing risk and taking into consideration market volatility and economic fluctuation.

customers are impressed with SF&Mi’s ceaseless hard work and devotion.

net profit growth rate

16%


core achieVeMent

Victories

the world payS attention to SF&mi

14

the world takes increasing interest in SF&Mi. the company was dubbed the Most

progressive insurer in the insurance domain of the Sustainable Finance awards in asia

(SFaa) by the association for Sustainable & responsible investment in asia (aSria).

the SFaa was established in 2011 and awards one organization in eight domains each

– asset owners, regulators, fund managers, analysts, bankers, companies, insurers, and

journalists – by voting of members for all management activities including financial

achievement, social responsibility, and environment-friendly activities. SF&Mi was

duly recognized for its effective sustainable management while also pursuing profit,

social responsibility, and environmental awareness. this award is expected to have a

positive effect on all aspects of management of SF&Mi, including greater credability

in sustainability and easier attraction of well disposed investors who consider social

responsibility important.

Foreign awardsrecognized as the Most progressive insurer in the insurer domain of the Sustainable Finance awards in asia SFaa

our 14 victories are not due to brilliant technique but indomitable spirit. the teamwork that enables us to unite against difficulties and go straight for the goal is unique to SF&Mi.Shin, chi Yong _ coach of the blue Fangs

Shin, Chi Yong coach of the Blue Fangs, SF&MI’s volley ball team, is an outstanding leader. He has won 13 times over 18 years since he became the coach in 1995, when the team was founded. Guiding the Blue Fangs by well thought-out tactics and strategies, thorough preparation, and unshakable confidence in the face of any difficulty, he has made the team a part of living history in volley ball in Korea and Korea’s best professional volley ball team.

the world notes SF&Mi's potential for sustainable growth.

story 3 : three Promise 44 SF & MI _ AnnuAl RepoRt 2011 45

FroM auto inSurance For SaFe vehicle driving to long-terM inSurance For SecuritY throughout liFe, coMMercial inSurance For protection FroM riSkS in dailY liFe and buSineSS operationS, and aSSet ManageMent For Stable growth, SF&Mi proMiSeS itS cuStoMerS SecuritY, health, and aFFluence via cuStoMer-oriented productS and ServiceS.

we promiSe to protect the preciouS liveS oF our cuStoMerS

Kim, Sang Joon


FroM auto inSurance For SaFe vehicle driving to long-terM inSurance For SecuritY throughout liFe, coMMercial inSurance For protection FroM riSkS in dailY liFe and buSineSS operationS, and aSSet ManageMent For Stable growth, SF&Mi proMiSeS itS cuStoMerS SecuritY, health, and aFFluence via cuStoMer-oriented productS and ServiceS.

we promiSe to protect the preciouS liveS oF our cuStoMerS

Kim, Sang Joon

threepromiSe

StorY 3review oF operation


beSt choice For SaFe and happy driving

Management environment in 2011

the auto insurance market remained challenging in 2011 due to economic hardship following

2010 as well as emergence of new sales channels including the online channel, more

rigorous demands by customers, and more intense competition among financial industries.

nonetheless, SF&Mi posted substantial overall growth thanks to increases in the number of

registered vehicles and policy purchase rates, a rise in the amount of property insured, and

an increase in purchases of imported cars and mid- and large-sized cars. notably, growth

was actually at a double-digit rate as a result of continued strength in online auto insurance.

Major achievements in 2011

1) Growth through improved loss ratio and diversification of sales channels

in 2011, auto insurance posted insurance premiums totaled krw3,579 billion, up 5.7% from

2010. SF&Mi’s market share rose to 27.6% from 27.3% in 2010 due to stabilization of the

underwriting cycle, and the renewal rate rose to 77.6% from 76.9% in the previous year. the

fixed-rate deductible system launched in February 2011 helped prevent excessive repairs

and unnecessary expenses, which lowered the loss ratio by 5.3%p from the previous year

to 70.6%. SF&Mi thoroughly analyzed customers' needs in the rapidly growing online auto

insurance market and responded actively. as a result, its share in the online auto insurance

market rose to 12.5% from 8.3% in 2010, and the loss ratio also declined 6.3%p to 68.5%.

2) release of preferential products for the working class to help stimulate the economy

as part of efforts to stimulate the economy, SF&Mi released a 'Special policy for Sharing',

which discounts 8% of the total auto insurance premiums for eligible low-income people

such as welfare recipients. in response to weak sales due to lack of advertisement, the

company promoted the product via diverse advertisement channels and encouraged active

participation of sales organizations. in consultation with the supervisory body, the company

also simplified the subscription process and required fewer documents to further facilitate

sales of the product. through such a product targeted at ordinary people, SF&Mi could

support finance of ordinary households and fulfill some of its corporate social responsibility.

3) environment-friendly products and eco mark certification

Following the 'eco e-policy' and the 'eco Special policy for use of used parts' in 2010, the

company launched 'eco Mileage' in 2011. this program discounts premiums up to 12%

depending on driving distance, completing the eco Series of environment-friendly products.

with completion of the eco Series, SF&Mi began to prepare for eco mark certification by

the Ministry of environment. the eco mark is evaluation and certification of insurance

companies' efforts for environmental management, accident prevention, environment-

friendly auto insurance business performance, resource saving, and green procurement.

acquisition of the eco mark certification for auto insurance – a first for any financial product

in korea – is expected to help the company comply with the government's low-carbon green

growth policy and bolster its environment-friendly image.

forecasts and strategies for 2012

the auto insurance market is expected to remain challenging in 2012. demand for insurance

continues to contract due to rising household debt and the stubbornly high oil prices. the

number of registered vehicles will rise at a slower rate, and expansion of online sales will

make price competition even more intense. the factors that serve to increase the loss ratio

including the decline in premium rates and the effect of the special mileage policy are likely

to be offset partially by other factors such as the economic slowdown and continued effect

of the fixed-rate deductible.

in 2012, SF&M intends to focus on the profitability of auto insurance. the company will

strive to carve out a larger market share of online sales by reinforcing the business base for

direct sales such as the internet and mobile media and increase sales by releasing combined

products for vehicle management such as smart auto insurance utilizing telematics. in

addition, the company will further hone its competitive edge in terms of price and system.

while expanding the market share of commercial vehicles and increasing high-value

securities, SF&Mi plans to introduce the mobile business process in earnest for on-site

completion of business. the company will also make efforts to reduce compensation costs

by tightening hospital management in order to prevent excessive treatment and promoting

structural efficiency of repair expenses of imported vehicles.

backed by proactive

operation, improvement of

loss ratio, and diversification

of sales channels, SF&Mi’s

auto insurance premiums rose

5.7% in 2011. the company

will continue to concentrate

on increasing sales and

securing profits by expanding

online sales, sharpening

its competitive edge, and

reducing compensation costs.

fy 20113,579

FY 20103,387

FY 20093,148

+5.7%

27.6%

| Market share |

| insurance premiums |

[unit: krw billion]

1

auto

insurance



in 2011, demand for insurance continued decline as a result of the economic slowdown. the

insurance market witnessed many changes caused by changing consumer needs, tightening

of rules and regulations on insurance, and expansion of non-exclusive channels such as the

internet and home shopping. competition in the insurance industry became even more intense

with the domestic insurance market reaching maturity and population aging. despite these

environmental changes, growth in the long-term insurance market remains high since both

companies and individuals have greater awareness of the necessity for protection against risks.


1) steady sales increase and expansion of profits

long-term insurance brought about growth of the entire business through strategic product

development, improvement in underwriting policy, and active promotion of sophisticated

management of risks and profit/loss intended for continuous growth and higher profit.

insurance premiums of long-term insurance totaled krw9,579.9 billion in 2011, up 18% from

2010. the market share of new contracts rose for a third consecutive year, reaching 29.2%

of the long-term insurance market as of the end of 2011. new contracts of protection-type

products declined 4.6% against 2010 due to shrinkage in property insurance and driver

insurance, but new contracts of saving-type products increased 29.7%, backed by increased

sales stemming from expansion of the savings market and pensions. the company’s

competitive edge was enhanced in terms of the net risk loss ratio due to steady growth of

renewal-type security against death and retaining of a stable security structure. as of the end

of 2011, the net risk loss ratio stood at 74.2%, down 3.3%p from the previous year.

2) enhanced core competitiveness of long-term products

SF&Mi is actively coping with the rapid changes in the financial market by developing target

products through study of new growth opportunities for long-term insurance based on

customer value and identification of strategic markets and expanding optimally designed

products suited to each channel, further strengthening its leadership in the long-term

insurance market. in 2011, the company continued to enhance its product competitiveness

by releasing customized products suited to the demands of customers and markets, such

as 'My personalized Super plus', comprehensive insurance that is an upgrade of 'Samsung

Super insurance', 'Mother's Favorite', comprehensive child insurance, and 'thriving business',

comprehensive property insurance for small businesses. the company also stepped up its

efforts to consolidate its already strong position in long-term insurance by further improving

its underwriting and compliance system.

3) ceaseless improvement of competitiveness of sales channels

in order to raise the competitiveness of sales channels one notch further, SF&Mi focused on

transforming the exclusive channel into multi-hybrid channels, increasing productivity, and

facilitating the general agency (ga) channel. productivity improved by helping rcs attract more

customers and improving their on-site business processing through addition of tM and dM

operations and establishment of the mobile business environment. the share of the ga channel

in new contracts rose to 7.2% in 2011 from 5.1% in 2010. the company also continued its efforts to

provide optimum products for each channel and differentiate sales strategies in order to respond to

the diversification of sales channels caused by the proliferation of non-exclusive channels.


the year 2012 will see yet more anxiety in the global financial market and belt-tightening by

governments around the world. the domestic economy is not expected to escape its slowdown easily

due to poor consumer sentiment caused by the slow growth. environmental changes will accelerate

including shifts in customer needs and changes in rules and regulations on insurance. the long-term

insurance market is likely to maintain stable growth backed by an increase in subsequent premiums,

and demand for new contracts should remain concentrated in health and property insurance.

under these circumstances, SF&Mi intends to focus most heavily on the high-growth area of

new contracts in protection-type products in order to maintain growth in long-term insurance.

the company will strengthen the sales power of exclusive face-to-face channels, expand

the ga channel and the hybrid channel to extend the mixed operation model, and enhance

the competitiveness of protection-type products. one of the major strategies in long-term

insurance is to expand the base of the original non-life insurance market. the company will

again explore health insurance by establishing a strategy for products to prepare for medical

expenses in later years and by developing long-term care for diseases and injuries and security

against incomes loss. we will also step up efforts to develop new services by commercializing

and combining insurance services for health, houses, and vehicles. to realize stable profit and

loss management, we will boost source competitiveness for risk management and implement

balanced product strategies between sales and profit and loss.

fy 20119,580

FY 20108,120

FY 20096,581

+18.0%

29.2%

| Market share |


[unit: krw billion]

liFe-tiMe partner For healthy and happy liFe

long-term insurance

premiums rose 18.0% in

2011 on higher sales of new

contracts in saving-type

products. these products

drove the overall growth

of all business lines, and

premiums are continuing to

rise in 2012 on new contracts

in protection-type products

and enlargement of the

base of the original non-life

insurance market.

2

long-term

insurance



the commercial insurance market continued to experience difficulties in 2011 due to lower

capital investment by companies in response to the slower economic growth, the slump

in the construction market, and the decline in sales in foreign currencies stemming from

the appreciation of the korean won. in particular, the domestic non-life insurance industry

incurred losses from natural disasters such as floods in thailand. the fire insurance market

contracted, but the marine insurance market recovered, especially in hull insurance. in

casualty insurance, the personal accident insurance market saw substantial growth in group

personal accident insurance as companies improved their employee benefits.


1) Maintenance of stabilized sales increase

SF&Mi's commercial insurance diversified its efforts in 2011 in order to overcome the

difficult business environment. insurance premiums recorded krw1,425.3 billion, up

12.7% from 2010, mostly as a result of an increase of sales in off-shore operations of big

companies and package products. its market share stood at 29.3%, up 0.6%p from the

previous year. however, profit decreased due to occurrence of one-time losses including

floods in thailand. thanks to the company's active utilization of experts with appropriate

underwriting knowledge for each risk and nationwide networks in order to provide proper

insurance money, its loss ratio was the lowest in the industry.

2) Balanced growth led by profitability and unmatched competitiveness

the high growth of commercial insurance is a result of the company's incessant efforts to

enhance market power by expanding the specialized market and operations targeting big

companies, facilitating participation in the SMe market, and exploring the b2b2c market

under the goal of balanced growth focusing of profitable operations. regarding the specialized

market (construction, vessels and airplanes, etc.) and operations targeting big companies, the

company's efforts to enhance expertise and provide differentiated anti-disaster consulting

services were highly effective. in order to extend its share in the SMe market, the company

fostered the crc channel systematically. it also stepped up efforts to facilitate partnership

marketing with business partners to explore the b2b2c (insurer company executives and

employees or big companies) market.

3) Meeting the global standard and innovation of the operational paradigm

in order to meet the global standard for commercial insurance, we continued efforts to

establish the premium rate calculation system; innovate the structure of retention and

reinsurance including elevation of retention limits, increase of fine small- and mid-scale

contracts, and diversification of reinsurance sources; and stabilize transfer of the line

underwriting function into the operating department. we also made efforts to fully

institutionalize the profitability-oriented business culture by innovating the business

paradigm in such ways as modification of the evaluation management indicators and

establishing sales management standards via profitability analysis for each product.


it appears that 2012 will be another tough year to achieve management goals in commercial

insurance due to slower economic growth amid the global economic crisis and the decline in sales

in foreign currencies stemming from the appreciation of the korean won. the company is moving

to counter these difficulties by expansion of the small- and medium-sized market, increaing global

contracts, and advancing commercial insurance through innovation of competence and systems, all

of which promise high growth.

we will develop and launch new products for the sales channels targeting the SMe market

and activate sales by increasing support for marketing education for major sales channels.

by fostering sales channels and promoting preemptive marketing, we will move to dominate

the institutional new insurance market which has emerged as a result of regulation requiring

insurance in facilities used by multiple people. the company intends to increase underwriting

of global large-scale articles such as satellite insurance and insurance for marine plant

construction to lay the groundwork for effective risk distribution and generation of a new

profit base.

in addition, we will establish standardized rules and processes enabling comprehensive

support and management of underwriting in all bases at home and abroad and build a

supportive it system in order to secure a global risk management system. as part of efforts

to achieve unmatched competitiveness in commercial insurance, we will build a mobile

working environment for transformation from a time- and space-centered business culture

to a performance-centered business culture to achieve growth and improve efficiency

simultaneously.

FY 20101,265

FY 20091,166

29.3%

| Market share |


[unit: krw billion]

reliable partner For SucceSSFul buSineSS

despite the serious

difficulties in the market,

SF&Mi's commercial

insurance was very proactive,

achieving a 12.7% increase

in insurance premiums in

2011. in 2012, the company

will make efforts to further

advance commercial

insurance by taking full

advantage of growth

opportunities, increasing

global contracts, improving

competence, and innovating

systems.

3

commercial

insurance

fy 20111,425

+12.7%



in 2011, on-going growth in long-term insurance and high performance in saving-type

products allowed non-life insurers’ invested assets to rise. however, uncertainties such

as the financial crisis originating in europe and the downgrading of the credit rating of the

u.S. have forced market interest rates to continue to decline, and this has caused asset

management returns to decline overall. For the first time since the financial crisis in 2008,

the return on asset management fell to only 4%. given that insurance assets need to be

managed for the long term, unlike other financial industries, uncertainties in the external

environment and the extreme persistence of low interest rates have had a significant effect

on asset management.


1) increase in invested assets and investment returns

SF&Mi invests its assets in the capital market as an institutional investor and, at the

same time, engages in lending for its corporate and individual customers. in 2011, the

company’s invested assets rose 20.5% from 2010 to krw 32,489.2 billion. the increase

is mostly attributed to a net increase in interest income stemming from a robust increase

in invested assets. this caused investment returns to rise krw 128.5 billion to krw

1,361.2 billion in 2011. the rate of return on investment fell to 4.7% in 2011 from 5.2% in

2010, mostly due to declining yield rates on bonds and loans and decreasing one-time

profits and losses. despite the recent concerns about excessive household debt, the yearly

delinquency rate on household debt was only 0.3%, the same as in 2010, and the npl ratio

held steady around 0.1%.

2) stable operation and higher returns

bonds account for 45.3% of invested assets. SF&Mi managed to improve its returns on its

bond holdings by diversifying more extensively into corporate bonds and special bonds and

away from excessive concentration in government bonds. loan assets account for 26.2% of

invested assets , and SF&Mi secured stability and profitability in them by focusing on loans

on insurance contracts and security. backed by balanced growth of loans secured on real

estate and loans on insurance contracts, the volume of household loans rose 21.3% in 2011

to krw 6,272 billion. corporate loans rose 19.7% to krw 2,240 billion. among the capital

income assets, the volume of securities increased krw 924.1 billion due to increases in the

stock prices of affiliates.


in 2012, the agonizingly slow recovery of the uS economy, slowdown in the chinese

economy, and concerns over recurrence of the economic crisis originating in europe are likely

to keep growth rates low, and volatility in the financial markets is expected to rise. under

these circumstances, the low interest rate environment will likely persist due to general

preference for safer assets.

based on this awareness of the changing environment, asset portfolio management will

focus on prevention of decline of yield rates and securing of the future profit base. the

most important challenge will be portfolio diversification. the share of corporate financing

and investment in Soc of the government and local government bodies will be extended,

and investment in new growth domains such as power generation, the environment, and

energy will be explored. purchases of corporate bonds, special bonds, and korea paper will

be expanded to improve yield rates, and the future profit base will be secured by purchasing

undervalued blue-chip stocks and investing in lucrative real estate in the core commercial

zones. through these efforts, SF&Mi will consolidate the stability of invested assets and

improve profitability to maximize shareholder value.

fy 2011324,892

fy 201113,611

FY 2010269,239

FY 201012,487

FY 2009227,341

FY 200910,097

+20.5%

+10.4%

| invested assets |

[unit: krw billion]

| investment returns |

[unit: krw billion]

despite the global economic

crisis and low interest rates,

asset management achieved

substantial investment

returns by increasing invested

assets, effective asset

portfolio management, and

thorough risk management.

in 2012, SF&Mi continues to

respond actively to changes

in the financial markets and

concentrate on diversifying

its portfolio and securing

investment returns.

eFFective inveStMent StrategY to improve corporate value

4

asset

management

story 4 : Four Pride 54 SF & MI _ AnnuAl RepoRt 2011 55

the reSourceS and inFraStructure enabling uS to coMpete againSt global coMpanieS are not created overnight. eFFective riSk ManageMent, the higheSt cuStoMer SatiSFaction, a State-oF-the-art it SYSteM, and outStanding huMan reSourceS are iMportant FactorS oF coMpetence and SourceS oF pride For SF&Mi. theY enable the coMpanY to dreaM oF becoMing the world'S top inSurer.

Suh, Ha Rin

our pride lieS in our power to win in coMpetition

Fourpride

StorY 4management inFra


Suh, Ha Rin

the reSourceS and inFraStructure enabling uS to coMpete againSt global coMpanieS are not created overnight. eFFective riSk ManageMent, the higheSt cuStoMer SatiSFaction, a State-oF-the-art it SYSteM, and outStanding huMan reSourceS are iMportant FactorS oF coMpetence and SourceS oF pride For SF&Mi. theY enable the coMpanY to dreaM oF becoMing the world'S top inSurer.

our pride lieS in our power to win in coMpetition

Fourpride

StorY 4buSineSS review


new opportunity beYond riSk

operation of enterprise-wide risk management organization

SF&Mi’s enterprise-wide risk management organization comprehensively manages all risks

across all business lines. the risk management organization consists of the board of directors,

the risk Management committee, the product committee, the asset risk Management

committee, the investment/loan committee, and the risk Management department. the

risk Management committee determines the level of tolerable risks by establishing and/or

amending rules on risk management and setting the level of proper investment and the upper

limit of loss, monitors risks, and formulates management measures. the risk Management

department, an organization devoted to risk management, is in charge of devising a systematic

risk management process and establishing a corporate culture that is most conducive to

effective risk management. the department does this by various means such as securing of

proper systems and human resources and operation of a risk management consultation body.

systematic risk management process

SF&Mi's risk management involves a five-stage process: risk recognition, risk measurement,

consultation of involved departments, internal reporting, and execution of measures. by this

process, the risk Management department recognizes risks, which stem from the business

processes of product development, insurance review and assessment, operations, and asset

investment, and performs risk quantification and profit evaluation. For product development,

management of financial, ethical, and legal risks is done first. based on the results of risk

measurement, consultations are held with involved departments to forge a management

strategy. each business line executes the risk management measures, and the risk

Management department monitors execution of risk management measures to give feedback.

effective management of major risks

SF&Mi strives to effectively manage major risks that a non-life insurer considers most

important, such as alM risks, underwriting risks, market risks, and credit risks. For the alM

risks, structural risks are managed, including those of interest rates, shareholder's equity,

and liquidity, for optimization of profits, and a risk management strategy is forged from the

perspectives of both assets and liabilities. the underwriting risks are managed by setting the

upper limit of underwriting approval, requiring approval of transactions including new products,

and supervising reinsurance management in order to manage risks of financial losses. For

market risk management, potential changes in expected profits are assessed with respect

to immediate changes in factors of the financial market via the worst case scenarios and

sensitivity analysis. to reduce credit risks, the company transfers part of its new businesses

to reputable reinsurers and maintains a diversified fixed-credit profit portfolio in managing its

investment portfolio.

1

risk

management

based on the enterprise-wide risk management system, SF&Mi effectively manages risks by strategic decision-making based on quantitative and qualitative analyses. we will proactively manage risk for new business opportunities instead of merely avoiding risks.


SurpriSing impreSSion beYond SatiSFaction

2

customer Satisfaction

management

consolidation of cs operation system and capabilities

the company provides support for effective customer satisfaction through cS-dedicated

organizations such as the committee on customer Service Quality improvement, the committee

on customer right protection, the committee on autonomous adjustment, and the committee

on dispute deliberation. cS experts across the country identify customer issues and evaluate and

improve customer service. Systematic cS education is provided for executives and employees as well

as rcs through online/offline education, lectures by invited instructors, educational broadcasting, and

manual distribution. customer complaint cases and successful cS cases are shared and distributed

enterprise-wide to strengthen cS competence and provide competitive customer services.

Quick processing of customer opinions and their reflection into Business

the customer call center and the 24/7 service center resolve customers' inconveniences and

complaints quickly and effectively by such means as 24/7 accident reporting, request for dispatch

of service personnel, contract inquiries, and customer consultation. in order to reflect customers'

opinions into improvement of products and services, the voice of the customer (voc) collected by the

internet, telephone, email, and post is systematically processed by the customer complaint processing

system, and, at the same time, multi-faceted measures are formulated to minimize customers'

inconveniences and implement their suggestions by sharing the progress of customer complaint

processing with involved departments, rcs, and partner companies.

unmatched customer service that Makes a lasting impression

SF&Mi has made steady efforts to develop and provide unmatched services in order to offer its

customers greater value. the S., the membership service for anycar customers, is very popular. it

features a convenient mileage system and offers various discounts, and with neighbors, a cafe-style

lounge, is also well received by customers. Specialized services such as SF&Mi economy Forum,

SF Members' college, and theme trips for families of good customers make an especially strong

impression on customers. Services for vip customers have been further expanded; in addition to the

Fp center providing asset management service and services related to automobile, health, culture, and

education, SF&Mi began issuing nah, a vip magazine.

active communication with customers

SF&Mi has stepped up its efforts to communicate with customers more effectively. a customer panel

is convened every year to share with the company suggestions for improvements collected by panel

members’ direct experiences. the panel discussion findings are applied to innovation of products and

services. For freer communication with a wider range of customers, SF&Mi actively uses online SnS

channels including twitter and facebook; i am a beginner, an online community for inexperienced drivers;

wide topics, a blog for those in their 20s and 30s; and good daddy, a campaign for good fathers.

SF&Mi fully understands that customer satisfaction management involves aligning all services by customer-centered business processing. we will move one step further to make a strong impression on the customer beyond customer satisfaction by rendering the most convenient, quick, and precise customer service possible.


Smart evolution rather than technologY

3

it

infrastructure

state-of-the-art Global it system

SF&Mi built a next-generation system in phases in 2007 and 2008 and has the best it system in

the industry. the next-generation system has enabled a one-stop service channel for customers;

a channel hub to which changes in products and business processes are automatically linked;

better standardization of the mobile-based compensation business; quick and precise handling

of contract business; a user-friendly next-generation business portal; and an informatization

service system specifically designed for the field, supporting consistent response to customers

and a differentiation strategy in the sales and service channels. in addition, an integrated global it

system has been placed and operated at overseas bases for real-time management of all business

processes including insurance contract status.

establishment of an advanced Mobile system

SF&Mi has built and operated mobile systems in a timely manner to effectively respond to the

constant change in the mobile environment, characterized today by the rapid proliferation of smart

devices. the company was the first domestic insurance company to open a mobile homepage

to provide information on products, compensation, and additional services. through a mobile

customer service application, SF&Mi offers insurance business services such as answering inquiries

about and modification of contracts, providing accident reports, lending, and certificate printing. in

2011, SF&Mi unveiled the call to web service, which integrated the call center and mobile devices

for the first time in the financial industry, enabling customers to report accidents from their

smartphones.

tighter customer information Management

SF&Mi takes protection of customer’s sensitive personal information very seriously. it employs

very rigorous wireline and wireless network security and a robust information protection system in

accordance with the act on electronic Financial transaction in order to prevent abuse of important

customer information and financial transaction information. to deal with threats to sensitive internal

information and network security, we have in place sophisticated information protection systems

including a server security tool to prevent hacking, a web firewall, a dual firewall, and an intrusion

detection system. we also encrypt the customer information db and use network encryption and

24/7 cyber control to ensure world-class customer information security.

scientific risk analysis and Management

SF&Mi is the industry's first company to establish a risk measurement system based on it. using

scientific risk measurement, the company analyzes scenarios and potential effects on company

profitability, and the risk analysis results are utilized to determine the price of a new product,

present guidelines on insurance product profitability, analyze risks and losses of investment

products, and manage duration. along with this, we apply business continuity Management

(bcM) to ensure that there is no interruption in business in the event it system damage due to

a disaster, such as a fire, gas explosion, or heavy rainfall. SF&Mi became the first domestic non-

life insurer to acquire international bcM certification in June 2010, which helped the company

garner due recognition for its excellent accident response system.

SF&Mi has a world-class it system and provides customers with smart financial services anytime, anywhere by the most advanced mobile system. we protect our customers' personal information by extremely tight security.


FroM eMploYeeSto Financial expertS

4

human resource

management

the World's Best expert Group for insurance and finance

as an experts group of korea's best experts in insurance and finance, SF&Mi provides optimal

insurance and finance services for individual and corporate customers alike. we are proud of our

outstanding human resources: about 740 finance experts holding cpcu, cFei, arM, are, FrM,

bci, and aic; some 80 actuaries; and about 550 loss adjusters (as of January 2012). in line with

the development of new products and expansion of overseas business, we scout global experts

for products and regional business who are the best in their domains to further improve our

tremendous pool of human resources. internally, we train our human resources more systematically

and by the most advanced means to produce truly capable insurance and finance experts.

fostering of Global finance pioneers

under the slogan of 'global finance pioneers with passion and a sense of ownership', SF&Mi

systematically trains global finance experts who will apply their capabilities in the domestic as

well as the international market. through the individual development plan (idp) linking human

resources management to training, employees and executive are put through step-by-step training

in three domains: Samsung insurance value (Siv), Samsung insurance leader (Sil), and Samsung

insurance expert (Sie) to support their development as the best experts in each area by task and by

job. the company also conducts online and offline education to help executives and employees to

acquire needed knowledge and technology anytime, anywhere.

energetic and challenging organizational culture

one of SF&Mi's unmatched strengths is its dynamic and challenging corporate culture backed by

smooth communications between executives and employees and labor-management relations

based on mutual confidence. under the slogan of 'exciting Samsung Fire & Marine insurance' with

motives of ‘pride & challenge’, ‘Young & open’, and ‘Fun & Joy’, the company has strived to make

its corporate culture as dynamic, exciting, and challenging as possible. the company sought to

maximize effective communication between executives and employees through various initiatives

such as exciting Supporter for change agents; exciting talk talk, a communication channel between

executives and employees; the being project, research initiatives about domains of interest by

employees; the volleyball championship for communications; and the chorus contest with one

Mind. it seeks to strike a reasonable work-life balance for its executives and employees, help them

achieve their visions and the company’s vision simultaneously, and create a better workplace.

systematic development of capable rcs

SF&Mi's approximately 33,000 rcs (based on the statistics of domestic rcs) are life-time

happiness partners for its customers to manage their assets and risks. to develop rcs into experts

of comprehensive insurance and finance who offer customers optimal products and services, the

company is concentrating on improving their competence. in addition to systematic training

programs such as the junior rc course and the senior rc course, the company supports

acquisition of qualifications; offers cyber education; and operates the rc knowledge center to

help them become the industry's best consultants.

to foster outstanding human resources, SF&Mi externally secures the world's top experts and internally trains world-class experts in insurance and financing. the dynamic and challenging corporate culture is extremely conducive to producing the kind of global finance pioneers who will one day lead the world's insurance industry.

story 5 : Five Love 64 SF & MI _ AnnuAl RepoRt 2011 65

we provide an environMent where people live together, purSue honeSt and tranSparent ManageMent, give hope to thoSe in need, Make people'S liveS More enJoYable and worthwhile through SportS, and Share the aFFluence oF culture. thiS iS how SF&Mi contributeS to SocietY and careS For the world.

our love MakeS the world a More beautiFul place

StorY 5SuStainability management

Fivelove

park, Jung Min


we provide an environMent where people live together, purSue honeSt and tranSparent ManageMent, give hope to thoSe in need, Make people'S liveS More enJoYable and worthwhile through SportS, and Share the aFFluence oF culture. thiS iS how SF&Mi contributeS to SocietY and careS For the world.

our love MakeS the world a More beautiFul place

park, Jung Min

StorY 5SuStainability management

Fivelove


establishment of an environmental Management system and policies

to protect the environment, SF&Mi employs an enterprise-wide green management

system and is formulating a new strategy to cope with climate change and manage

environmental risks effectively. the environmental management policy announced

in 2011 was revised as the policy on Management of environment and energy in april

2012, it engenders a more robust environmental management system. the company

charged the corporate Social responsibility (cSr) office with full responsibility for

environmental management for comprehensive response to climate change, and

regularly evaluates performance of environmental efforts by each business unit.

enterprise-Wide energy saving and reduction of Greenhouse Gas emissions

to reach the goal of enterprise-wide energy saving under the policy on Management of

environment and energy, SF&Mi is pursuing enterprise-wide reduction efforts for such

purposes as increasing efficiency of energy consuming facilities and energy saving by

executives and employees. the company also publicly announces the results of carbon

data analysis including green house gas emissions from all company buildings and

conducts a third-party verification of green house gas emissions to improve confidence

in its environment information. the company was cited as the carbon Management

industry leader in 2011 by the carbon disclosure project (cdp) korean committee,

and in 2012 became the first financial company in korea to acquire iSo 50001, an

international standard for energy management system.

environmental Management implemented together with

executives and employees and customers

SF&Mi is conducting a number of environmental campaigns to raise the environmental

awareness of its executives and employees and encourage environment-friendly

practices in daily life. in addition to eco office activities such as reduction of paper

use, disposable products, and electricity use in offices, the company has actively

encouraged its executives and employees to use public transportation and participated

in environmental events such as earth hour and earth day. the company adopted

electronic policies in 2009 to reduce the quantity of paper used and has set aside

a certain amount of money whenever customers receive electronic policies and

application forms by email to set up a fund donated to the korea Forest Service and

the korea Forest Foundation to create forests around schools. it also produced and

distributed the environment-friendly driving guide and provided honey bean mileage

for members who subscribed to the SF&Mi homepage. the mileage points were

donated to plant for the planet!, an environmental campaign by unep, to practice

environmental activities together with customers.

1

environmental

management

in forging a strategy to cope

with climate changes and

manage environmental risks

more effectively, SF&Mi leads

environmental management

in a way that takes greatest

advantage of the characteristics

of a finance company. Saving

energy, reducing green house

gas emissions, and sharing the

value of the environment with

our customers, we will ensure

a healthy future of the earth

where we all live together.

we care For people and the environment

people environment

reduction of Greenhouse Gas

emissions

eco e-policy


we uphold high StandardS oF ethicS and require Strict compliance

enterprise-Wide ethical Management system and organization

SF&Mi implements ethical management systematically based on its solid philosophy on

ethical management and fair trade. we became the first domestic insurance company

to declare intention of fair trade compliance in 2001, and we made 2002 the first

year of ethical management, adopting the code of ethics engendering “transparent

management” trusted by the people, “fair trade” respecting free and fair competition

and market order, and “clean organizational culture” preventing irregularities. in 2009,

we announced five more ideals for executives and employees: customer-oriented spirit,

sense of ownership, sense of challenge, professionalism, and law-abiding spirit. the

compliance monitoring team was established to promote ethical management and

conduct ethical education, daily monitoring, and internal control, and the team is in turn

monitored and supervised by the audit committee under the board of directors.

ethical Management activities by executives and employees

as part of efforts to reinforce the ethics of executives and employees and heighten their

power of execution, we require them to write a pledge on ethics and compliance every

year and encourage them to review themselves on their jobs and major risks in each

business area. we also make sure that the best online and offline education on ethics and

compliance is provided to executives and employees and rcs. a report channel is available

to report ethics breaches and irregularities by executives and employees. customers can

report such matters directly to the audit team by telephone, fax, email, or the internet,

and employees can report them to the compliance monitoring team via whistle blowing,

an internal report channel. ethical management practices by executives and employees

are a major evaluation item for achievement evaluation of executives and performance

evaluation of employees.

reinforcement of fair trade and internal control

SF&Mi manages various issues related to internal control that occur in the process of

corporate operation, under the responsibility of the audit committee and the related

party transactions committee. the compliance manager is appointed to operate the 'Fair

trade compliance program' to firmly institutionalize law-abiding culture. the fair trade

compliance counseling center operates according to the compliance program developed

for executives and employees, and step-by-step training is provided for executives and

employees in departments or positions that entail high risk of violation of the Fair trade

act. by the related party transactions committee consisting of only outside directors,

the company makes efforts to put transparent management into practice to meet global

as well as domestic standards.

2

ethical

management

with a solid management

philosophy on ethics

and compliance, SF&Mi

encourages all executives

and employees to observe

corporate ethics in their jobs

and lives. we will become

respected and trusted by

our customers and society

if we engage in truly ethical

and compliant management,

as the world's top non-life

insurer should.

ethicS compliance


establishment of safety in traffic and life

SF&Mi initiated the 'safe driving project' as its representative corporate social responsibility

project in consideration of the company’s nature. its primary purpose is to prevent traffic

accidents involving children and to promote safe driving to prevent traffic accidents in

general. the company has offered a number of traffic safety training programs and staged

traffic safety campaigns led by the Samsung traffic Safety research institute and Samsung

transportation Museum. SF&Mi is twinned with children whose parents died in traffic

accidents or were traffic policemen who died in the line of duty, and provides them funds

for living expenses as well as college scholarships and funds to pay private educational

institution fees. we also give them emotional assistance by encouraging each department

to support one such child. in addition, we engage in community safety check activities such

as Safe Seoul, a comprehensive safety experience festival, living safety campaigns, and

living safety education in order to enhance safety awareness and prevent safety accidents.

support for communities and the underprivileged

we operate a college development fund and grant grade-based scholarships for high school

students to support promising young talents and future leaders. we provide scholarships

for children of firefighters who died in the line of duty. we hold the “SF&Mi Junior global

leaders’ Forum” every year for teenagers to help them develop the capabilities and traits

needed to be global leaders. as part of efforts to support the underprivileged, SF&Mi

provides support for living and education for about 150 teenagers who are the heads of

their families, and cover the cost of operations and supplies for social welfare organizations

such as the korea Fund, volunteers for call for help, and the disabled First Movement

organization. the company also supports Smile Microcredit bank to provide funds for

inception and operation of businesses by people who experience difficulty obtaining

financing. through the project to encourage one department to support one village in a rural

area, we also help revive rural areas experiencing economic difficulties as a result of opening

of the agricultural and fishery market to foreign competition and insufficient labor.

project to support the disabled and raise awareness

SF&Mi has been engaged in various support initiatives for the handicapped. via the SF&Mi

guide dog School, we trained good guide dogs and donated 149 guide dogs through 2011

to the blind for free, and have continued various initiatives including teaching of guide

dog training know-how, establishment of foreign networks, amendment of laws on guide

dogs, and improvement of awareness. to help the handicapped adapt themselves to

society, the company runs the poco a poco music camp for disabled teenagers and grants

scholarships every year to talented blind students of Seoul national School for the blind.

in addition, the company has so far produced four educational films to improve awareness

of the handicapped and distributed them to elementary, middle, and high schools across

the country, and it produces educational video contents for public officers and distributes

them. we also make efforts to raise public awareness of the handicapped by awarding prizes

to excellent classes that helped the disabled adapt themselves to the integrated school

environment, holding essay contests, and staging campaigns.

reaching out to those in need

the Samsung anycar volunteer team was set up in 1994, and 16 volunteer centers and 180

volunteer teams were in operation across the country as of 2011. the dream Fund was set

up by donations from executives and employees and the company's matching grants. it is

used as a service fund for social contribution. Family volunteer service teams consisting of

executives and employees and their families and relatives are also in operation. together

with Samsung group, they participate in blood donation drives, festivals of volunteer

service in celebration of the company’s foundation day, festivals of volunteer services by

executives and employees, donation campaigns at the end of the year, and talent sharing

campaigns.

sharing hope and happiness

SF&Mi rcs participate in efforts to support the disabled and prevent traffic and safety

accidents. through the 500-won gift of hope project since 2005 by which they deposit

krw500 per new long-term insurance contract, they have helped families of the

handicapped suffering economic difficulties and supported the improvement of their

housing situation. Since 2010, they have deposited krw500 per new auto insurance

contract into a fund and promoted the happy School campaign that provides safety

training, delivers safety accident prevention supplies, and installs safety accident prevention

signs for lower-grade elementary school students across the country.

3

contribution to

Society

Focusing on the safe driving

project, SF&Mi's representative

social contribution program,

the company makes efforts to

make society healthier and more

beautiful through a wide range

of social contribution activities

for such purposes as support for

communities, the underprivileged,

and the handicapped, and by

volunteer services by executives,

employees, and rcs. our on-going

and systematic social contribution

activities make the world a safer

and more welcoming place.

11.1 hours

time spent in social contribution activities per

executive and employee

number of executives and employees participating

in Voluntary services (accumulated yearly)

support for the handicapped

support for traffic and living safety

number of Guide dogs donated (accumulated)

4,594

3,161

149

22,452

we Share hope For a brighter Future with Society

Sharing Society

million

million

krW

krW


support for amateur sports

SF&Mi has supported amateur sports since 1997 to promote greater participation

in them and expand the base of players. the company sponsors the korea Skating

union, the korea athletics Federation, and the college volleyball association, and we

identify excellent players via programs for cultivating promising young athletes. the

company especially seeks to identify and foster promising speed skaters by supporting

the korea Skating union. we lend assistance by holding speed skating contests for

teenagers, covering the expenses of overseas training, and hiring first-class coaches.

Baduk contests and nurturing of promising players

SF&Mi has hosted world Masters baduk every year since 1996 to popularize baduk,

a mental sport. world Masters bakuk invites players regardless of nationality or

whether they are professional or amateur, directs public attention to baduk, and

supports cultural exchange between people around the world. SF&Mi sets aside funds

whenever korean players win games from the top 32 to the final of world Masters

baduk. in 2011, this money was granted to trainees who achieved good results in the

SF&Mi baduk trainees league.

Blue fangs, sf&Mi's professional Volleyball team

established in 1995, the blue Fangs put on a spectacular and exciting performance on

the volleyball court and play an important role in representing korea in world matches

by producing talented players. the blue Fangs have won 13 victories in the korea

volleyball Super league and professional volleyball v league. they have won five

times in a row since the 2007-2008 season and became recognized as korea's best

volleyball club. Since 2002, they have worked as honorary ambassadors of the disabled

First Movement organization and participated every year in various events to support

the disabled and improve awareness of the disabled. in daejon, home of the team, they

actively participate in social contribution activities including the Sharing of love event.

conservation of cultural heritage

along with the cultural heritage administration, SF&Mi wages the one company one

cultural property movement, helps preserve gyeongbokgung palace, and supports

intangible cultural property to preserve korea’s precious cultural heritage and

traditional culture. the company cleans up the grounds of gyeongbokgung palace and

checks the condition of cultural heritage properties to better preserve them and help

people visit them more easily. also, the company supports daekyun kim, who is skilled

in tightrope walking, important intangible cultural asset no. 58, to help pass korea's

traditional culture down to our posterity for a long time to come.

samsung transportation Museum

Samsung transportation Museum is the nation’s first auto museum. it was

established in 1998 to introduce, spread, and further the development of auto culture

in korea by examining the history and culture of vehicles. the museum has gathered,

studied, and preserved automobiles and relevant cultural heritage, while making

efforts to establish an appropriate automobile culture through activities to exhibit

automobile cultural properties, provide traffic safety training for children to prevent

traffic accidents, and offer information on automobile culture in foreign countries.

samsung loss control center

to create a safe, comfortable corporate environment without disasters, SF&Mi

became the first domestic non-life insurance company to form a disaster management

organization, Samsung loss control center (Slcc), in 1979. the company has since

offered risk management services to prevent accidents at its customer workplaces.

with expertise in risk management accumulated over 20 years, state-of-the-art

inspection equipment, and disaster prevention software, the Slcc offers specialized

risk diagnosis consulting in each area and disaster consulting. the Slcc also

provides technical advice on prevention of national disasters and disaster prevention

and response policies with regard to institutionalization of disaster insurance,

development of a new national disaster response system, and the like. through a

series of disaster education programs, seminars by invited experts, and periodic

publications, the company widely disseminates information on how best to prevent

and respond to disasters.

4

Support for

Sports

5

Support for

culture

SF&Mi supports amateur and

non-popular sports, promotes

baduk (a mental sport), and

presents the wonderful games

of the blue Fangs, giving society

more energy. with fair matches,

unmatched passion, and lively

games, we show how fun sports

truly are for everyone.

Spearheading the conservation

of korea’s precious cultural

heritage, SF&Mi raises

awareness of the tremendous

value of cultural heritage and

traditional culture and conducts

wide-ranging research and

activities for traffic safety and

prevention of disasters to make

society safer and more affluent.

we will step up efforts to share

greater impressions of culture

since it is more beautiful when

it is shared.

we build energy through SportS we enjoy more impreSSionS through culture

energy SportS impreSSion culture


providing the higheSt value to all StakeholderS iS whY SF&Mi StriveS to perForM better and better. SF&Mi SetS SeriouS goalS and achieveS theM one aFter another with itS eYe on becoMing the world'S top inSurer that trulY ServeS itS cuStoMerS; produceS returnS For itS ShareholderS and inveStorS; and bringS happineSS to itS executiveS and eMploYeeS, Mutual SucceSS to partnerS, growth to coMMunitieS, and hope to Mankind.

our valueS brighten the Future oF all StakeholderS

Sixvalue

StorY 6Financial Section

Shin, Kyung Jin


providing the higheSt value to all StakeholderS iS whY SF&Mi StriveS to perForM better and better. SF&Mi SetS SeriouS goalS and achieveS theM one aFter another with itS eYe on becoMing the world'S top inSurer that trulY ServeS itS cuStoMerS; produceS returnS For itS ShareholderS and inveStorS; and bringS happineSS to itS executiveS and eMploYeeS, Mutual SucceSS to partnerS, growth to coMMunitieS, and hope to Mankind.

our valueS brighten the Future oF all StakeholderS

Shin, Kyung Jin

Sixvalue

StorY 6Financial Section

story 6 : Six Value 76 SF & MI _ AnnuAl RepoRt 2011 77

1. OverviewSpillover from the financial crisis in Europe caused continued turmoil in the international financial markets and stagnation

in global economic growth in the 2011 fiscal year. In addition to this already challenging situation, a spate of major natural

disasters including earthquakes and floods in Australia, Japan, and Thailand increased the risks in the non-life insurance

industry. SF&MI, nevertheless, performed well, surpassing its original goals thanks to its outstanding sales organization,

incomparable risk management, and robust asset management.

Backed by improved loss ratios in automobile insurance and long-term insurance, net profit rose 16% in 2011 to KRW 784.5

billion. The average growth rate for the past two years was 21.5%, which was in excess of the increase in sales. Total assets

rose 19.7% to KRW 38,621.2 billion, and the solvency margin ratio reached 450.7%, further bolstering the company’s financial

condition.

Net Profit by Year [ Unit: In KRW billions ]

FY07 FY08 FY09 FY10 FY11

net profit (*1) 476.5 598.7 524.5 676.4 784.5

Change 39.7% 25.6% -12.4% 29.0% 16.0%

(*1) K-IFRS applied after FY10

2. Profit and Loss SummaryDirect premiums written and net premiums in the 2011 fiscal year rose 14.2% and 15.3% to KRW 14,584.6 billion and KRW

13,679.4 billion, respectively. Underwriting posted losses of KRW 260.4 billion due to losses caused by one-time factors

such as floods in Thailand. However, this was an improvement of KRW 36.7 billion from the previous year, which was mostly

attributed to a significant decline in the loss ratio in auto insurance stemming from the adoption of fixed rate deductibles.

Although the return on investment fell slightly due to lower yields on bonds and loans and lower one-time profits compared

with the previous year amid the low interest rate environment, investment returns rose KRW 128.4 billion on higher interest

income due to high growth of invested assets.

Net profit reached KRW 784.5 billion, and the cash dividend in the 2011 fiscal year was set at the same level as in 2010:

KRW 3,750 per share and KRW 174.9 billion in total. The dividend payout ratio fell slightly from the previous year to 22.3%.

Excluding non-dividend resources: catastrophe reserves and bad debt reserves, the dividend payout ratio stood at 25.8%,

remaining little changed from 2010.

Income Statement [ Unit: In KRW billions, % ]

FY10 FY11 Change

Direct premiums written 12,771.3 14,584.6 14.2

net premiums earned 11,861.1 13,679.4 15.3

underwriting profit -297.1 -260.4 N/A

Investment profit 1,232.7 1,361.1 10.4

operating profit 935.6 1,100.7 17.6

non-operating profit -33.5 -42.7 N/A

pre-tax profit 902.0 1,058.0 17.3

net profit 676.4 784.5 16.0

3. Earnings by Business LineDirect premiums written totaled KRW 14,584.6 billion, up 14.2% from the 2010 fiscal year. This represents a robust annual

average growth rate of 15.9% in the past two years and is mostly attributed to 18% growth in long-term insurance resulting

from an increase in new contracts and on-going recurring premiums. Commercial insurance and auto insurance rose 12.7%

and 5.7% respectively.

Commercial insurance rose 12.7% to KRW 1,425.3 billion on higher sales of marine plant insurance and package products.

Direct sales of auto insurance with low premiums over the Internet increased, and upward pressures on premiums

disappeared, which in turn caused offline auto insurance sales to decline. Overall auto insurance sales were weak compared

with commercial and long-term insurance. However, its market share was recovering, backed by active marketing in the

wake of stabilization of underwriting conditions. The renewal rate of auto insurance rose approximately 0.7%p.

In long-term insurance, sales of protection-type products fell since sales of property insurance decreased. However, sales of

saving-type products rose sharply, led by higher sales of annuity products due to tax reforms and a general flight to quality.

Direct Premiums Written by Line [ Unit: In KRW billions, % ]

FY10 FY11Change

Amount Share Amount Share

Commercial 1,264.8 10.7 1,425.3 9.8 12.7

long-term 8,119.6 60.4 9,579.9 65.7 18.0

Initial premiums 605.7 2.8 760.2 5.2 25.5

Recurring premiums 7,513.9 57.6 8,819.6 60.8 17.4

Automobile 3,386.9 28.9 3,579.4 24.5 5.7

total 12,771.3 100.0 14,584.6 100.0 14.2

Underwriting Efficiency [ Unit: In KRW billions, %, %p ]

FY10 FY11 Change

loss ratio 84.7% 84.1% -0.6

Commercial 66.6% 73.8% 7.2

Long-term 86.5% 86.8% 0.3

Auto 84.2% 79.3% -4.9

expense ratio 17.6% 17.6% 0.0

Combined ratio 102.3% 101.7% -0.6

A

Operational

Results

MANAGEMENTDISCUSSION & ANALYSIS


In the 2011 fiscal year, the expense ratio remained unchanged from the 2010 fiscal year at 17.6%. Distribution costs improved

0.4%p due to adoption of the upper limit of distribution costs in auto insurance, while business maintenance costs increased

0.4%p due to increased advertisement expenses incurred by active marketing.

Expense Ratio Breakdown [ Unit: %, %p ]

FY10 FY11 Change

Wages & severance benefits 3.8 3.9 0.1

Distribution costs (*1) 10.3 9.9 -0.4

Business maintenance costs 4.8 5.2 0.4

expenses recovered (*2) -1.4 -1.4 0.0

total 17.6 17.6 0.0

(*1) Acquisition and collection cost, agent commissions, and amortization of acquisition cost(*2) Reinsurance commission and reinsurance profit commissions

4. Investment ReturnsInvestment returns increased KRW 128.4 billion to KRW 1,361.1 billion. Interest income rose steadily on bonds, loans, and

overseas securities. Stock holdings declined by KRW 65.2 billion from the previous year when disposition gains were created

by changes in accounting standards.

The yield on investment decreased 0.5%p to 4.7% from the previous year due to the on-going decline in market interest

rates such as government bond rates and corporate bond rates.

Nonetheless, this was significantly above the market interest rates, which hovered around the mid 3% range. The yield on

interest bearing instruments such as bonds and loans stabilized above 5%.

Investment Income [ Unit: In KRW billions, %, %p ]

FY10 (*1) FY11 Change

Amount Yield Amount Yield Amount Yield

Cash & equivalents 15.6 4.9 21.9 3.4 40.4 -1.5

Stocks 144.4 4.9 79.2 2.2 -45.2 -2.7

Bonds 650.4 5.7 706.6 5.3 8.6 -0.4

loans 380.7 6.2 455.9 6.1 19.8 -0.1

overseas securities 134.7 5.8 152.9 5.8 13.5 0.0

Real estate 22.5 2.1 16.9 1.4 -24.9 -0.7

Investment administration expenses 99.6 - 72.3 - -27.4 -

Investment income 1,248.7 5.2 1,361.1 4.7 9.0 -0.5

(*1) Based on FY10 K-GAAP

1. OverviewInvested assets rose 20.5% to KRW 32,489.2 billion. The company concentrates on stable and active asset management

focusing on interest income assets to effectively manage the sharply increasing invested assets amid the low interest rate

environment.

Bond assets accounted for 45.3% of invested assets, and the holdings of stable and high-yield bonds, including corporate

bonds and special bonds, were increased. Loan assets accounted for 26.2% and were increased with focus on secured loans

such as real estate and policy loans.

Financial Position Summary [ Unit: In KRW billions, % ]

FY10 FY11 Change

operating assets 26,968.4 32,489.2 20.5

Cash & equivalents 345.1 970.9 181.3

Stocks 3,244.1 4,168.2 28.5

Bonds 12,671.1 14,707.3 16.1

Loans 7,014.5 8,512.0 21.3

Overseas securities 2,593.9 2,859.5 10.2

Real estate 1,099.8 1,271.3 15.6

non-invested assets 5,303.3 6,132.0 15.6

total assets 32,271.8 38,621.2 19.7

policy reserves 22,503.2 27,130.8 20.6

other liabilities 1,753.0 2,081.5 18.7

Special account liabilities 1,393.7 1,713.9 23.0

total liabilities 25,649.9 30,926.1 20.6

Shareholder's equity 6,621.9 7,695.0 16.2

Catastrophe reserves 1,188.2 1,284.8 8.1

total liabilities & shareholders' equity 32,271.8 38,621.2 19.7

B

Financial

Positions



2. SecuritiesAs of the end of the 2011 fiscal year, securities assets including stocks, bonds, and overseas securities were up 17.4% to

KRW21,735 billion. Stock holdings rose 28.5% to KRW 4,168.1 billion, attributed to increased valuation gain of affiliates’

stocks such as Samsung Electronics and Samsung Securities that are classified as available-for-sale.

Bond holdings rose 16.1% to KRW 14,707.3 billion. The volume of trading bonds increased significantly since market interest

rates did not pick up as expected. Overseas securities rose 10.2% to KRW 2,859.5 billion as Korea Paper, a bond that Korean

companies issue in foreign currency, realized good yield rates.

Securities [ Unit: In KRW billions, % ]

FY10 FY11 Change

Stocks 3,244.1 4,168.2 28.5

Equity method 127.5 192.1 50.7

Trading 0.0 3.9 N/A

Available-for-sale 3,059.0 3,628.8 18.6

Affiliates and subsidiaries stocks 3.9 343.3 496.0

Bonds 12,671.1 14,707.3 16.1

Trading 372.0 883.4 137.5


Held-to-maturity 110.1 110.1 0.0

Affiliates and subsidiaries stocks 360.3 0.0 N/A

overseas securities 2,593.9 2,859.5 10.2

Trading 224.4 245.4 9.4


total 18,509.1 21,735.0 17.4

3. Loans and Asset QualityLoans increased 20.9% to KRW 8,475.2 billion. Retail loans rose 21.3% to KRW 6,260.2 billion, of which mortgage loans

increased 23.6% to KRW 3,553.8 billion and policyholder loans rose 17.2% to KRW 2,634.9 billion.

Corporate loans increased 19.7% to KRW 2,215 billion, led by secured loans such as real estate and SOC loans. Despite

concerns over household debt, the household delinquency ratio remained unchanged at 0.3%, and the non-performing loans

(NPL) ratio was 0.1%, the lowest in the finance industry.

Loans [ Unit: In KRW billion, % ]

FY10 FY11

ChangeAmount Share Amount Share

Retail loans 5,161.8 73.6% 6,260.2 73.9% 21.3

Mortgages 2,874.7 41.0% 3,553.8 41.9% 23.6

Policyholder 2,248.5 32.1% 2,634.9 31.1% 17.2

Non-secured 38.4 0.5% 71.5 0.8% 86.2

Corporate loans 1,851.0 26.4% 2,215.0 26.1% 19.7

Secured 1,821.0 26.0% 2,175.0 25.7% 19.4

Non-secured 30.0 0.4% 40.0 0.5% 33.3

total 7,012.8 100.0% 8,475.2 100.0% 20.9

Asset Quality [ Unit: In KRW billions, % ]

FY10 FY11 Change

total loans 7,053.2 8,485.2 20.3%

Normal 7,040.2 8,460.5 20.2%

Precautionary 2.5 13.5 440.0%

Substandard 9.1 10.3 13.2%

Doubtful 0.8 0.2 -75.0%

estimated loss 0.5 0.6 20.0%

Substandard & below loans 10.4 11.2 7.7%

Non-performing loans to total loans ratio 0.1% 0.1% -

Loan loss provisions to substandard & below loans ratio 505.3% 527.3% 22.0%p

Delinquency ratio 0.2% 0.2% -

Retail 0.3% 0.3% -

Corporate 0.0% 0.0% -



4. Asset & Liability ManagementAs of the end of the 2011 fiscal year, the duration matching rate between assets and liabilities stood at 83.8%, significantly

increasing the company's profit stability despite the volatility of the market interest rates.

For the asset-liability spread margin, the return on matching assets reached 5.42%, and the interest rate on the liabilities

rose to 4.61% due to setting of a higher interest rate on saving-type products, narrowing the spread to 81bp (basis points).

Under the assumption that interest rate competition in the industry will likely ease, the company's spread margin is expected to

improve as the volume of loans with floating interest rates increases and loans with fixed high interest rates continue to mature.

ALM on Long-term Insurance [ Unit: In KRW billions, %, %p ]

FY10 FY11 Change

Amount Yield Duration Amount Yield Duration Amount Yield Duration

Assets (*1) 16,136.9 5.62 3.95 20,329.1 5.42 3.89 4,192.2 -0.20 -0.18

liabilities (*2) 15,776.4 4.56 4.46 19,551.4 4.61 4.64 3,775 0.05 0.18

Spread (*3) 360.5 1.06 88.6 777.7 0.81 83.8% 360.5 -0.25 -4.8

(*1) Sum of invested assets and unamortized deferred assets (*2) Sum of reserves for savings, unearned policy reserves, and reserves for lapsed policies(*3) Spread in the column of duration refers to the matching rate of asset and liability duration.


The Board of Directors and ShareholdersSamsung Fire & Marine Insurance Co., Ltd.:

We have audited the accompanying consolidated statements of financial position of Samsung Fire & Marine Insurance Co.,

Ltd. and its subsidiaries (the “Group”) as of March 31, 2012, 2011 and April 1, 2010, and the related consolidated statements

of comprehensive income, changes in equity and cash flows for the years ended March 31, 2012 and 2011. Management is

responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Korean

International Financial Reporting Standards. Our responsibility is to express an opinion on these consolidated financial

statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those standards

require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the

amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles

used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial

position of the Group as of March 31, 2012, 2011 and April 1, 2010 and its financial performance and its cash flows for the years

ended March 31, 2012 and 2011, in accordance with Korean International Financial Reporting Standards.

Without qualifying our opinion, we draw attention to the following:

The procedures and practices utilized in the Republic of Korea to audit such consolidated financial statements may differ

from those generally accepted and applied in other countries. Accordingly, this report and the accompanying consolidated

financial statements are for use by those knowledgeable about Korean auditing standards and their application in practice.

This report is effective as of May 25, 2012, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

INDEPENDENT AUDITORS’ REPORT (CONSOLIDATED FINANCIAL STATEMENTS)

Seoul, Korea

May 25, 2012

KPMG Samjong Accounting Corp.


The Board of Directors and ShareholdersSamsung Fire & Marine Insurance Co., Ltd.:

We have audited the accompanying separate statements of financial position of Samsung Fire & Marine Insurance Co., Ltd.

(the “Company”) as of March 31, 2012, 2011 and April 1, 2010, and the related separate statements of comprehensive income,

changes in equity and cash flows for the years ended March 31, 2012 and 2011. Management is responsible for the preparation

and fair presentation of these separate financial statements in accordance with Korean International Financial Reporting

Standards. Our responsibility is to express an opinion on these separate financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those standards

require that we plan and perform the audit to obtain reasonable assurance about whether the separate financial statements

are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the separate financial statements. An audit also includes assessing the accounting principles used and

significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe

that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

In our opinion, the separate financial statements referred to above present fairly, in all material respects, the financial

position of the Company as of March 31, 2012, 2011 and April 1, 2010 and its financial performance and its cash flows for the

years ended March 31, 2012 and 2011, in accordance with Korean International Financial Reporting Standards.

Without qualifying our opinion, we draw attention to the following:

The procedures and practices utilized in the Republic of Korea to audit such separate financial statements may differ from

those generally accepted and applied in other countries. Accordingly, this report and the accompanying separate financial

statements are for use by those knowledgeable about Korean auditing standards and their application in practice.

This report is effective as of May 25, 2012, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying separate financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

INDEPENDENT AUDITORS’ REPORT(SEPARATE FINANCIAL STATEMENTS)

Seoul, Korea

May 25, 2012

KPMG Samjong Accounting Corp.


[ Unit: In millions of won ]

March 31, 2012 March 31, 2011 April 1, 2010

Assets

Cash and deposits 1,233,512 519,032 434,864

Financial asset at fair value through profit or loss 1,177,280 930,157 580,534

Available-for-sale financial assets 20,015,978 17,266,371 14,807,695

Held-to-maturity financial assets 110,098 113,562 110,131

Loans 8,389,659 6,971,743 5,638,644

Other receivables 1,011,133 914,136 811,985

Investments in associates 6,422 5,934 11,924

Derivative assets 118,716 132,835 81,627

Reinsurance assets 957,815 770,575 781,707

Investment properties 1,089,719 544,848 682,411

Property and equipment 840,081 742,303 721,577

Intangible assets 147,521 124,863 124,441

Deferred income tax assets 2,929 534 993

Other assets 2,339,002 2,046,691 1,733,520

Separate account assets 1,700,886 1,385,556 1,118,556

Total assets 39,140,751 32,469,140 27,640,609

Liabilities

Insurance liabilities 27,294,057 22,594,562 19,006,341

Borrowings 139,000 30,300 107,200

Other financial liabilities 558,879 451,500 446,139

Derivative liabilities 139,275 107,061 123,294

Provisions 41,564 35,134 28,823

Defined benefit liabilities 73,049 73,649 65,121

Deferred income tax liabilities 1,141,256 830,212 754,789

Current tax liabilities 41,719 74,784 31,902

Other liabilities 255,381 227,334 205,302

Separate account liabilities 1,713,869 1,393,718 1,123,433

Total liabilities 31,398,049 25,818,254 21,892,344

Stockholders’ equity

Share capital 26,473 26,473 26,473

Capital surplus 731,766 730,020 728,232

Capital adjustments (80,668) (92,807) (92,496)

Accumulated other comprehensive income, net of taxes 2,434,343 1,971,671 1,621,481

Retained earnings 4,611,015 4,000,241 3,450,858

Equity attributable to owners of the Company 7,722,929 6,635,598 5,734,548

Non-controlling interests 19,773 15,288 13,717

Total stockholders’ equity 7,742,702 6,650,886 5,748,265

Total liabilities and stockholders’ equity 39,140,751 32,469,140 27,640,609


March 31, 2012 March 31, 2011 April 1, 2010

Assets

Cash and deposits 970,914 345,112 303,237

Financial asset at fair value through profit or loss 1,082,203 596,454 292,837

Available-for-sale financial assets 20,350,547 17,674,952 15,209,523

Held-to-maturity financial assets 110,098 110,115 110,131

Loans 8,511,959 7,014,497 5,655,659

Other receivables 921,951 867,565 765,944

Investments in subsidiaries and associates 192,124 127,550 115,157

Derivative assets 118,716 132,835 79,881

Reinsurance assets 838,901 703,618 744,494

Investment properties 513,802 412,025 425,714

Property and equipment 832,792 737,756 717,715

Intangible assets 144,059 121,999 122,937

Other assets 2,332,201 2,041,756 1,730,090

Separate account assets 1,700,886 1,385,556 1,118,556

Total assets 38,621,153 32,271,790 27,391,875

Liabilities

Insurance liabilities 27,130,778 22,503,178 18,952,702

Borrowings - 26,300 36,700

Other financial liabilities 421,599 397,039 354,614

Derivative liabilities 139,275 107,061 123,187

Provisions 41,564 35,134 28,823

Defined benefit liabilities 66,728 70,831 62,401

Deferred income tax liabilities 1,141,231 829,873 754,343

Current tax liabilities 38,651 73,171 31,162

Other liabilities 232,427 213,595 192,169

Separate account liabilities 1,713,869 1,393,718 1,123,432

Total liabilities 30,926,122 25,649,900 21,659,533

Stockholders’ equity

Share capital 26,473 26,473 26,473

Capital surplus 731,766 730,019 728,233

Capital adjustments (80,668) (92,807) (92,496)

Accumulated other comprehensiveincome, net of taxes 2,431,403 1,981,932 1,630,583

Retained earnings 4,586,057 3,976,273 3,439,549

7,695,031 6,621,890 5,732,342

Total liabilities and stockholders’ equity 38,621,153 32,271,790 27,391,875

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

SEPARATE STATEMENTS OF FINANCIAL POSITION


[ Unit: In millions of won, except earnings per share ]

2012 2011

Operating revenues

Insurance operating income:

Premium income 14,873,988 12,947,707

Reinsurance income 466,180 424,403

Increase in reinsurance assets 183,130 8,301

Compensation income 1,721 6,828

Expense recovered 228,556 196,861

Gain on foreign exchange transactions 23,312 19,154

15,776,887 13,603,254

Investment income:

Interest income 1,297,707 1,132,576

Dividend income 40,316 48,658

Gain on valuation and sales of financial instruments 95,675 126,787

Gain on valuation and sales of derivative instrument 35,460 83,604

Reversal of allowance and impairment loss of financial asset 184 96

Rental income 59,320 50,565

Commission income 448 954


Gain on sale of investment properties - 6,556

Miscellaneous investment income 1,373 2,998

1,612,700 1,470,866

Other income 11,082 16,686

Gain on investment in associates 641 1,562

Separate account commission 8,120 6,541

Separate account income 104,915 159,049

17,514,345 15,257,958

Operating expenses

Insurance operating expenses:

Claims paid and refund of long-term insurance policies 7,298,394 6,707,068

Reinsurance premium expenses 1,012,728 908,316

Increase in insurance liabilities 4,637,976 3,610,784

Loss adjustment expense 383,437 329,883

Expenses paid 2,693,686 2,336,804

Loss on foreign exchange transactions 29,981 22,792

16,056,202 13,915,647


2012 2011

Investment expenses:

Interest expense 6,453 5,576

Loss on valuation and sale of non-derivative financial instruments 28,796 20,362

Loss on valuation and sale of derivative instruments 76,379 24,811

Impairment loss on financial assets 4,744 3,973

Investment management expenses 76,757 83,086

Maintenance expenses on investment properties 22,791 23,378

Depreciation expenses on investment properties 8,852 9,104


Loss on sale of investment properties - 3

Miscellaneous investment expenses 9,381 4,016

251,738 236,011

Other expenses 21,245 18,338

Loss on investment in associates 841 -

Separate account commission paid 605 746

Separate account expenses 104,915 159,049

16,435,546 14,329,791

Profit before income tax 1,078,799 928,167

Income tax expenses 279,639 234,581

Profit for the year 799,160 693,586

Other comprehensive income, net of tax 462,671 350,190

Total comprehensive income for the year 1,261,831 1,043,776

Profit attributable to:

Owners of the Company 794,875 691,022

Non-controlling interests 4,285 2,564

799,160 693,586

Total comprehensive income attributable to:

Owners of the Company 1,257,280 1,042,410

Non-controlling interests 4,551 1,366

1,261,831 1,043,776

Earnings per share (in won)

Basic earnings per share 17,926 15,574

Diluted earnings per share 17,917 15,543

CONSOLIDATED STATEMENTS OF INCOME



2012 2011

Operating revenues

Insurance operating income:

Premium income 14,714,672 12,832,830

Reinsurance income 439,171 399,385

Increase (decrease) in reinsurance assets 134,516 (23,022)

Compensation income 1,523 6,636

Expense recovered 188,434 168,837


15,501,200 13,403,726

Investment income:

Interest income 1,297,329 1,124,564

Dividend income 47,305 60,086

Gain on valuation and sales of financial instruments 94,949 119,253

Gain on valuation and sales of derivative instrument 35,460 82,800

Reversal of allowance and impairment loss of financial asset 184 96

Rental income 45,850 46,915

Commission income 446 897


Gain on sale of investment properties - 6,556

Miscellaneous investment income 1,278 988

1,603,964 1,458,184

Other income 11,205 16,099

Gain on investments in subsidiaries and associates 68 879

Separate account commission 8,120 6,542

Separate account income 104,915 159,049

17,229,472 15,044,479

Operating expenses

Insurance operating expenses:

Claims paid and refund of long-term insurance policies 7,260,795 6,674,130

Reinsurance premium expenses 906,909 827,166


Loss adjustment expense 381,101 331,890

Expenses paid 2,653,495 2,310,410


15,802,054 13,737,057


2012 2011

Investment expenses:


Loss on valuation and sale of non-derivative financial instruments 27,663 18,359



Investment management expenses 74,211 82,364

Maintenance expenses on investment properties 19,757 20,550

Depreciation expenses on investment properties 8,852 9,104

Loss on sale of investment properties - 3


Miscellaneous investment expenses 9,101 3,986

242,963 227,444

Other expenses 20,980 18,145

Separate account commission paid 605 747

Separate account expenses 104,915 159,049

16,171,517 14,142,442

Profit before income tax 1,057,955 902,037



Changes in other comprehensive income 449,471 351,348

Total comprehensive income for the year 1,234,000 1,027,754

Earnings per share (in won)

Basic earnings per share 17,690 15,239

Diluted earnings per share 17,681 15,209

SEPARATE STATEMENTS OF INCOME



Sharecapital

Capitalsurplus

Capitaladjustment

Accumulatedother

comprehensiveincome

Retainedearnings

non-controlling

interests

total stockholders’

equity

Balance at April 1, 2010 26,473 728,232 (92,496) 1,621,481 3,450,858 13,717 5,748,265

Dividends - - - - (139,682) - (139,682)

Profit for the year - - - - 691,022 2,564 693,586

Gain on disposal of treasury stock - 1,593 - - - - 1,593

Disposal of treasury stock - - 964 - - - 964

Exercise of stock options - - (1,017) - - - (1,017)

Expiration of stock options - 195 (258) - - - (63)

Gain on valuation of available for-sale financial assets

- - - 331,496 - 174 331,670

Gain on translation of foreign currency financial statements

- - - 69 - (1,371) (1,302)

Changes in accumulated comprehensive income in equity-method investees

- - - 17 - - 17

Gain on valuation of cash flow hedge derivatives

- - - 19,817 - - 19,817

Accumulated other comprehensive loss of the separate account

- - - (1,209) - - (1,209)

Changes in consolidation scope, etc - - - - (1,957) 204 (1,753)

Balance at March 31, 2011 26,473 730,020 (92,807) 1,971,671 4,000,241 15,288 6,650,886

Balance at April 1, 2011 26,473 730,020 (92,807) 1,971,671 4,000,241 15,288 6,650,886

Dividends - - - - (174,745) - (174,745)

Profit for the year - - - - 794,875 4,285 799,160

Gain on disposal of treasury stock - 1,565 - - - - 1,565

Disposal of treasury stock - - 1,129 - - - 1,129

Grant of stock-grant options - - 12,282 - - - 12,282

Exercise of stock options - - (1,104) - - - (1,104)

Expiration of stock options - 181 (168) - - - 13


- - - 443,159 - (84) 443,075


- - - 10,954 - 351 11,305

Changes in accumulated comprehensive income in equity-method investees

- - - 669 - - 669


- - - 5,698 - - 5,698

Accumulated other comprehensive income of the separate account

- - - 2,192 - - 2,192

Change in consolidation scope, etc. - - - - (9,356) (67) (9,423)

Balance at March 31, 2012 26,473 731,766 (80,668) 2,434,343 4,611,015 19,773 7,742,702


Sharecapital

Capitalsurplus

Capitaladjustments

Accumulatedother

comprehensiveincome

Retainedearnings

totalstockholders’

equity

Balance at April 1, 2010 26,473 728,233 (92,496) 1,630,583 3,439,549 5,732,342

Dividends - - - - (139,682) (139,682)

Profit for the year - - - - 676,406 676,406

Gain on disposal of treasury stock - 1,591 - - - 1,591

Disposal of treasury stock - - 964 - - 964

Exercise of stock options - - (1,017) - - (1,017)

Expiration of stock options - 195 (257) - - (62)


- - - 332,645 - 332,645


- - - 95 - 95


- - - 19,817 - 19,817

Accumulated other comprehensive loss of the separate account

- - - (1,209) - (1,209)

Balance at March 31, 2011 26,473 730,019 (92,806) 1,981,931 3,976,273 6,621,890

Balance at April 1, 2011 26,473 730,019 (92,806) 1,981,931 3,976,273 6,621,890

Dividends - - - - (174,745) (174,745)

Profit for the year - - - - 784,529 784,529

Gain on disposal of treasury stock - 1,566 - - - 1,566

Disposal of treasury stock - - 1,128 - - 1,128

Grant of stock-grant options - - 12,282 - - 12,282

Exercise of stock options - - (1,105) - - (1,105)

Expiration of stock options - 181 (167) - - 14


- - - 439,263 - 439,263


- - - 2,319 - 2,319


- - - 5,698 - 5,698

Accumulated other comprehensive income of the separate account

- - - 2,192 - 2,192

Balance at March 31, 2012 26,473 731,766 (80,668) 2,431,403 4,586,057 7,695,031

CONSOLIDATED STATEMENTS OF ChANGES IN EqUITY

SEPARATE STATEMENTS OF ChANGES IN EqUITY


CONSOLIDATED STATEMENTS OFCASh FLOwS


2012 2011

Cash flows from operation activities


Adjustment for:

Loss on foreign translation and transaction 11,937 59,173



Loss on disposal of property and equipment 960 692

Loss on disposal of investment properties - 3


Retirement benefit 68,594 45,908

Amortization 36,023 33,633

Depreciation 64,783 56,599

Amortization of deferred acquisition cost 923,657 742,184

Loss on valuation and sales of financial assets 2,967 7,176

Loss on investments in associates 841 -

Impairment loss on financial instruments 4,744 3,973

Bad debt expenses 2,630 2,208

Other expense 16,857 3,632


Receipt of dividends (40,316) (48,658)

Gain on foreign exchange (74,090) (14,232)

Compensation income (1,721) (6,828)

Increase in reinsurance assets (183,130) (8,301)

Gain on valuation and sale of financial assets (55,772) (103,201)

Interest income (1,297,707) (1,132,576)

Gain on disposal of property and equipment (262) (1,433)

Gain on disposal of investment properties - (6,556)

Gain on investments in associates (641) (1,562)

Gain on valuation and sales of derivative instruments (8,238) (58,409)

Other income (12,707) (8,713)

Changes in assets and liabilities:

Increase in deposits (428,531) (127,713)

Increase in financial assets at fair value through profit or loss (239,325) (312,523)

Increase in loans (1,474,479) (1,332,878)

Increase in other receivables (65,053) (66,133)

Increase in derivative assets (11,908) (10,811)

Increase in other assets (1,261,114) (1,096,728)

Decrease (increase) in separate account assets 4,299 (11,574)

Increase in financial liabilities 105,591 2,968

Increase in derivative liabilities 4,029 13,951

Increase in insurance liabilities 53,994 -


2012 2011

Increase (decrease) in provisions 1,570 (251)

Payment of retirement benefits (25,060) (19,003)

Increase in plan assets (43,638) (18,146)

Increase (decrease) in other liabilities 35,912 (1,796)

Increase in separate account liabilities 2,714 13,651

Interest received 1,262,901 1,089,395

Interest paid (2,506) (3,189)

Dividends received 44,944 53,286

Income tax paid (221,042) (212,085)

Net cash provided by operating activities 2,993,961 2,083,124

Cash flows from investing activities

Proceeds from disposal of available-for-sale financial assets 2,433,269 3,088,264

Proceeds from disposal of investments in associates 170 7,000

Proceeds from disposal of property and equipment 613 2,063

Proceeds from disposal of intangible assets - 94

Proceeds from disposal of investment properties 136 133,377

Proceeds from disposal of held-to-maturity financial assets 3,447 -

Acquisition of available-for-sale financial assets (4,356,102) (5,061,757)

Acquisition of property and equipment (114,050) (63,827)

Acquisition of intangible assets (19,232) (12,129)

Acquisition of investment properties (592,283) (1,696)

Acquisition of held-to-maturity financial assets - (3,447)

Net cash used in investing activities (2,644,032) (1,912,058)

Cash flows from financing activities

Disposal of treasury stock 2,090 2,046

Increase in borrowings, net 108,700 (76,900)

Payment of dividends (174,745) (139,682)

Net cash used in investing activities (63,955) (214,536)

Net increase (decrease) in cash and cash equivalents 285,974 (43,470)

Cash and cash equivalents at beginning of the year 197,256 237,940

Effect of exchange rate fluctuations on cash held 8,906 2,786

Cash and cash equivalents at end of year 492,136 197,256



2012 2011

Cash flows from operation activities


Adjustment For:

Loss on valuation and sale of financial assets 20,551 15,547

Loss on disposal of property and equipment 932 671

Loss on disposal of Investment properties - 3


Loss on foreign exchange translation and transaction 11,069 58,889


Bad debt expenses 1,208 1,412

Decrease (increase) in reinsurance assets (134,516) 23,022


Amortization of deferred acquisition cost 923,657 742,638

Depreciation 62,082 54,310

Amortization 35,303 32,960

Retirement benefit 57,844 37,639



Other expense 16,857 3,632

Gain on valuation and sale of financial assets (73,559) (108,495)

Income on investments in subsidiaries and associates (68) (879)

Gain on valuation and sale of derivative instruments (8,238) (58,409)

Gain on disposal of investment properties - (6,556)

Gain on disposal of property, plant and equipment (240) (1,429)

Gain on foreign exchange transactions (73,797) (13,399)

Interest income (1,297,329) (1,124,564)

Compensation income (1,523) (6,636)

Dividends income (47,305) (60,254)

Other income (12,708) (8,704)

Changes in assets and liabilities:

Increase in deposits (359,556) (45,286)

Increase in financial assets at fair value through profit or loss (477,627) (314,519)

Increase in loans (1,554,106) (1,356,061)

Increase in other receivables (7,587) (68,017)

Increase in derivative assets (11,908) (12,557)

Increase in other assets (1,265,064) (1,072,360)

Increase (decrease) in insurance liabilities 53,994 (11,574)

Decrease in separate account assets 4,299 40,032


2012 2011

Increase in other financial liabilities 22,771 14,059

Increase (decrease) in derivative liabilities 4,029 (251)

Increase in provisions 1,570 23,258

Increase in other liabilities 33,877 13,651

Increase in separate account liabilities 2,714 -

Payment of retirement benefits (22,747) (17,407)

Increase in plan assets (39,200) (11,801)

Interest received 1,253,395 1,081,472

Interest paid (2,038) (2,157)

Dividends received 47,305 (65,050)

Income tax paid (214,384) (204,799)

Net cash provided by operating activities 2,657,089 2,197,208

Cash flows from investing activities

Proceeds from disposal of available-for-sale financial assets 2,961,396 3,472,838

Proceeds from disposal of investment in associates 171 7,384

Proceeds from disposal of investment properties 136 9,452

Proceeds from disposal of tangible assets 380 2,041

Acquisition of available-for-sale financial assets (4,813,588) (5,452,757)

Acquisition of investments in subsidiaries and associates (64,677) (19,064)

Acquisition of investment properties (149,189) (1,646)

Acquisition of property and equipment (108,486) (60,761)

Acquisition of intangible assets (18,006) (9,995)

Net cash used in investing activities (2,191,863) (2,052,508)

Cash flows from financing activities

Increase in borrowings, net (26,300) (10,400)

Disposal of treasury stock 2,090 2,046

Payment of dividends (174,745) (139,682)

Net cash used in investing activities (198,955) (148,036)

Net increase (decrease) in cash and cash equivalents 266,271 (3,336)

Cash and cash equivalents at beginning of the year 147,053 150,390

Cash and cash equivalents at end of year 413,324 147,054

SEPARATE STATEMENTS OF CASh FLOwS



2012 2011 (*1)

Unappropriated retained earnings

Balance at beginning of year 366 259

Changes in accounting policies (*2) 808,915 -

Net income 784,529 664,852

Balance at end of year before appropriation 1,593,810 665,111

Appropriation of retained earnings

Catastrophe reserve 1,284,783 -

Regulatory reserves for loan loss 58,943 -

Voluntary reserve 75,000 490,000

Dividends 174,916 174,745

Unappropriated retained earnings to be carried over to subsequent year 168 366

(*1) The statement of appropriation of retained earnings for the year ended March 31, 2011 was prepared under previous K-GAAP.(*2) Change in retained earnings resulting from transition to K-IFRS was included in the cumulative effect of transition to K-IFRS.

SEPARATE STATEMENTS OF APPROPRIATION OF RETAINED EARNINGS

FINANCIAL SERvICES

Samsung Fire & Marine Insurance Co., Ltd.Samsung Life Insurance Co., Ltd.Samsung Card Co., Ltd.Samsung Securities Co., Ltd.Samsung Investment Trust Management Co., Ltd.Samsung Venture Investment Corporation

ELECTRONICS INDUSTRIES

Samsung Electro-Mechanics Co., Ltd.Samsung SDI Co., Ltd.Samsung Corning Precision Materials Co., Ltd.Samsung SDS Co., Ltd.Samsung Techwin Co., Ltd.Samsung Mobile Display Co., Ltd.Samsung Digital Imaging Co., Ltd.

MAChINERY & hEAvY INDUSTRIES

Samsung Heavy Industries Co., Ltd.

OThER AFFILIATED COMPANIES

Samsung C&T CorporationSamsung Engineering Co., Ltd.Cheil Industries Inc.Samsung Everland Inc.The Shilla Hotels & ResortsCheil WorldwideS1 Corporation Samsung Medical Center Samsung Human Resources Development Center Samsung Economics Research InstituteSamsung LionsThe Ho-Am FoundationSamsung Foundation of CultureSamsung Welfare FoundationSamsung Life Public Welfare Foundation

ChEMICALS INDUSTRIES

Samsung Total Petrochemicals Co., Ltd.Samsung Petrochemicals Co., Ltd.Samsung Fine Chemicals Co., Ltd.Samsung BP Chemicals Co., Ltd.

SAMSUNG AFFILIATES


GLOBALNETwORk

BRANChES

China Beijing Branch25/F China Merchants Tower N0118, jianguolu, Chaoyang District Beijing 100022, ChinaTel. 6-10-6566-8100-6200

China Shezhen BranchUnits C-D, 35F, Tower B, NEO Building, No. 6009, Shennan Avenue, Futian District, Shenzhen P.R.C.Tel. 86-755-8252-0390

China Suzhhou BranchRM.505, SIFC, 24A, Times Square, Huachi Road, Suzhou Industrial Park, Suzhou, Jiangsu 215028, ChinaTel. 86-512-6292-5968

China Qingdao Branch(A1&G&H Area)23F, Flagship Tower NEW World Cyberport No.40 Hongkong Middle Road, Qingdao, China, 266071Tel. 86-532-8667-9950

China Tianjin BranchRoom2004-2005, 20th floor, Xinyin Building, No.28, Zengjin Road, Hexi District, Tianjin, China.Tel. 86-22-2845-9128-1400

united States U.S. Branch85 Challenger Road 6th Floor, Ridgefield Park, NJ 07660-2112, U.S.A.Tel. 1-201-229-6008

Vietnam hanoi Branch19th Floor, Keangnam Hanoi Landmark Tower, E6 Pham Hung St., Tu Liem Dist., Hanoi, VietnamTel. 84-4-3942-5251

REPRESENTATIvE(LIAISON) OFFICES

Japan Tokyo Representative OfficeRoppongi-T-CUBE 3-1-1, Roppongi, Minato-ku, Tokyo 106-8532, JapanTel. 81-3-6234-2208

China Beijing Liaison Office25/F China Merchants Tower N0118, jianguolu, Chaoyang District Beijing 100022, ChinaTel. 86-10-6566-8100-6212

India India Liaison Office2nd Fl., Samsung India Electronics Co. Ltd., Vipul Tech Square, Golf Course Road, Sector 43, Gurgaon, Haryana - 122009Tel. 91-124-488-2060

Brazil Samsung Fire & Marine Consultoria Em Seguros LtdaAv. Das Nacoes Unidas, 12901 - Torre Oeste 22 andar - Brooklin Novo Sao Paulo SP Brasil 04578-910Tel. 55-11-5105-5040

uAe Dubai Representative Office#719, Liberty House Building, DIFC, Dubai, UAETel. 971-4-358-6110

united States U.S. Branch, LA Office3333 Michelson Dr. #550 Irvine, CA 92612-0680, U.S.A.Tel. 1-949-797-8083

hEAD OFFICE

Samsung Fire & Marine Insurance Co., Ltd.Samsung Insurance Bldg., 29 Euljiro (87 Euljiro-1ga), Jung-gu, Seoul, 100-782, KoreaTel. 82-2-1588-5114 www.samsungfire.com

SUBSIDIARIES & JOINT vENTURE

China Samsung Property & Casualty Insurance Company(China), Ltd.RM 812 Shanghai International Trade Center No 2201 Yan an (W) RD Shanghai 200335, ChinaTel. 86-21-6208-0080

Indonesia P.T. Asuransi Samsung TuguPlaza Bapindo Citibank Tower 25th Floor Jl.Jend. Sudirman Kav. 54-55, Jakarta, Indonesia - 12920Tel. 62-21-2995-0010

Vietnam Samsung vina Insurance Co., Ltd.12th Floor, Diamond Plaza , 34 Le Duan St., Dist 1, Ho Chi Minh City, VietnamTel. 84-8-3823-7812

united States Samsung Fire & Marine Management Corporation85 Challenger Road 6th Floor, Ridgefield Park, NJ 07660-2112, U.S.A.Tel. 1-201-229-6012

europe Samsung Fire & Marine Insurance Company of Europe Ltd.16th FL., 88 Wood Street London U.K EC2V 7QT, London U.K.Tel. 44-207-367-0010~19

Singapore Samsung Reinsurance Pte. Ltd.Church Street #16-03 Samsung Hub Building, Singapore 049483Tel. 65-6645-5578

EUROPE ASIA

AFRICA

OCEANIA

SOUTH AMERICA

NORTH AMERICAEurope

Beijing

QingdaoSuzhhou

Shezhen

Hanoi

Tianjin

Tokyo

United States

Sao Paulo

New york

LAChina

Vietnam

IndiaDubai

Singapore

Indonesia

Subsidiaries & Joint Venture

Branches

Representative(liaison) offices

We alWaYS Care oUr CUStoMerS and ShareholderS.

WWW.SaMSUnGFire.CoM httP://ir.SaMSUnGFire.CoM

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