In 2022, we delivered another remarkable performance in our domestic engineering insurance business, including Korea interest abroad (KIA). For the fourth consecutive year, we achieved solid growth and profitability. Our gross written premiums increased by 21.8% year on year to KRW 297.7 billion, and we also attained a considerable underwriting profit of KRW 19 billion for 2022. Despite the market uncertainty caused by the COVID-19 pandemic and the Russia-Ukraine war, we have continued to manage and develop our business successfully, while remaining dedicated to fully addressing the needs of our clients.
Looking ahead, however, we expect that the favorable market conditions we have enjoyed may not continue, as the Korean government has reduced its 2023 infrastructure budget for the first time in five years, and privately financed infrastructure projects are also facing financial difficulties. In spite of these circumstances, we will remain committed not only to providing stable rates and capacity but also to enhancing the profitability of our business by focusing on acquiring quality accounts.
The government is expected to encourage new and renewable energy businesses to support the development of the environmental, social and governance (ESG) ecosystem, with plans to expand the nation’s renewable energy capacity to 63.8GW by 2030. As a strong provider of reinsurance for the construction and operation of facilities in the sustainable energy industry at home and abroad, we expect our reinsurance business to gain momentum from the upcoming growth of the eco-friendly energy sector. Additionally, considering Korea’s recent economic cooperation with Middle Eastern countries and the U.S., we forecast that our KIA business will experience significant growth in the near future.
Korean Re will strive to take full advantage of these market conditions and drive our growth while also seeking to ensure profitability. This will be achieved through our accumulated underwriting experience and thorough risk management practices. By doing so, we will build a solid foundation for creating value for our partners as well as for our company.
Marine & Aviation
In 2022, our marine and aviation business reported KRW 349.4 billion in gross written premiums, representing a 9.3% increase from the previous year. Hull premiums grew by 16.3% year on year to KRW 205.2 billion. The growth was in part driven by the introduction of several LNG-fueled vessels and container vessels to large fleets. Along with this strong premium growth, there was an improvement in the loss ratio. The Korean market continued to experience rate hardening, helping to improve the overall profitability of insurers.
The volume of cargo premiums soared by 29.2% to KRW 92.6 billion due to an increase in the prices of raw materials and the recovery from the economic downturn caused by COVID-19. However, aviation premiums declined to KRW 51.6 billion, mainly because of the non-renewal of the coverage for four government fleets due to unsatisfactory coverage conditions and contract wording.
We are closely monitoring ongoing discussions about the possibility of a global economic recession and inflationary pressures. So far, we have not experienced any significant inflationary impact. The South Korean shipbuilding industry is currently booming, and docks are fully booked with orders, leading to an increase in premiums and the value of Builder’s risks. We have seen Builder’s risks of naval vessels perform consistently stable in terms of profitability.
In 2023, overall premium volume is anticipated to decrease slightly in the midst of rising economic woes. While hull premiums are expected to remain stable in terms of volume and rate, cargo premiums are predicted to decline due to a global economic downturn. On the other hand, we expect aviation premiums to grow by more than 50%, driven by the new military test flight business and potential government fleet operations. Alongside our focus on rate increases and profit-oriented underwriting, we have been working to minimize claims and improve our loss ratio. This year, we plan to further strengthen our profit-oriented underwriting stance and will focus on enhancing claims management and maintaining healthy pricing levels. These efforts will help us achieve our profitability target.
Gross Written Premiums: Domestic Engineering, Marine & Aviation
(Units: KRW billion, USD million)
|FY 2022 (KRW)
|FY 2022 (USD)
|FY 2021 (KRW)
|FY 2021 (USD)
✽ Individual figures may not add up to the total shown due to rounding.