2013 Annual Report - Hyundai Insurance USA

2013 ANNUAL REPORT

HYUNDAI MARINE&FIREINSURANCE

Hyundai Marine & Fire Insurance Co., Ltd.163 Sejong-daero, Jongno-gu, Seoul, Korea | Tel: (82)1588-5656 | www.hi.co.kr

HYU

ND

AI IN

SUR

AN

CE 2013 ANN

UAL R

EPO

RT

HYU

ND

AI M

AR

INE

&FIR

E INSU

RA

NCE 2013 AN

NU

AL REP

OR

T

03Hyundai Marine & Fire Insurance

(Adj.) Total Shareholders’ Equities

FY2008

FY2012

FY2011

FY2009

FY2010

1,153,595

2,101,924

1,744,234

1,423,800

1,557,248

Financial Highlights

FY2010 FY2011

Classification (KRW million) (KRW million) (KRW million) (USD 1,000)

Direct Premium 7,610,424 9,316,657 10,157,664 9,109,461

Net Premium 6,786,492 8,421,672 9,232,199 8,279,498

Earned Premium 6,634,219 8,357,856 9,212,849 8,262,144

Underwriting Income -204,486 30,465 -212,672 -190,726

Investment Income 440,670 520,718 684,884 614,209

Total Operating Income 236,184 551,183 472,212 423,483

Net Income 159,485 392,756 333,381 298,979

(Adj. Net Income) 205,418

Total Assets 13,005,845 17,571,242 20,867,758 18,714,345

Invested Assets 10,313,054 13,422,220 16,290,616 14,609,534

Total Shareholders’ Equities 1,152,819 1,744,234 2,101,924 1,885,019

(Adj. Total Shareholders’ Equities) 1,557,248

FY2012

(Unit: KRW Million)Note) Figures refer to adjusted shareholders’ equities for FY2010 or before and to total shareholders’ equities for FY2011 and after.

Note 1) Based on the exchange rates used for accounting settlement in FY2012: PL basic rate 1,115.07 : U$1 / BS basic rate 1,112.10 : U$1Note 2) K-IFRS was applied from FY2011 on a non-consolidation basis.Note 3) Adjusted net income: Net income + Increase of Catastrophe Reserves / Adjusted shareholders’ equities: Total shareholders’ equities + Catastrophe Reserves

Direct Premium

FY2008

FY2009

FY2010

FY2011

FY2012

5,539,606

6,466,633

7,610,424

9,316,657

10,157,664

Total Assets

FY2008

FY2009

FY2010

FY2011

FY2012

9,487,404

11,093,772

13,005,845

17,571,242

20,867,758

(Adj.) Net Income

FY2008

FY2009

FY2010

FY2011

FY2012

155,421

224,983

205,418

392,756

333,381

Note) Figures refer to adjusted net income for FY2010 or before and to net income for FY2011 or after.

Reliable Hyundai Insurance

Financial Highlights 03

Future Vision 04

Company Overview and Management Philosophy 10

Chairman’s Letter 12

Message from the CEO 14

Business & Financial Summary 16

Vision Hi 2015

Vision Hi 2015 18

Sustainability report Sustainability Management 20

Ethics Management 22

Environment Management 24

Social Contribution Activities 26

Activities for Customer Satisfaction 28

Risk Management Activities 30

FY2012 Management News for Hyundai Insurance 32

Financial Issues

FY2012 Detailed Management Result Report 34

Financial Statements 45

About Hyundai Marine & Fire Insurance

Board of Directors/Executive Directors 108

Organization Chart 110

Subsidiary Companies 112

Company History 113

Global Networks 114



Future Vision

Company Overview and Management Philosophy

Chairman’s Letter

Message from the CEO

Report on Major Management Results

04 2013 Annual Report 05Hyundai Marine & Fire Insurance

Righteous management

The leading insurance company creating best service for customers by righteous management. We always follow the right path and strive to grow with our customers by providing them with a first-rate service.

We trust in following the right path and believe that it is the best way to repay our customers

for putting their trust in us. We have built up a solid tradition of excellence since our

establishment in 1955 and are refreshing our resolve to provide satisfactory services to all

our customers for the next 100 years based on such a tradition.



Future Vision


Chairman’s Letter




Customer satisfaction

Customers’ trust and satisfaction – Our most valuable assets

Hyundai Marine & Fire Insurance will always act as your trusted partner for life.

We conduct first-rate management that leave our customers satisfied by developing

creative products suited to customers’ needs, planning exemplary insurance aimed at

securing our customers a prosperous future, and providing positive and differentiated

compensation.



Future Vision


Chairman’s Letter




Hyundai Insurance leads hope with hearty challenge for a better tomorrow! We at Hyundai Marine & Fire Insurance do all we can to give hope to the less privileged.

We engage in social contribution activities to repay our customers for putting their trust

in us. We return a given portion of our profit to the community in an effort to build a

society where everyone is happy. Hyundai Insurance dreams of a respectable company

stepping forward for the happy future – That is how we envision ourselves.

Social contribution



Future Vision


Chairman’s Letter




Since the company’s establishment in 1955 as the country’s first company dedicated to marine insurance, we have grown into

a leader in the non-life insurance industry. We have been able to accomplish such a feat through indomitable earnestness,

creative will, a daring spirit of challenge, and our customers’ trust. We regard customer satisfaction as our highest value and

have always striven to realize our customers’ happiness. We aim to be a world-class insurance company that grows with its

customers based on our solid tradition of excellence. We will help build a hopeful future by contributing to society.

Management PhilosophyWe will play a leading role in the financial industry with creativity and powerful driving force, place priority on customers’

satisfaction, and contribute to the making of a more affluent society and the development of the national economy.

Enterprising Spirit of Challenge

Unwavering Love of Customers

Fervent Passion

Creative Will

Hyundai Marine& Fire Insurance

Leading Korean Non-life Insurance Industry



Future Vision


Chairman’s Letter




Chairman’s Letter

My dear customers and investors!

I am pleased to present this FY 2012 Annual Report and would like to express my gratitude for your full-

hearted support and trust in us.

In 2012, there was yet another global recession which started with the financial crisis in the southern

European countries. Domestic economy also went through a hard time, and the GDP growth rate stood at

an anemic level of 2.0% amid sluggish private consumption.

The insurance industry shared this gloomy fate. Auto insurance, for example, recorded negative growth.

Under the prevalent trend of low interest rates, the investment business environment displayed unfavorable

prospects.

In 2012, we recorded 342.3 billion won in net income and more than 10 trillion won in direct premium

despite the difficult circumstances. We also achieved a significant management result, including more than

20 trillion won in total assets and more than 2 trillion won in total shareholders’ equities.

Such a remarkable result is attributable to the deep interest and strong support of our customers and

investors as well as our employees’ unremittingly hard work.

In 2013, the worldwide economic situation is expected to remain uncertain amid generally low interest

rates. As for the insurance industry, competition among players will intensify further still amid the slowdown

in market growth.

The current situation requires players to make profound efforts to strengthen their financial soundness,

including strengthening the RBC scheme and customer protection.

In 2013, we will concentrate our efforts on cementing our status in the non-life insurance industry by

pursuing customer centered management, staying on the right path, and attaining our mid- and long-term

vision of “growing with our customers through first-rate services.”

Dear customers and investors,

We always appreciate your encouraging comments. We will continue to listen to your

advice as we have always done, keeping in mind that we can make better progress by doing

so. We will do what we can to obtain good results and make our customers satisfied by

reflecting your opinions in our operations

I wish you and your family members great health and happiness.

Chairman Mong-Yoon Chung

In 2013, we will cement our status as

a leading non-life insurance company that stays on

the right path by implementing customer centered

management and an efficient growth strategy.



Future Vision


Chairman’s Letter




Dear customers and investors, We expect to see diverse changes in FY2013.

Uncertainty both in and out of the country will continue to prevail amid

the southern European financial crisis and the economic slowdown of the

United States and China. Low growth and low interest rates will continue

for the time being. It appears that we should take preemptive steps in

conjunction with forthcoming changes in the relevant systems, such as

reducing customer complaints and strengthening the RBC scheme.

To deal with such changes, we will adopt the three following management

guidelines in 2013:

First, we will carry out business based on principle and rules.

Second, we will strengthen our sales capability with the focus on efficiency

and profit. We will ensure that a profit-oriented sales structure takes root.

We will also strive to execute distribution expenses and run the organization

more efficiently.

Third, we will push ahead with the innovation of products and services in

a customer centered way. We will continue to establish a more convenient

business process for customers and enhance the level of customers’

satisfaction with differentiated products and our claims service.

Please rest assured that we will do our best to obtain better management

results by carrying out the said management guidelines thoroughly in 2013.

Thank you.

CEO Message

Dear customers and investors,

I am pleased to be able to present the management results for FY2012 to

you all.

The amount of direct premiums in FY2012 stood at KRW 10,157.7

billion, a 9.0% y-o-y increase. By line, general insurance grew by 8.3%,

while long-term insurance grew by 12.9% on the back of the stable

inflow of recurring premium and an increase of new business premium.

As for auto insurance, it recorded negative growth of 2.6% due to the

impact of the primium cut and the expansion of the direct market.

We recorded 342.3 billion won in net income on a consolidation

basis, representing a 15.6% y-o-y decrease. It is attributable to an

increase in the loss ratio in auto insurance and the occurrence of excess

amortization of the long-term insurance acquisition cost, which resulted

in combined ratio of 102.3%, i.e. a 2.7%p y-o-y increase.

Looking at the financial results, total assets and invested assets stood at

20,867.8 billion won and 16,290.6 billion won, respectively, an 18.8%

and 21.4% y-o-y increase. Total shareholders’ equities stood at 2,101.9

billion won, a 20.5% y-o-y increase. The RBC ratio fell by 2.2%p y-o-y

to 207.2% due to the impact of the the RBC regime changes. Overall,

in 2012 we posted significant management results, exceeding the 10

trillion won and 20 trillion won in revenue and total assets, respectively,

although we posted a decrease in net income due to the unfavorable

business environment.CEOs Cheol-Young Lee and Chan-Jong Park

Vice President & CEO Chan-Jong ParkPresident & CEO Cheol-Young Lee



Future Vision


Chairman’s Letter




Business & Financial Summary

In FY2012, the non-life insurance industry collected direct premium of about KRW 63 trillion with growth of

about 12% compared to the previous year. Commercial insurance grew 12%, thanks to a consistent increase

of group accident insurance and casualty insurance. As for auto insurance, it recorded negative growth of

1.5% due to the impact of a premium cut and the expansion of the online market. Long-term insurance

posted robust y-o-y growth of 17% on the back of a strong rise of the initial premium, particularly in the

healthcare types amid a stable inflow of recurring premiums.

Looking at our performance in 2012, we posted 10,157.7 billion won in direct premiums, showing a 9.0%

y-o-y increase, with long-term insurance playing a central role. By line, we recorded an 8.3% y-o-y increase

in general insurance as a result of positive efforts made to attract new customers. Auto insurance recorded

negative growth of 2.6%.

We posted a monthly average of initial premium of 24.8 billion won, a 17.8% y-o-y increase and 16 billion

won in monthly converted new business premiums, a 3.7% increase over the preceding year. As for

recurring premiums, we posted 6,752.3 billion won, a 19% y-o-y increase, as a result of our efforts to

improve the persistency rate. In long-term healthcare type insurance with a high profit margin , we recorded

a 41.7% y-o-y increase in terms of monthly converted average initial premiums with 45.3% of proportion in

our long-term portfolio. As regards profit and loss, we recorded a combined ratio of 102.3% with a loss of

212.7 billion won in the underwriting. The loss is attributable to the expense ratio of 19.2%, a 1.8%p y-o-y

increase, associated with an excess amortization of the long-term insurance acquisition cost.

As regards the loss ratio, we posted 83.1%, a 0.9%p y-o-y increase. In general insurance, our loss ratio

stood at 69.8% due to various factors including claims caused by typhoon and other natural disasters. In

auto insurance, our loss ratio stood at 83.4%, i.e.a 2.7%p y-o-y increase, which resulted from a decrease

in per-unit earned premiums associated with premium cut and heavy snow. For long-term insurance, our

loss ratio stood at 83.7%, showing a modest increase over the preceding year, due to an increase in the risk

loss ratio

In the investment sector, we maintained the level of 77% concerning the composition ratio of interest-

bearing assets in invested assets. We held on to the investment strategy of putting priority on risk

management by minimizing risky assets. As of the end of March 2013, our invested assets stood at 16,290.6

billion won, i.e. an increase of 3 trillion won over the same period of the preceding year. In investment

income, we posted 684.9 billion won, which was mainly attributable to an increase in gain on the valuation/

disposition of marketable securities. We also posted a 4.7% return on investment.

As a result of the aforesaid, we posted 342.3 billion won in net profit on a consolidation basis (or 333.4 billion

won on a separate basis) and 19% in ROE. We recorded 2,101.9 billion won in total shareholders’ equities.

As for the RBC ratio, we recorded 207.2%, i.e. a 2.2%p decrease, due to the strengthening of the RBC

scheme.

We accredited the credit rating of “A stable,” an upgrade from the “A-Positive” of the preceding year, from

A.M. Best, a world-class credit rating agency specializing in insurance businesses, apparently in recognition

of the continuous improvements we have made in terms of business performance, our investment strategy’

s focus on risk management and a sufficient solvency margin.

Most observers predict that the world economic environment will remain uncertain in 2013. Insurance

industry is in a difficult situation due to the forthcoming change in the RBC scheme which is designed

to strengthen the qualitative aspect of capital and reduce the customer complaints. Under such

circumstances, we at Hyundai Marine & Fire Insurance will deal with such changes with maintaining

enthusiastic attitude and differentiated competitiveness in business, and set up effective strategies to boost

profitability and growth at the same time.

In FY2012, the non-life insurance industry posted direct premium of about KRW 63 trillion with growth of about 12% compared to the

previous year. Commercial insurance grew 12%, thanks to a consistent increase of group accident insurance and casualty insurance. As

for auto insurance, it recorded negative growth of 1.5% due to the impact of a drop in the premium rate and the expansion of the online

market. Non-life insurance posted robust y-o-y growth of 17% on the back of a strong rise in the number of new contracts, particularly

those in personal insurance amid a stable inflow of recurring premiums.



Future Vision


Chairman’s Letter




VISION Hi 2015

To realize our new vision, Hyundai Insurance has chosen mid and long-term strategic tasks for each business division

in line with our 4 major management strategy directions and 12 key strategies.

Based on the momentum gathered through the promotion of 47 strategic measures in the preceding year, we selected and pushed

ahead with 45 strategic measures in 2012 in consideration of their importance and urgency among those to be promoted by each division

by 2015. We successfully concluded the one-year-long FY2012 mid- and long-term strategic measures, in which a total of 200-plus

employees took part, through the kickoff in April 2012, interim checks and progress appraisals, and the final report session in March

2013.

The ongoing mid- and long-term strategic measures, which were implemented for successful accomplishment of the company’s Vision

Hi 2015, may reap good results thanks to the positive efforts made by the relevant director and project members in 2012, the second year

of the project, despite the many difficulties, including rapidly changing external conditions. We will continue to push forward with these

measures, positively using our accumulated know-how and reflecting changes in the relevant environment.

We shall bolster basic competitiveness as an insurer to achieve our “Vision Hi 2015” and become a ‘Leading insurance

company creating the best services for customers’ by concentrating all our capabilities on maximizing customer

values along with internally solid growth.

“The leading insurance company creating best service for customers”We at Hyundai Insurance established our mid and long-term vision, “Hi 2010, Insurer with Korea’s Top Competitiveness” and have been

doing our best in all sectors. As a result, we have grown remarkably in business revenue and other fields. Nonetheless, the future is

uncertain because of changes in the business environment including the saturation of the insurance market, entry of new insurers

into the insurance market, continuous sales channel diversification, and consumer protection consolidation trend. These present new

challenges and tasks that we must overcome.

We have established a new mid and long-term vision dubbed “Hi 2015,” proclaiming it both internally and externally in April 2011 to

proactively cope with the upcoming environmental changes and to continuously grow as a company. Under the newly adopted vision,

namely, “the leading insurance company creating best service for customers”, we will provide high-quality insurance products and

services, faithfully holding on to our role of contributing to customers’ happiness and social security as an insurance business, and

continuing to grow accordingly.

To that end, we have set the following mid-and long-term management strategies: strengthening core business competitiveness,

improving business infrastructure, maximizing customer value, and preparing new growth engines. Under these strategies, we will strive

to remain at the top in terms of overall sales, profitability, and competitiveness, push forward with business more efficiently, and continue

to provide services in a way that will enhance the quality of our customers’ lives. We will also strive to continue to grow by strengthening

the basis for new growth and overcoming the limitations of the insurance market.

12 key strategies to realize 4 major mid- and long-term management strategy directions

01 Development of products leading the market and consolidation of

UW/contract management competence

02 Bolstering sales competitiveness in the open-type,

multi-channel structure

03 Maintaining top-level claim competiveness in the industry

04 Consolidation of assets management competence to realize

long-term, stable investment returns

05 Establishment of Hyundai Insurance’s own new culture and

nurturing of talented people

06 Risk management competences strengthening suitable for

business portfolio and assets increase

07 IT infrastructure enhancement to make the business

process efficient

08 Consolidation of brand image to enhance customer trust

and loyalty

09 Enhancing of total customer services to offer values

beyond risk security

10 Reinforcing of social responsibility management as

the leading insurer

11 Boosting of global business on a step-by-step basis to

overcome the domestic market limitations

12 Consolidation of response to secure new growth opportunities

New Vision and Management Strategy of Hyundai Insurance

New Vision and Management Strategy

Vision Hi 2015

Report on Sustainability

Activities for Customer Satisfaction

Risk Management Activities

FY2012 Management News


We place priority on customer satisfaction, fulfill our economic, social, and

environmental responsibilities toward stakeholders and the country, and pursue

balanced development among economic, social, and environmental aspects through

corporate activities and the creation of values. Our sustainable management is

focused on efforts to promote practical methods with a view to attaining our mid-

and long-term visions based on our management philosophy.

Sustainable management

strategy

Sustainability Management

First, we will focus on staying on the right path. As a business dedicated to ensuring security in the future, we stress

mid- and long-term risk management rather than short-term results, which

requires a sound ethical mindset and behavior on the part of our employees.

Second, we will put priority on the efficiency of our operation. Employees will be reminded to innovate themselves so as not to fall into the

trap of inefficiency and carelessness in order that the company will continue

to grow. This is also an effective way of enhancing shareholder value.

Third, customer satisfactions comes to our priority. The most basic element of sustainable management is to provide ultimate satisfaction

to customers, who are our most important stakeholders, and to develop diverse products

and services that reflect customers’ needs.

Fourth, win-win management comes next. A business takes root in the community and grows on the nutrition provided by it. A business can achieve

sustainable development when striving for joint prosperity with the community by adopting the latter as

an important stakeholder. Such an effort includes paying attention to our surroundings and providing

them with protective support.

Fifth, the management of human resources is no less important.It goes without saying that efforts should be made to strengthen employees’ capabilities in order for a

business to engage in creative management activities. Training talented employees with earnestness

and an ownership mindset is the most basic thing that a business must do.

System for promoting sustainable management

righteous management· Risk management

· Ethical management

Efficient management· Innovative management

· Shareholder value enhancement

Customer management· Customer satisfaction

Human resources management· Employees

· Hi planners

Win-win management· Partners

· Society

· Environment

VisionMid- and long-term

objectives

Management philosophy

A perpetual concept

Sustainable management

strategyConcrete methods

of execution

Righteousmanagement

Efficient management

Customer management

Win-win management

Human resources

management

For Tomorrow

Vision Hi 2015

Report on Sustainability Sustainability Management




Sustainability Report



Ethics ManagementUnder the motto of ethical management, we carry out management activities in a way that engenders a sense of trust in our customers

and put customer satisfaction, which is a core element of our management philosophy, into practice through the transparent and fair

handling of business. We are committed to developing a corporate culture focusing on fair and free competition. Our business ethics

require that we provide customers and society with affluence and stability. We are building the base for sustainable management through

ethical management.

We have done our best to practice ethical management, fulfilling all our responsibilities and obligations toward customers, employees,

shareholders, subcontractors, country and society based on our Ethics Charter and Code of Conduct. Our Compliance Officer, appointed

by the Board of Directors, deals with matters relating to compliance and internal control so that our ethical management may be

conducted concretely and effectively.

Within the Company, matters relating to ethical management are controlled by the Compliance Department under the instructions of

the Compliance Officer, with a team composed of 139 compliance managers charged with carrying out matters relating to compliance-

related internal control activities.

Compliance programs ● Periodic campaigns are conducted for the continued promotion of ethical management.● Voluntary programs are adopted to ensure fair transactions with the aim of achieving effective management results through fair and free

competition. We observe the competition laws and execute self-regulated fair transaction rules under the control of the Compliance

Officer. We observe The Personal Information Protection Act by enacting the relevant in-house rules and carrying out activities for

checking and improving the relevant system under the control of the Compliance Officer. We have also established a system to prevent

money laundering involving through financial companies.● We regularly carry out company-wide activities relating to ethics, compliance, and accident prevention through ‘Hi-Compliance Day’

(a departmental-level internal control activity) events and operate a system for the evaluation of self-regulated internal control.● Each department is required to designate an employee in charge of compliance so that ethics and compliance-related matters may be

reflected properly in our overall operation. We also strive to enhance the level of employees’ awareness of ethical and compliance-related

issues through educational sessions.

Compliance and ethics management activities

Our Ethics Charter We at Hyundai Marine & Fire Insurance have set the criteria for ethical decision making and behavior as follows based on our

management philosophy and ethical management-related values and hereby resolve to put them into practice at all times:

● We shall deal with all our customers honestly, respect their opinions, put priority on customer satisfaction, and enhance

customer value.

● We shall disclose Company-related information to our shareholders transparently and fairly. We shall protect our shareholders’

rights and interests through sound management.

● We shall develop the corporate culture in such a way as to recognize human dignity and values based on mutual trust, and

adhere firmly to the basics and principles. ● We shall engage in fair and free competition with other businesses and conduct reasonable business transactions for mutual

development and coexistence.

● We shall provide abundance and stability to the community and contribute to the development of society and the country’s

economy by creating jobs and faithfully paying our taxes.

Trust of Hi

Vision Hi 2015

Report on Sustainability Ethics Management





Green FinanceEnhancement of the company’s image as an eco-friendly business

As corporate that fulfills its social responsibilities, we make concerted efforts to draw attention to environmental issues, enhance our

image as an eco-friendly business, and establish our status as a business engaging in sustainable activities.

We develop and sell green insurance products to put environmental management into practice, while making diverse efforts to reduce

energy consumption in the name of low carbon, green growth. We operate the eco-Friendly Management Committee and the Hyundai

Insurance Research Center(HIRC) to carry out eco-friendly management positively and be better prepared against environmental risks

relating to climate change.

We are doing our best to save energy wherever possible. We manage energy use in an effort to minimize the environmental burden

occasioned by corporate activities, setting the indoor temperature of our buildings no higher than 20˚C in winter and taking part in the

campaign to reduce power consumption during peak hours. Every year, we distribute energy-saving guidelines throughout the Company

as a part of our participation in the nationwide energy-saving campaign in this era of high oil prices.

In July 2010, HIRC has established to

proactively cope with climate change by

recognizing it as both a risk and opportunity

simultaneously, as well as support

the company’s realization of its social

responsibilities and develop the insurance

industry through research regarding traffic

safety, a major area of non-life insurance

recently.

We started the climate information service

in December 2010 to help reduce safety or

traffic accidents caused by heavy rainfall,

blizzards or cold waves. The service

includes periodic provision of detailed

climate information to customer businesses

via e-mail and SMS-based provision of

information on inclement weather, such as

downpours, heavy snowfall or cold waves to

customers in the affected areas.

Our HIRC provides information on the

impending danger of flooding, using facilities

installed in areas frequently affected by

floods, on a real-time basis in an effort to

prevent accidents and minimize damages.

Environment Management

Weather Management CertificationContents : Certification concerning the creation of added value through diverse use

of weather information by a business (or institution) and ensuring safety

from adverse weather disasters.

Provider : KMA(Korea Meteorological Administration)

Validity of certification : October 26, 2012 - October 25, 2015 (for three years)

Green Finance

We obtained a weather management certification from the Korea Meteorological

Administration (KMA), the first of its kind awarded to a financial business, in

recognition of the aforementioned activities.

We also strive to contribute to society with the development of diverse products

and services designed to realize environmental management. We do what we can

to meet the demand for businesses’ positive environmental management and

meet customers’ eco-friendly service needs by offering Hi Life Power Eco Driver’s

Insurance, Hi Belief Bicycle Casualty Insurance, and storm and Flood Insurance.

We developed Hicar Eco Auto Insurance, a product utilizing used car parts, the

first of its kind adopted by an insurance business, and won an exclusive license for

it. We replaced the printed materials used for insurance contracts related to the

Hicar Green Service , such as the terms and conditions and insurance policy, with

e-mail and reflected the amount thus saved in the insurance premium charged to

customers.

As the first Korean insurance company to sign up to the UN Environmental Program

Financial Initiative (UNEP FI), we are carrying out environmentally-related activities,

including the dissemination of sustainable management. In 1995, we issued a

statement on the importance of environmental issues and the role of insurance

businesses in addressing them in Geneva.

In 2005, we became the first Korean insurance company to announce its support

for the Carbon Disclosure Project (CDP) and have since participated in the relevant

activities. In 2012, we announced our support for the CDP Water Disclosure and have

made efforts to contribute to programs related to climate change and environmental

preservation.

Vision Hi 2015

Report on Sustainability Environment Management







Traffic/safety accident prevention activities We carry out activities aimed at protecting people from the kinds of accidents that can occur in everyday life.

[Hicar women drivers’ class] We run a class for novice women drivers, teaching them how to prevent traffic accidents and

park a car in a small space.

[Hi-Mom 119 class] This class aims to teach children how to avoid accidents in their everyday lives and how to act decisively

in moments of danger.

[Helping children avoid a traffic accident] We run a program aimed at teaching children how to get home safely without a

traffic accident after school. We provide a traffic safety map about the areas close to their school in an effort to help children

avoid traffic accidents. We also carry out other programs, such as the Children’s Traffic Safety Concert, which is designed to

raise awareness of the potential dangers posed by road traffic, particularly where children are concerned.

Support for future generations to follow the path of virtueWe work together with experts to assist young people and

tackle social issues relating to them through the following

programs:

[Very Minor Confessions] This program was set up to prevent

school violence through the invigoration of communication.

It comprises Confessions to Make, which is run online and

offline; a session in which celebrities are invited to discuss

school violence; and Healing Camp, which is designed to heal

victims of school violence or trauma. It is carried out with the

positive participation of students, teachers, and parents.

[T-um Class] This long-term program (a total of 16 sessions

have been conducted so far) aims to develop the personality

of children accommodated in special facilities with the help

of experts. The program helps young people to improve their

sense of pride and sociability and make a plan for a hopeful

future.

We share hope with neighborsWe do our best to help needy neighbors and build a better

future.

[Hi-Life voluntary activities / Disaster Aid Committee] The

Company encourages employees and Hi Planners to engage in

voluntary activities and provides support for their activities. Our

Hi-Life Volunteers, launched in 2005, carry out activities in more

than 30 facilities and national parks nationwide. We also operate

the Disaster Aid Committee to provide relief to the needy.

[Ashoka Support] Hyundai Marine & Fire Insurance is a

founding partner of Ashoka Korea, which is well known for its

discovery of and provision of support to social entrepreneurs.

We concur with Ashoka’s philosophy of pursuing a society in

which more and more people take the initiative with a view

to changing the world. We carry out activities as a partner of

Ashoka Korea based on the belief that our activities will bring

about positive changes in our society.

[Financial donations] Our employees voluntarily donate part

of their monthly salary to provide financial support for children

whose parent(s) have lost their lives in a traffic accident.

[Charity Bazaar] Every year our employees and Hi Planners

donate used articles and sell them at the Charity Bazaar. They

spend the proceeds on helping needy neighbors.

Heart Plus

Social Contribution Activities

Challenge for tomorrow We at Hyundai Marine & Fire Insurance pursue sustainable and shared growth and do our best to fulfill our social responsibilities. We make

a point of returning a given percentage of our profits to society so that all people may live a happier life. We expect that the actions we have

taken to help create a more humane society where people share happiness together will blossom into new hope.

Vision Hi 2015

Report on Sustainability Social Contribution Activities





7 Heart Service01 Customer Satisfaction Service

02 Automobile Claims (Family Heart Service)

03 Long-Term Insurance Claims (Smart Heart Service)

04 Emergency Mobilizations (Plus Heart Service)

05 Emergency Claims (Speed Heart Service)

06 Call Center (Sense Heart Service)

07 Risk Management Service

Meticulous efforts on behalf of our customers In 1996, we became the first insurance business to announce the Customer Satisfaction Management Charter. Since then, our employees

and Hi Planners have made concerted efforts to deliver differentiated customer satisfaction management under the motto of “Hyundai

Marine & Fire Insurance, a company loved by customers for its first-rate service and humane approach.”

We have adopted the 7 Heart Service as our service identity in an effort to put the principle of better customer service into practice.

Under the said service identity, we do our best to convey our readiness to serve our customers at the seven leading contact points: auto

compensation, long-term compensation, coming to the client’s aid, rushing to the scene, call center, Hi Planners, and counters.

As a result of such efforts, our name was admitted to the Hall of Fame, the Korea Management Grand Prize in the category of customer

satisfaction management in 2012.

● Customer assurance SMS information service (information on receipt of report; fax number; employee in charge)● Customized service to inform the client of the end of indemnity (via SMS, location message service (LMS), post, email)● Fax receiving confirmation inquiry of sent document ● Real-time indemnity processing information system from homepage● Mobile-based information system on the real-time compensation handling process● Indemnity consulting on the Internet

04. Emergency Mobilization (Plus Heart Service)● Hicar service (emergency mobilization and vehicle care service) ● Free mobile inspection during summer and winter

05. Emergency Claims (Speed Heart Service)● Hicar emergency claims ● System for identification of the customer’s location and the team coming to the client’s aid● Premium partner repair center information service (SMS service for the closest partner company and information on the person mobilized on-site) ● Customer assurance and information on the accident handling procedure

06. Call Center (Sense Heart Service)● Receipt of the report on a car accident and request for coming to the client’s aid (all year round)● Contract-related counseling and document issuance (documents that a customer needs to prepare, e.g. insurance policy or subscription certificate)● Security call service for elderly living alone● Call-back service

07. Risk Management Service● Risk management seminars● Risk assessment services for corporate customers● Risk management information offerin

01. Customer Satisfaction Service● Hi-Class Service for premium customers● Premium Customer’s Day● Music CD offering to premium customers● Free legal/tax service● Hicar driving lessons for women● Hi mom 119 class● Customer consultant● Hi-VOC (voice of customers) system● Online convenience system via homepage/smart customer center

02. Automobile Claims (Family Heart Service)● Smart Hi-UP service (mobile-based compensation handling system, real-time Claim payment)● Real-time mobile-based accident inquiry service for customers (transmission of a photo of the accident scene via e-mail and inquiry about employee in charge, etc)● Real-time indemnity processing information system from homepage● Post-accident care● Customized service to inform the client of the end of indemnity (via location message service (LMS), post, email)● On-site claim adjustment and payment service for petty car accident claims● Zero Complaint Day to solve customer complaints● Indemnity consulting on the Internet● Education and compensation consulting to prevent accidents for corporations

03. Long-Term Insurance Claims (Smart Heart Service)● Smart phone information service (information on documents to be submitted; consent to personal information handling; payment details)● Accident acceptance service from homepage (file loading, allocating fax number per insured person)● Long-term insurance accident consulting● Mobile accident acceptance service● LMS informing the client of the required documents● Planner touch service for customers with accident experience● Post-accident care

7 Heart Service programs


Vision Hi 2015






Effective response to financial environment and system changesWith the increasingly complicated nature of the financial system, risk management is becoming ever more important

amid uncertainty over global financial markets and the world economy and the ongoing problems of domestic savings

banks. The situation requires the sophistication and specialization of risk management in conjunction with the need

to deal more efficiently with changes in the financial environment and systems, such as compulsory execution of the

Risk-based Capital (RBC) system and enactment of the International Financial Reporting Standard (IFRS).


1) RBC : Risk Based Capital 2) IFRS : International Financial Reporting Standards

Organization · Secure independence of risk management. · Consolidate specialist manpower.

Regulation · Establish the risk perceiving, measuring, analyzing, controlling, and monitoring system.

Premanagement · Consolidate the investment proposal analysis. · Pursue earnings considering the risk. · Tactical Asset Allocation.

Postmanagement · Select risk Mgt. indicators. · Establish the RAPM system.

Analysis · Develop analysis indicators. · Various sensitivity analyzing and reporting systems · Secure model conformance. · Accumulate and computerize risk data.

System · Establish market, credit, interest rate, insurance, and operation risk systems. · Build an integrated risk system.

Vision Hi 2015





Adva

ncem

ent of risk

Mgt

. s

ystem

Risk Mgt. s

yste

m

Consolidation of risk

analyzing capabilityBalance between

earnings and risks

Advancement of risk

management

In consideration of such a need for risk management activities, we strive to operate a risk-based strategic management system, looking

for ways to strike a balance between risk and profit and adopting sophisticated risk management organizations, regulations, and systems.

To achieve this, we make a point of establishing a basic risk management plan and pushing ahead with specific objectives and measures

every year based on a risk management master plan.

Risk Management SystemHyundai Insurance is committed to minimizing

losses and enhancing corporate sustainability

amid all financial risks (interest rate, insurance,

market, credit, liquidity) and non-financial risks

(operation, reputation, laws) that may occur in

the course of business operation.

We have developed risk management systems

(ALM system, market risk management

system, credit risk management system, and

DFA system) to measure and analyze each

potential risk and operate the systems. We

completed our project of improving the market

risk management system in 2010 and laid the

foundation for integrated risk management and

consolidated market risk management.

Especially, in 2012, we established the Self Risk

Assessment System in an effort to enhance

the efficiency of self-regulatory efforts to

diagnose the risk management level and

improve vulnerable sectors. We plan to use

the said system as the basis for the operation

risk management system that we are about

to establish. Hyundai Insurance is committed

to continually improving and upgrading the

risk management system, coping with the

risk-concentrated supervision system, and

consolidating the enterprise risk management

base.

Risk-Oriented Management SystemHyundai Insurance has bolstered the risk Mgt. system, risk analysis and control

competence. The Risk Mgt. Committee affiliated with the board of directors

establishes a enterprise risk Mgt. strategy each year, deliberates on the company’

s key management strategy including risk-based business plans, asset Mgt.

plans, and reinsurance special terms and conditions revision. Thus, a risk-

concentrated management system has been built. The Committee is regularly

reported the risk status each quarter; when key issues occur, a provisional

meeting of the Committee is held. The Committee consists of at least 2 directors

or more nominated by the board, including the CEO.

The Risk Management Operation Committee affiliated with the Risk Management

Committee carries out the establishment of detailed policies on the decisions

of the Risk Management Committee, prior negotiation on the agenda, post-

management and inspection of action results, and review of risks in investment

proposals. The Risk Management Operation Committee consists of officer

from the department exclusively in charge of risk management and officers in

underwriting, and asset management divisions; in principle the meeting is held

prior to the Risk Management Committee meeting.

For efficient and practical risk management, Hyundai Insurance nominates risk

management departments per risk to manage the relevant risks. The former

cyclically inspects company-wide risks and reports the results to the Committee.

Furthermore, the department measures and analyzes the entire company’s risk

extent and that of each division and regularly carries out the stress test. The

department is also equipped with a system to measure, report, and cope with the

risk volatility early in case the management or environment rapidly changes. In

addition, the department continually conducts education and seminars on the risk

system, environmental changes, and risk management and makes an effort to

promote a risk-concentrated management culture.

While we at Hyundai Insurance constantly endeavor for risk-based management

culture promotion, we shall strengthen the risk system response and internal risk

management and enhance capital appropriateness by consolidating risk-based

insurance and asset portfolio management. At the same time, Hyundai Insurance

is committed to the solidification of a stable financial company base to cope

proactively with the global financial crisis by bolstering crisis situation analysis.

▶ Risk Management Strategy FrameworkFramework


2013Apr • Hold on opening ceremony of the Qingdao Branch of Hyundai Insurance (China) Co., Ltd.

• Awarded the excellent call center certification for

5 consecutive years in the call center sector of non-life

insurance by 2012 Korea Service Quality Index

May • Hold on agreement ceremony for <Very Minor Confession>, a project for the prevention of school violence

• Hold the 1st customer consultant organization ceremony

Jun • Conducted 2012 internship program

Jul • Ranked No.1 in the long-term insurance sector for 4 consecutive years and in the automobile insurance

sector for 8 consecutive years by 2012 Global Customer

Satisfaction Index

Jan • Hold a completion ceremony for Bupyeong building

Feb • Hold a inauguration of the new CEOs

Mar • Launched Ashoka Korea

• Launched children’s transportation safety certification programs

• Awarded the Grand Prize in the product development and

marketing support sectors by 2012 Seoul Economy Daily

Aug • Hosted the first counseling concert of <Very Minor Confession> to make

Sept • Launched the claim service team for the 2012 World Conservation Congress

• Supported the campaign, 2012 Zero Injuries to Children

in Traffic Accidents

Oct • Awarded 2012 Korea 100 Best Companies to Work for (for 5 consecutive years, 10 times)

• Awarded Grand Prize in 2012 Global Excellent Awards in

Customer Satisfaction sector (7 times)

• Ranked No.1 in the non-life insurance sector of Korea

Sustainability Index for 3 consecutive years

• Rated A (stable) by A.M. Best

• Chosen as the first certified weather management

company in a financial business

Nov • Inducted to the Hall of Fame in 2012 Korea Management Grand Awards in Customer Satisfaction sector

• Awarded the 2012 Harald Economy Insurance Grand Prize

in innovative social contribution sector

• Awarded the 2012 Money Today Financial Innovation Grand Prize

• Rated BBB+ (Positive) by S&P

Dec • Agreement ceremony for <T-um Class>, a social contribution activity

• Chosen as 2012 excellent financial product by Financial

Supervisory Service (100 Years Age Nursing Insurance)

FY2012 NEWS

Vision Hi 2015





2013

yundai Marine & Fire Insurance


2. Direct Premium1) Overall

Note) Based on the exchange rates used for accounting settlement in FY2012: PL basic rate 1,115.07:U$1 / BS basic rate 1,112.10:U$1

Note) Hicar Direct: Subsidiary where Hyundai Insurance has 100% stake

In FY2012 (up to the end of March 2013), we posted 10,157.7 billion won in direct premiums, representing a 9.0% y-o-y increase.

Our market share stood at 16.6% (or 17.3% with Hi Car Direct included), a 0.2%p y-o-y drop. By line, commercial insurance posted

growth of 8.3%, while long-term insurance, including single payment, posted growth of 12.9% growth, and auto insurance negative

growth of 2.6%.

Classification FY2010 FY2011

(KRW million) (KRW million) (KRW million) (USD 1,000)

Direct Premium 7,610,424 9,316,657 10,157,664 9,109,461

Net Premium 6,786,492 8,421,672 9,232,199 8,279,498

Earned Premium 6,634,219 8,357,856 9,212,849 8,262,144

Underwriting Income -204,486 30,465 -212,672 -190,726

Investment Income 440,670 520,718 684,884 614,209

Total Operating Income 236,184 551,183 472,212 423,483

Net Income 159,485 392,756 333,381 298,979

(Adj. Net Income) 205,418

Total Assets 13,005,845 17,571,242 20,867,758 18,714,345

Invested Assets 10,313,054 13,422,220 16,290,616 14,609,534

Total Shareholders’ Equitie 1,152,819 1,744,234 2,101,924 1,885,019

(Adj. Total Shareholders’ Equities) 1,557,248

FY2012 Detailed report on management results _Financial Report

1. Financial Highlights

Note 1) Based on the exchange rates used for accounting settlement in FY2012: PL basic rate 1,115.07:U$1 / BS basic rate 1,112.10:U$1Note 2) K-IFRS was applied from FY2011 on a non-consolidation basis.Note 3) Adjusted net income: Net income + Increase of Catastrophe reserves / Adjusted shareholders’ equities: Total shareholders’ equities + Catastrophe reserves

FY2012

(Unit: KRW million)Direct Premium

FY2008

FY2009

FY2010

FY2011

FY2012

5,539,606

6,466,633

7,610,424

9,316,657

10,157,664

(Unit: KRW million)(Adj.) Net Income

FY2008

FY2009

FY2010

FY2011

FY2012

155,421

224,983

205,418

392,756

333,381

Note) The Adjusted Net Income up to FY2010, Net Income in FY2011 are shown.

(Unit: KRW million)(Adj.) Total Shareholders’ Equities

FY2008

FY2009

FY2010

FY2011

FY2012

1,153,595

1,423,800

1,557,248

1,744,234

2,101,924

Note) The Adjusted Total Shareholders’ Equities up to FY2010 and Total Shareholders’ Equities in FY2011 are shown.

Total Asset

FY2008

FY2009

FY2010

FY2011

FY2012

9,487,404

11,093,772

13,005,845

17,571,242

20,867,758

(Unit: KRW million)

ClassificationFY2010 FY2011 FY2012


Commercial 808,224 910,859 986,170 884,404

Long-term 4,809,361 5,925,248 7,050,401 6,322,846

- Initial Premium 166,065 253,163 298,134 267,369

- In-force (recurring) Premium 4,643,297 5,672,085 6,752,266 6,055,478

Auto 1,925,636 2,040,907 1,988,159 1,782,995

Sub-total 7,543,221 8,877,014 10,024,730 8,990,245

Single Payment 67,203 439,643 132,935 119,217

Total 7,610,424 9,316,657 10,157,664 9,109,461

M/S Trend Including Hicar Direct Excluding Hicar Direct

16.8%

15.9%

16.9%

16.0%

16.9%

16.1%

17.5%

16.8%

17.3%

16.6%

FY2008 FY2009 FY2010 FY2011 FY2012

Financial Issues

FY2012 Detailed report on management results

Audit report on financial statements


The Company’s sales are mostly derived from traditional channels such as solicitors and agencies. As the sales channels become

more diversified, traditional channels are concentrating on the sales of customized products, enhancement of financial consulting

capability, etc. when new channels are advancing their entry strategy in consideration of each market situation

2) Commercial details

Note) Based on the exchange rates used for accounting settlement in FY2012: PL basic rate 1,115.07:U$1 / BS basic rate 1,112.10:U$1

In FY2012, general insurance posted 986.2 billion won in direct premiums, an 8.3% increase. The other categories posted an even

growth rate, with the exception of engineering/workers’ compensation insurance, which had posted a dramatic growth in the

preceding year.



Commercial 808,224 910,859 986,170 884,404

- Fire 31,382 33,775 38,858 34,848

- Marine 169,582 178,557 196,141 175,901

- Engineering 77,752 93,462 66,410 59,557

- Workers’ Compensation 16,462 19,642 18,938 16,984

- Liability 94,528 104,271 111,858 100,315

- Accident 138,823 149,162 172,988 155,137

- Property All Risk 169,857 175,638 178,548 160,123

- Overseas 66,467 73,305 79,463 71,263

- Others 43,372 83,047 122,965 110,276

Channel Breakdown

Employee Solicitor & Agency Bancassurance Online Others

Note1) Online includes Hyundai Insurance’s subsidiary, Hicar Direct. Note2) Retirement lnsurance(pension) is included.

3) Long-Term Details

(Long-Term Total)

Note 1) Based on the exchange rates used for accounting settlement in FY2012: PL basic rate 1,115.07:U$1 / BS basic rate 1,112.10:U$1Note 2) Single payment is excluded.

(Initial Premium)

Note 1) Based on the exchange rates used for accounting settlement in FY2012: PL basic rate 1,115.07:U$1 / BS basic rate 1,112.10:U$1Note 2) Single payment is excluded.



Protection 3,584,463 4,144,788 4,637,823 4,159,231

- Accident 1,430,757 1,688,195 1,925,697 1,726,978

- Drivers 345,517 363,905 361,055 323,797

- Property 415,575 584,480 670,382 601,203

- Disease 675,542 784,079 966,741 866,980

- Convergence 717,073 724,130 713,948 640,274

Savings 927,225 1,647,140 1,854,286 1,662,936

Individual annuity 364,876 572,963 691,226 619,896

Total 4,876,564 6,364,891 7,183,335 6,442,063



Protection 83,282 108,746 113,134 101,459

- Accident 39,807 37,054 44,843 40,215

- Drivers 9,847 4,404 5,364 4,810

- Property 17,511 46,546 24,997 22,418

- Disease 13,166 18,656 36,305 32,558

- Convergence 2,951 2,086 1,626 1,458

Savings 63,575 121,912 172,916 155,072

Individual annuity 19,208 22,505 12,085 10,838

Total 166,065 253,163 298,134 267,369

FY2009

Others0.8%

Online5.1%Bancassurance

5.0%

Solicitor & Agency81.3%

Employee7.8%

Employee7.2%

Others0.9%


5.0%

FY2008


FY2010

Others1.1%


5.5%


Employee7.4%

FY2011

Others0.9%


10%


Employee8.9%

FY2012

Others1.0%


7.9%


Employee8.1%

Financial Issues




Long-term insurance, a driver of sales growth, also posted a high growth rate in FY 2012, 12.9% higher than the previous year. We

posted a growth rate of 17.8% for initial premiums. We posted growth of 4.0% and 28.1% in protection type and saving type, including

individual annuity, respectively, mainly on the back of briskness of healthcare insurance, which showed a 41.7% y-o-y increase,

despite the slowdown in property insurance. Recurring premiums recorded a high growth rate of 19.0% from the previous year due

to the improvement in persistency ratio. In regards to the product mix, protection products accounted for 64.6%, savings products for

25.8%, and annuity for 9.6%. The proportion of protection products, who has more profit margin, is still high. Within the protection

insurance products, accident insurance including coverage for medical expenses comprised the highest portion.

3. Operating Income1) Underwriting Efficiency

Note 1) The figures above are ratios against earned premiums. Sales expense is the amount after the amortization of the acquisition cost.Note 2) K-IFRS was applied from FY2011; its performance is based on a separate standard.


(K-GAAP) (K-IFRS) (K-IFRS)

Loss ratio 79.8% 82.2% 83.1%

- Commercial 58.8% 69.2% 69.8%

- Long-term 81.2% 83.3% 83.7%

- Automobile 79.0% 80.8% 83.4%

Expense ratio 22.5% 17.4% 19.2%

- Personnel cost 4.3% 2.8% 2.8%

- Maintenance cost 5.7% 4.7% 4.7%

- Distribution cost 12.6% 11.2% 12.7%

- Others 0.1% -1.3% -1.0%

Combined ratio 102.4% 99.6% 102.3%

Product Mix

Our overall combined ratio rose by 2.7%p y-o-y to 102.3%, with a 0.9%p y-o-y increase in the loss ratio and a 1.8%p increase in the

expense ratio. The loss ratio in general insurance recorded a 0.6%p y-o-y increase due to the occurrence of high-cost accidents,

including typhoons. The loss ratio in long-term insurance recorded a 0.4%p y-o-y increase due to an increase in the risk loss ratio.

Auto insurance recorded a 2.7%p y-o-y increase due to a drop in per-unit premium and heavy snow. The expense ratio recorded

a 1.8%p y-o-y increase due to an excess amortization of the long-term insurance acquisition cost despite the effort to reduce

expenses.

2) Long-Term Risk Loss Ratio

Note 1) Based on the exchange rates used for accounting settlement in FY2012: PL basic rate 1,115.07:U$1 / BS basic rate 1,112.10:U$1Note 2) Based on the direct premium and including IBNR.Note 3) K-IFRS was applied from FY2011 on a non-consolidation basis.



Risk premium (a) 1,146,242 1,329,543 1,473,764 1,321,681

Amount of loss incurred (b) 948,409 1,066,123 1,214,288 1,088,982

Risk loss ratio (b/a) 82.7% 80.2% 82.4% 82.4%

Risk margin (a-b) 197,833 263,420 259,475 232,699

Combined Ratio Trend

Loss Ratio

FY2008(K-GAAP)

FY2009(K-GAAP)

FY2010(K-GAAP)

FY2011(K-IFRS)

FY2012(K-IFRS)

75.8%

78.2%

79.8%

82.2%

83.1%

Combined Ratio

FY2008

FY2009

FY2010

FY2011

FY2012

102.8%

101.5%

102.4%

99.6%

102.3%

Expense ratio

FY2008

FY2009

FY2010

FY2011

FY2012

27.0%

23.3%

22.5%

17.4%

19.2%

Accident

Drivers

Property

Disease

Convergence

Savings

Individual annuity

Protection

FY2008

Individual annuity6.0%

Savings15.7%

Convergence20.2%

Disease17.0%

Property11.7%

Drivers9.9%

Accident19.4%

Protection78.3%

FY2012


Savings25.8%

Convergence9.9% Disease

13.5%

Property9.3%

Drivers5.0%

Accident26.8%

Protection64.6%

FY2009


Savings15.4%

Convergence17.4%

Disease15.4%

Property9.4%

Drivers7.6%

Accident28.5%

Protection78.3%

FY2010


Savings19.0%

Convergence14.7%

Disease13.9%

Property8.5%

Drivers7.1%

Accident29.3%

Protection73.5%

FY2011


Savings25.9%

Convergence11.4% Disease

12.3%

Property9.2%

Drivers5.7%

Accident26.5%

Protection65.1%

Long-Term Risk Margin (Unit: KRW million)

Risk MarginLoss Ratio

259,47577.6%

82.9% 82.7%

80.2%

82.4%

FY2008 FY2009 FY2010 FY2011 FY2012

159,380163,396

197,833

263,420

Financial Issues




In calculation of long-term insurance loss ratio, the loss amount includes interest on savings premiums. The interest is offset by the

investment income, but the loss ratio does not reflect such investment performance. Therefore, the loss ratio of long-term insurance

has some limitation in estimating profitability. Consequently, the risk loss ratio, which is compared to the actual loss amount divided

by separated risk premiums from overall long-term insurance premium, is a way of more precisely measuring the true profitability of

long-term insurance.The long-term risk-related loss ratio recorded 82.4%, a 2.2%p y-o-y increase. The risk margin (Risk premium –

minus claims amount) stood at 259.5 billion won, a 1.5% y-o-y decrease.

3) Investment Returns

Note 1) Based on the exchange rates used for accounting settlement in FY2012: PL basic rate 1,115.07:U$1 / BS basic rate 1,112.10:U$1Note 2) K-IFRS was applied from FY2011 on a non-consolidation basis.

Since K-IFRS was adopted for the first time in FY2011 and some standards of financial data, such as equity method-based valuation

on gain or loss of subsidiaries, were changed, it is not correct to directly compare FY2011 and FY2010. Invested assets stood at

16,290.6 billion won, a 21.4% y-o-y increase. Investment income stood at 684.9 billion won, a 29.3% y-o-y increase. We posted in the

investment income on the back of an increase in gain on the valuation/disposition of marketable securities.



Invested assets 10,313,054 13,422,220 16,290,616 14,648,518

Investment income 440,670 520,718 684,884 614,209

(Investment yield) 4.7% 4.5% 4.7% 4.7%

- Interest income 404,429 483,024 570,548 511,671

- Dividend income 23,166 30,740 29,874 26,791

- Gain (loss) from trading securities 46,313 30,871 115,124 103,244

- Gain (loss) from derivatives and foreign currency -1,284 5 -1,092 -979

- Equity method gain (loss) -36,809 -36,368 -42,115 -37,769

Others 4,855 12,446 12,545 11,250

4. Asset Management1) Asset Portfolio


As of the end of March 2013, invested assets posted at KRW 16,290.6 billion. The total assets grew 18.8%, up to KRW 20,867.8 billion,

on the basis of IFRS. It is important to match the investment portfolio with the liability structure because a large portion of the

invested assets were generated from long-term insurance in which interest-related risks are high. Therefore, based on the ALM

principle, invested assets are mostly comprised of interest-bearing assets such as bonds and loans.

2) Bonds Detail

Note 1) Based on the exchange rates used for accounting settlement in FY2012: PL basic rate 1,115.07:U$1 / BS basic rate 1,112.10:U$1Note 2) K-IFRS was applied from FY2011; its performance is based on a separate standard.

As of the end of March 2013, Hyundai Insurance managed KRW 8,695.9 billion in bonds. The credit ratings of these bonds were

mostly “AA” or higher. Likewise, Hyundai Insurance has maintained stable risk management.

ClassificationMar. 2011 Mar. 2012 Mar. 2013


Total assets 13,005,845 17,571,242 20,867,758 18,764,282

Invested assets 10,313,054 13,422,220 16,290,616 14,648,518

Cash & Deposit 337,586 596,418 728,365 654,946

Trading securities

(Securities at fair value through profit or loss)

817,508 426,785 510,483 459,027

- Stocks 0 0 20,451 18,390

- Bonds 667,035 270,619 59,365 53,381

- Others 150,473 156,166 430,668 387,256

Available-for-sale securities 4,816,314 6,980,416 8,674,745 7,800,329

- Stocks 136,497 294,607 329,614 296,389

- Bonds 3,948,450 5,855,737 7,325,811 6,587,367

- Others 731,368 830,072 1,019,320 916,573

Held-to-maturity securities 596,359 1,052,536 1,325,255 1,191,669

Equity method securities 263,139

Securities Invested in Affiliates or Subsidiaries 244,434 252,752 227,274

Loans 2,637,617 3,231,876 3,837,551 3,450,725

Real estate 844,530 889,754 961,465 864,549



AAA 4,046,518 4,884,620 5,717,542 5,141,212

AA 1,053,641 2,168,483 2,868,470 2,579,328

A 70,989 102,053 102,507 92,175

Subtotal 5,171,148 7,155,156 8,688,520 7,812,714

(Ratio) 99.6% 99.9% 99.9% 99.9%

BBB+ 20,190 6,992 7,416 6,668

Total 5,191,338 7,162,148 8,695,935 7,819,383

(Unit: KRW million)

FY2008 FY2009 FY2010 FY2011 FY2012

5.0%4.7% 4.7%

4.5%4.7%

7,512,3108,724,761

10,313,054

13,422,220

16,290,616

Asset Volume & Yield TrendInvestment assetsInvested yield

Financial Issues




3) Loan Details

As of Mar. 31, 2013

Note 1) Before deducting bad debt reserves and deferred auxiliary revenueNote 2) K-IFRS was applied from FY2011; its performance is based on a separate standard.

Accounting for 23.6% of the invested assets, loans are one of the major investment assets. Within loan assets, 74.5% are for retail

customers and 80% or more are secured by real estates and insurance policies. They are therefore safe and profitable. The average

LTV (Loan to Value) of real estates-secured loans is about 50% and is strictly regulated by the financial regulator.

4) Loan Quality

Note 1) Based on the exchange rates used for accounting settlement in FY2012: PL reference rate 1,115.07:U$1 / BS reference rate 1,112.10:U$1Note 2) K-IFRS was applied from FY2011; its performance is based on a separate standard.

The NPL (Non-Performing Loan) ratio of Hyundai Insurance was less than 0.6%, showing very good asset soundness. The coverage

ratio is over 220%, which demonstrates the company’s effort to faithfully accumulate sufficient reserves.



Total loans 2,660,765 3,227,558 3,835,108 3,448,528

Normal 2,644,652 3,209,446 3,793,793 3,411,377

Precautionary 3,507 4,164 19,627 17,648

Substandard 7,394 5,349 13,246 11,911

Doubtful 184 109 71 63

Estimated loss 5,028 8,490 8,372 7,528

Substandard & below 12,606 13,948 21,689 19,502

(NPL ratio) 0.5% 0.4% 0.6% 0.6%

LLR (Loan Loss Reserve) 26,052 32,078 47,758 42,944

(Coverage ratio) 206.7% 230.0% 220.2% 220.2%

Pr. & below ratio 0.6% 0.6% 1.1% 1.1%

ClassificationRetail Corporate Total

(KRW million) (Ratio) (KRW million) (Ratio) (KRW million) (Ratio)

Total 2,856,680 100.0% 978,428 100.0% 3,835,108 100.0%

(Ratio) 74.5% 25.5% 100.0%

Secured by real estate 2,008,273 70.3% 284,931 29.1% 2,293,204 59.8%

Secured by an insurance contract 821,992 28.8% 0 0.0% 821,992 21.4%

By 3rd-party guarantee 20,998 0.7% 28,500 2.9% 49,498 1.3%

By security 0 0.0% 2,000 0.2% 2,000 0.1%

Non-secured 4,266 0.1% 273,907 28.0% 278,173 7.3%

Others 1,152 0.0% 389,090 39.8% 390,241 10.2%

5. Long-Term Savings Premium Reserve & Liability rate


The reserves of savings premiums to pay back to policyholders in the future are consistently increasing due to the sale boost of

savings insurance. As of the end of March 2013, it increased by 23.5% to KRW 13,618.4 billion. The share of fixed savings decreased

2.7% points to 23.5% compared with the previous year. The average interest rate of the reserves is 4.18%. The corresponding

investment return of separate accounts is 5.44% with a spread of about 120 bps.

6. Capital Position

Note 1) Based on the exchange rates used for accounting settlement in FY2012: PL reference rate 1,115.07:U$1 / BS reference rate 1,112.10:U$1Note 2) Adj. net asset: Total shareholders’ equities + Catastrophe reservesNote 3) Both solvency ratio and RBC ratio were used in FY2010 but solvency ratio was abolished from FY2011.

As of the end of March 2012, total shareholders’ equities stood at 2,101.9 billion won, a 20.5% y-o-y increase. The RBC ratio stood at

207.2%, showing a 2.2%p y-o-y decrease which is attributable to the bolstering of the capital adequacy system. A.M. Best upgraded

the Company’s credit rating from the “A-Positive” rating of the preceding year to that of “A stable” in recognition of our asset

operating strategy focused on risk management and our ability to create profit. Standard and Poor’s upgraded our credit rating from

“BBB+ Stable” of the preceding year to “BBB+ Positive.” These ratings show that we maintain stable capital availability, which means

we are capable of fulfilling our liabilities toward insurance contractors.



Savings premium reserve 8,331,164 11,024,417 13,618,385 12,245,648

- Fixed 1,698,885 1,721,499 1,759,098 1,581,780

(%) 20.4% 15.6% 12.9% 12.9%

- Floating 6,632,279 9,302,918 11,859,287 10,663,868

(%) 79.6% 84.4% 87.1% 87.1%

Average liability rate 4.57% 4.59% 4.18% 4.18%

- Fixed 6.08% 6.09% 5.99% 5.99%

- Floating 4.19% 4.31% 3.91% 3.91%

Investment Return of Separate Account 5.47% 5.09% 5.44% 5.44%



Total shareholders’ equities 1,152,819 1,744,234 2,101,924 1,890,049

Catastrophe reserves 404,430 0 0 0

Adj. shareholders’ equities 1,557,248 1,744,234 2,101,924 1,890,049

Solvency ratio (RBC based) 204.3% 209.4% 207.2% 207.2%

A.M. Best rating A- Stable A- Positive A Stable

S&P rating BBB+ Stable BBB+ Stable BBB+ Positive

Financial Issues




7. Shareholders’Dividend

Note 1) Based on the exchange rates used for accounting settlement in FY2012: PL basic rate 1,115.07:U$1 / BS basic rate 1,112.10:U$1Note 2) K-IFRS was applied from FY2011; its performance is based on a separate standard.

In FY2012, we posted net income of 333.4 billion won, a 15.2% y-o-y decrease. Dividend per share stood at 1,050 won, a 22%

decrease from the 1,350 won of the preceding year due to the decrease in net profits. Total amount of dividend paid came to 84.4

billion won. Dividend payout ratio stood at 25.3%.



Net income 159,485 392,756 333,381 298,979

Total dividend 56,290 108,560 84,435 75,722

Dividend per share (KRW) 700 1,350 1,050

Dividend rate per par value 140.0% 270.0% 210.0%

Payout ratio 35.3% 27.6% 25.3%

Dividend yield 2.4% 4.0% 3.3%

Total dividend

FY2008

FY2009

FY2011

FY2012

FY2010

39,996

56,290

56,290

108,560

84,435

Payout ratio

FY2008

FY2009

FY2011

FY2012

FY2010

34.7%

30.5%

35.3%

27.6%

25.3%

Dividend per par value

FY2008

FY2009

FY2011

FY2012

FY2010

100.0%

140.0%

140.0%

270.0%

210.0%

Dividend per share

FY2008

FY2009

FY2011

FY2012

FY2010

500

700

700

1,350

1,050

Dividend

Pay Out Ratio

(Unit: KRW)

(Unit: KRW million)

Report of Independent Auditors

To the Board of Directors and Shareholders of

Hyundai Marine & Fire Insurance Co., Ltd.

We have audited the accompanying separate statements of financial position of Hyundai Marine & Fire

Insurance Co., Ltd. “the Company” as of March 31, 2013 and 2012, and the related separate statements of

comprehensive income, changes in equity and cash flows for the years then ended, expressed in Korean won.

These financial statements are the responsibility of the Company’s management. Our responsibility is to

express an opinion on these 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

financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the 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 our audits provide a reasonable basis for our opinion.

In our opinion, the separate financial statements, referred to above, present fairly, in all material respects,

the financial position of Hyundai Marine & Fire Insurance Co., Ltd. as of March 31, 2013 and 2012, and its

financial performance and cash flows for the years then ended, in accordance with International Financial

Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”).

Auditing standards and their application in practice vary among countries. The procedures and practices

used in the Republic of Korea to audit such financial statements may differ from those generally accepted and

applied in other countries. Accordingly, this report is for use by those who are informed about Korean auditing

standards and their application in practice.

Samil PricewaterhouseCoopers

Seoul, Korea May 30, 2013

This report is effective as of May 30, 2013, 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 there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

Financial Issues




2013 2012

Assets

Ⅰ. Cash and cash equivalents(Note 4) 718,489,101 403,440,255

Ⅱ. Financial assets

1. Financial assets at fair value through profit or loss(Note 5,6,7) 140,895,607 272,033,800

2. Available-for-sale financial assets(Note 5,7,32) 8,674,745,368 6,980,415,845

3. Held-to-maturity investments(Note 5,32) 1,325,254,616 1,052,536,434

4. Derivatives held for hedging(Note 6,7) 17,926,251 10,177,443

5. Loans receivable(Note 5) 3,837,550,958 3,231,875,836

6. Other receivables(Note 5,17,32) 928,391,912 826,142,591

Ⅲ. Investments in subsidiaries and associates(Note 7,8) 252,751,584 244,434,451

Ⅳ. Property and equipment(Note 9) 537,625,859 482,459,820

Ⅴ. Investment property(Note 10) 463,159,542 447,232,070

Ⅵ. Intangible assets(Note 11) 64,235,231 76,116,296

Ⅶ. Other assets

1.Reinsurance assets(Note 12) 777,925,112 793,288,015

2.Compensation receivables(Note 13) 28,674,058 26,780,356

3.Deferred acquisition costs(Note 14) 2,008,597,413 1,833,181,044

4.Others(Note 15) 13,020,376 13,007,190

Ⅷ. Special accounts assets(Note 24) 1,078,514,867 878,120,935

Total assets 20,867,757,855 17,571,242,381

Liabilities

Ⅰ. Insurance liabilities(Note16) 16,600,904,004 13,894,958,918

Ⅱ. Financial liabilities

1. Financial liabilities at fair value through profit or loss(Note 6,7,18) - 2,636,425

2. Other financial liabilities measured at amortized cost(Note 17,18,32) 456,287,828 419,761,382

3. Derivatives held for hedging(Note 6,7,18) 5,507,888 3,634,822

4. Other financial liabilities(Note 18) 71,188,488 71,752,904

Ⅲ. Other liabilities

1. Provisions for restoration costs(Note 19) 1,580,151 1,544,993

2. Income taxes payable 29,952,100 59,960,021

3. Deferred income tax liabilities(Note 23) 220,192,286 181,540,411

4. Retirement benefit obligations(Note 20) 49,410,351 44,343,792

5. Others(Note 21) 270,822,934 247,917,268

Ⅳ. Special accounts liabilities(Note 24) 1,059,988,284 898,957,874

Total liabilities 18,765,834,314 15,827,008,810

Equity

Ⅰ. Capital stock(Note 22) 44,700,000 44,700,000

Ⅱ. Capital surplus(Note 22) 114,222,845 114,222,845

Ⅲ. Capital adjustment(Note 22) (20,044,215) (20,044,215)

Ⅳ. Accumulated other comprehensive income(Note 22) 383,115,384 250,247,050

V. Retained earnings(Note 22) 1,579,929,527 1,355,107,891

Total equity 2,101,923,541 1,744,233,571

Total liabilities and equity 20,867,757,855 17,571,242,381

Separate Statements of Financial Position

March 31, 2013 and 2012

(in thousands of Korean won)

The accompanying notes are an integral part of these separate financial statements.

Financial Issues




2013 2012

Ⅰ. Operating Income

1. Insurance income

1) Premium income(Note 25,26,36,38) 10,183,658,108 9,319,291,236

2) Reinsurance income(Note 26) 652,041,584 574,729,759

3) Changes in reinsurance assets 9,802,239 164,193,350

4) Expenses recovered 138,773,877 149,826,085

5) Gain on foreign currency transactions(Note 27,32) 9,351,861 7,966,833

6) Income from compensation receivables(Note 13) 1,893,702 -

7) Reversal of allowance for bad debts - 738,192

8) Others 2,196,265 1,641,704

10,997,717,636 10,218,387,159

2. Investment Income

1) Interest income(Note 27) 575,500,311 485,730,666

2) Gain on valuation on financial assets(Note 27) 1,267,841 9,771

3) Gain on financial assets transactions(Note 27) 177,339,391 67,689,623

4) Gain on valuation of financial derivatives(Note 6,27) 13,143,241 913,002

5) Gain on financial derivatives transactions(Note 27) 6,264,179 6,768,003

6) Gain on foreign currency transactions(Note 27,32) 9,756,971 11,169,804

7) Dividend income(Note 27) 29,874,101 30,740,444

8) Fee income 178,690 3,364,305

9) Rental income(Note 10) 28,389,209 28,306,130

10) Others 4,354,873 3,249,479

846,068,807 637,941,227

3. Special accounts income(Note 24) 44,286,231 53,646,708

4. Fees from special accounts(Note 24) 3,565,937 2,440,835

11,891,638,611 10,912,415,929

Ⅱ. Operating expenses

1. Insurance expenses

1) Increase in insurance liabilities 2,733,527,777 2,966,715,154

2) Insurance claims paid(Note 25,26) 3,256,059,796 2,953,919,693

3) Claim survey expenses(Note 28) 227,054,779 206,794,282

4) Dividends received 2,713,243 3,239,936

5) Refunds 2,122,413,583 1,543,843,348

6) Reinsurance expenses(Note 26) 951,459,345 897,619,598

7) Management expenses(Note 29,36) 1,066,973,319 1,007,536,675

8) Amortization of deferred acquisition costs(Note 14) 858,212,328 615,761,381

9) Loss on foreign currency transactions(Note 27,32) 8,301,561 8,997,102

10) Loss from compensation receivables(Note 13) - 1,698,153

11) Others 3,482,049 3,008,126

11,230,197,780 10,209,133,448

2. Investment expenses

1) Interest expense(Note 27) 4,681,770 2,598,826

2) Loss on valuation on financial assets(Note 27) 44,969,827 29,047,765

3) Loss on financial assets transactions(Note 27) 10,631,515 10,540,356

4) Loss on valuation of financial derivatives(Note 6,27) 5,732,858 8,802,578

5) Loss on financial derivatives transactions(Note 27) 8,670,107 5,600,559

6) Loss on foreign currency transactions(Note 27,32) 15,853,217 4,442,604

7) Asset management expenses(Note 30) 42,114,709 36,368,348

8) Maintenance expenses on property(Note 30) 12,233,758 11,612,024

9) Depreciation expenses on investment property(Note 10,30) 7,344,667 7,051,342

10) Others 799,674 3,246,296

153,032,102 119,310,698

3. Special accounts expenses(Note 24) 44,286,231 53,646,708

4. Fees paid on special accounts 152,604 587,284

11,427,668,717 10,382,678,138

Ⅲ. Operating profit 463,969,894 529,737,791

Ⅳ. Non-operating income

1. Gain on disposal of securities of subsidiaries and associates - 2,651,673

2. Gain on disposal of property and equipment 105,849 34,828

3. Gain on insurance settlements - 17,853

4. Miscellaneous gains 2,171,183 2,674,767

2,277,032 5,379,121

Ⅴ. Non-operating expenses

1. Impairment loss on investments in subsidiaries and associates(Note 8) 8,152,501 -

2. Loss on disposal of property and equipment 239,217 588,182

3. Impairment loss on intangible assets(Note 11) 1,449,917 326,800

4. Donations and contributions 3,321,302 1,652,138

5. Miscellaneous loss 10,678,428 5,381,822

23,841,365 7,948,942

Ⅵ. Profit before income tax expense 442,405,561 527,167,970

Ⅶ. Income tax expense(Note 23) 109,024,350 134,412,276

Ⅷ. Profit for the year(Note 22) 333,381,211 392,755,694

Ⅸ. Other comprehensive income (loss)

1. Change in value of available-for-sale financial assets(Note 5) 116,324,739 7,898,640

2. Change in value of investment in subsidiaries and associates(Note 8) (78,350) (1,273,209)

3. Currency translation differences(Note 32) (3,635,270) 34,435

4. Cash flow hedges(Note 6) 4,662,067 2,218,194

5. Special accounts(Note 24) 15,595,148 1,001,317

6. Revaluation surplus - (4,126,463)

132,868,334 5,752,914

Ⅹ. Total comprehensive income for the year 466,249,545 398,508,608

ⅩI. Earnings per share (in Korean won)(Note 33)

1. Basic earnings per share 4,146 4,884

2. Diluted earnings per share 4,146 4,884

Separate Statements of Comprehensive Income

Years Ended March 31, 2013 and 2012



Financial Issues




Capital StockCapital Surplus

Capital adjustments

Accumulated Other

Comprehensive Income

Retained Earnings

Total

Balance at April 1, 2011 44,700,000 114,685,621 (20,044,215) 226,453,831 1,036,682,652 1,402,477,889

Cumulative effect on correction of accounting process(Note 39) - - - 18,040,305 (18,040,305) -

Adjusted Balance 44,700,000 114,685,621 (20,044,215) 244,494,136 1,018,642,347 1,402,477,889

Comprehensive income

Profit for the year - - - - 392,755,694 392,755,694

Change in value of available-for-sale financial assets - - - 7,898,640 - 7,898,640

Change in value of investment in subsidiaries and associates - - - (1,273,209) - (1,273,209)

Currency translation differences - - - 34,435 - 34,435

Gains on valuation of cash flow hedge - - - 2,218,194 - 2,218,194

Other comprehensive income in special accounts - - - 1,001,317 - 1,001,317

Revaluation surplus due to the change in the korean tax rate - - - (4,126,463) - (4,126,463)

Total comprehensive income - - - 5,752,914 392,755,694 398,508,608

Transactions with equity holders of the company

Annual dividends - - - - (56,290,150) (56,290,150)

Change in value due to the change in the korean tax rate

Revaluation surplus - (462,776) - - - (462,776)

Balance at March 31, 2012 44,700,000 114,222,845 (20,044,215) 250,247,050 1,355,107,891 1,744,233,571

Balance at April 1, 2012 44,700,000 114,222,845 (20,044,215) 250,247,050 1,355,107,891 1,744,233,571

Comprehensive income

Profit for the year - - - - 333,381,211 333,381,211

Change in value of available-for-sale financial assets - - - 116,324,739 - 116,324,739

Change in value of investment in subsidiaries and associates - - - (78,350) - (78,350)

Currency translation differences - - - (3,635,270) - (3,635,270)

Gains on valuation of cash flow hedge - - - 4,662,067 - 4,662,067

Other comprehensive income in special accounts - - - 15,595,148 - 15,595,148

Total comprehensive income - - - 132,868,334 333,381,211 466,249,545

Transactions with equity holders of the company

Annual dividends - - - - (108,559,575) (108,559,575)

Balance at March 31, 2013 44,700,000 114,222,845 (20,044,215) 383,115,384 1,579,929,527 2,101,923,541

Separate Statements of Changes in Equity Separate Statements of Cash Flows


2013 2012

I. Cash flows from operating activities

1. Cash generated from operations(Note 34) 1,862,212,540 2,491,987,192

2. Interests received 564,203,908 479,391,543

3. Interests paid (28,014) (402,077)

4. Dividends received 27,461,362 30,080,880

5. Income tax paid (138,786,734) (53,822,683)

Net cash generated from operating activities 2,315,063,062 2,947,234,855

II. Cash flows from investing activities

1. Disposal of investment in subsidiaries and associates 10,000,000 22,651,673

2. Disposal of available-for-sale financial assets 2,689,425,608 1,135,068,054

3. Disposal of held-to-maturity investments 272,734,146 20,071,128

4. Disposal of financial derivatives 6,390,831 8,372,727

5. Disposal of property and equipment 195,151 541,498

6. Disposal of investment property - 677,258

7. Disposal of intangible assets 358,000 -

8. Decrease in guaranteed deposits 5,548,439 5,079,616

9. Decrease in deposited money 3,921,646 -

10. Increase in deposits, net (36,084,736) (180,773,370)

11. Acquisition of investments in subsidiaries and associates (26,573,000) -

12. Acquisition of available-for-sale financial assets (4,148,786,696) (3,281,491,494)

13. Acquisition of held-to-maturity investments (546,341,232) (479,926,575)

14. Acquisition of property and equipment (100,451,522) (44,983,570)

15. Acquisition of investment property - (153,977)

16. Increase in intangible assets (10,244,259) (12,261,646)

17. Increase in guaranteed deposits (4,648,326) (2,103,975)

18. Increase in deposited money (3,532,665) (2,203,015)

Net cash used in investing activities (1,888,088,615) (2,811,435,668)

Ⅲ. Cash flows from financing activities

1. Increase in leasehold deposits received 19,263,929 1,383,986

2. Decrease in leasehold deposits received (16,768,778) (1,015,061)

3. Payment of dividends (108,559,575) (56,290,150)

Net cash used in financing activities (106,064,424) (55,921,225)

Ⅳ. Exchange gains on cash and cash equivalents (5,861,177) 658,029

Ⅴ. Net increase in cash and cash equivalents 315,048,846 80,535,991

Ⅵ. Cash and cash equivalents at beginning of year 403,440,255 322,904,264

Ⅶ. Cash and cash equivalents at the end of year 718,489,101 403,440,255

Years ended March 31, 2013 and 2012


Years ended March 31, 2013 and 2012



Financial Issues




Notes to Separate Financial Statements

1. General InformationHyundai Marine & Fire Insurance Co., Ltd. (“the Company”) was incorporated on March 5, 1955, under the laws of the Republic of

Korea to engage in providing non-life insurance services and other related insurance services. As approved by the shareholders

on October 17, 1985, the Company changed its name from Dongbang Fire & Marine Insurance Co., Ltd. to Hyundai Marine & Fire

Insurance Co., Ltd. The Company’s capital stock was offered for public ownership on August 24, 1989, and all of its issued and

outstanding shares are listed on the Korea Exchange.

As of March 31, 2013, the Company’s major shareholder and his percentage of ownership are as follows:

2. Significant Accounting PoliciesThe principal accounting policies applied in the preparation of these separate financial statements are set out below. These

policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of PresentationThe Company maintains its accounting records in Korean won and prepares statutory financial statements in the Korean

language (Hangul) in accordance with the International Financial Reporting Standards as adopted by the Republic of Korea

(“Korean IFRS”). The accompanying separate financial statements have been condensed, restructured and translated into

English from the Korean language financial statements.

Certain information attached to the Korean language financial statements, but not required for a fair presentation of the

Company’s financial position, financial performance or cash flows, is not presented in the accompanying separate financial

statements.

The Company’s financial statements for the annual period beginning on April 1, 2011, have been prepared in accordance

with Korean IFRS. These are the standards, subsequent amendments and related interpretations issued by the International

Accounting Standards Board (“IASB”) that have been adopted by the Republic of Korea.

The preparation of the separate financial statements requires the use of certain critical accounting estimates. It also requires

management to exercise judgment in the process of applying the Company’s accounting policies. The areas involving a

higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the separate financial

statements are disclosed in Note 3.

2.1.1 Changes in Accounting Policy and Disclosures(1) New and amended standards early adopted by the Company

The Company early applied the following amended and enacted standards for the annual period beginning on January 1, 2013:

- Amendment of Korean IFRS 1001, Presentation of Financial Statements: Change in accounting policy, retrospective

restatement or reclassification

Korean IFRS 1001, Presentation of Financial Statements, requires the Company to present a statement of financial position at

the beginning of the preceding period if: (a) it applies an accounting policy retrospectively, makes a retrospective restatement

of items in its financial statements or reclassifies items in its financial statements; and (b) the retrospective application,

retrospective restatement or the reclassification has a material impact on the information in the statement of financial position

at the beginning of the preceding period. The comparative statement of financial position at the beginning of the preceding period

was not presented since the retrospective restatement of items in its financial statements does not have a material impact on

the statement of financial position at the beginning of the preceding period.

(2) New and amended standards adopted by the Company

- Amendment of Korean IFRS 1001, Presentation of Financial Statements

In accordance with amendment to Korean IFRS 1001, Presentation of Financial Statements, the Company changed its

accounting policy to present operating income and expenses as operating income which occurred from the Company’s major

operating activities less operating expenses.

The Company applies the accounting policy retroactively in accordance with the amended standards and the comparative

separate statement of the comprehensive income is restated by reflecting adjustments resulting from the retrospective

application. Effects of changes in accounting policies are as follows: (in thousands of Korean won)

1) 2013

2) 2012

There are no impacts on profit for the year, basic earnings per share and diluted earnings per share for the years ended March 31, 2013 and

2012.

(*1) Details of changed amounts that were classified as operating income or expense before the amendment, but are now excluded from operating income or expense, are as follows: (in thousands of Korean won)

Name of Shareholder Number of Shares Percentage of Ownership(%)

Chung Mong-Yoon 19,487,100 21.8

March 31, 2013 and 2012

Non-adjusted amount Adjustment(*1) Adjusted amount

Operating income 442,405,561 21,564,334 463,969,895

Non-adjusted amount Adjustment(*1) Adjusted amount

Operating income 527,167,970 2,569,821 529,737,791

Financial Issues




(3) New standards and interpretations not yet adopted

New standards, amendments and interpretations issued but not effective for the financial year beginning April 1, 2012, and not

early adopted by the Company are as follows:

- Amendment of Korean IFRS 1001, Presentation of Financial Statements

Korean IFRS 1001, Presentation of Financial Statements, requires other comprehensive income items to be presented into

two groups on the basis of whether they are potentially reclassifiable to profit or loss subsequently. This is effective for annual

periods beginning on or after July 1, 2012, with early adoption permitted. Company is assessing the impact of application of the

amendments to Korean IFRS 1001 on its financial statements.

- Amendments to Korean IFRS 1019, Employee Benefits

According to the amendments to Korean IFRS 1019, Employee Benefits, the use of a ‘corridor’ approach is no longer permitted,

and therefore all actuarial gains and losses incurred are immediately recognized in other comprehensive income. All past

service costs incurred from changes in pension plan are immediately recognized, and expected returns on interest costs and

plan assets that used to be separately calculated are now changed to calculating net interest expense (income) by applying

discount rate used in measuring defined benefit obligation in net defined benefit liabilities (assets). This amendment will be

effective for annual periods beginning on or after January 1, 2013, and the Company is assessing the impact of application of the

amended Korean IFRS 1019 on its separate financial statements.

- Enactment of Korean IFRS 1113, Fair Value Measurement

Korean IFRS 1113, Fair Value Measurement, aims to improve consistency and reduce complexity by providing a precise definition

of fair value and a single source of fair value measurement and disclosure requirements for use across Korean IFRSs. Korean

IFRS 1113 does not extend the use of fair value accounting but provides guidance on how it should be applied where its use is

already required or permitted by other standards within the Korean IFRSs. This amendment will be effective for annual periods

beginning on or after January 1, 2013, and the Company is assessing the impact of application of the amended Korean IFRS on

its separate financial statements.

- Amendment to Korean IFRS 1032, Financial Instruments: Presentation

Amendment to Korean IFRS 1032, Financial Instruments: Presentation, clarifies the facts that; a right to offset must not be

contingent on a future event and legally enforceable in all of circumstances; and if an entity can settle amounts in a manner such

that outcome is, in effect, equivalent to net settlement, the entity will meet the net settlement criterion. This amendment will be

effective for annual periods beginning on or after January 1, 2014, with early adoption permitted. The Company expects that the

application of this amendment would not have a material impact on its separate financial statements.

2.2 Subsidiaries and AssociatesThe financial statements of the Company are separate financial statements based on Korean IFRS 1027, Consolidated and

Separate Financial Statements. Investments in subsidiaries and associates are recognised at cost under the direct equity

method. Management applied the carrying amounts under the previous Korean GAAP at the time of first adoption of the Korean

IFRS as deemed cost of investments. The Company recognizes dividend income from subsidiaries and associates in profit or loss

when its right to receive dividend is established.

2.3 Segment ReportingOperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-

maker (Note 38). The chief operating decision-maker, who is responsible for allocating resources and assessing performance of

the operating segments, has been identified as the board of directors that makes strategic decisions.

2.4 Foreign Currency Translation(1) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the

entity operates ‘the functional currency’. The separate financial statements are presented in Korean won, which is the Company’

s functional and presentation currency.

(2) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the

transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of

such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign

currencies are recognized in the income statement, except when deferred in other comprehensive income as qualifying cash

flow hedges and qualifying net investment hedges.

Foreign exchange gains and losses are presented in the income statement within ‘operating income and expenses’.

Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analyzed

between translation differences resulting from changes in the amortized cost of the security and other changes in the carrying

amount of the security. Translation differences related to changes in amortized cost are recognized in profit or loss, and other

changes in carrying amount are recognized in other comprehensive income.

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss

are recognized in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets,

such as equities classified as available-for-sale, are included in other comprehensive income.

2.5 Cash and Cash EquivalentsCash and cash equivalents include cash in hand, deposits held at call with banks, and other short-term highly liquid investments

with original maturities of three months or less.

2.6 Financial Instruments

March 31, 2013 March 31, 2012

Non-operating income

Gain on disposal of securities of subsidiaries and associates - 2,651,673

Gain on disposal of property and equipment 105,849 34,828

Gain on insurance settlement - 17,853

Miscellaneous non-operating gains 2,171,183 2,674,767

Total 2,277,032 5,379,121

Non-operating expense :

Impairment of securities of subsidiaries and associates 8,152,501 -

Loss on disposal of property and equipment 239,217 588,182

Impairment of intangible assets 1,449,917 326,800

Donations and contributions 3,321,302 1,652,138

Miscellneous non-operating losses 10,678,429 5,381,822

Total 23,841,366 7,948,942

Financial Issues




2.6.1 ClassificationThe Company classifies its financial instruments in the following categories: financial assets and liabilities at fair value

through profit or loss, loans and receivables, available-for-sale financial assets, held-to-maturity investments, and other

financial liabilities at amortized cost. The classification depends on the purpose for which the financial assets and liabilities

were acquired. Management determines the classification of financial instruments at initial recognition.

(1) Financial assets and liabilities at fair value through profit or loss

Financial assets and liabilities at fair value through profit or loss are financial instruments held for trading. Financial assets

and liabilities are classified in this category if acquired or incurred principally for the purpose of selling or repurchasing it in

the short term. Derivatives that are not subject to hedge accounting and financial instruments having embedded derivatives

are also included in this category.

(2) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an

active market. The Company’s loans and receivables consist of ‘cash and deposits’, ‘loans receivable’ and ‘other receivables’.

(3) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities

that the Company intends and is able to hold to maturity and are classified as ‘Held-to-maturity securities’ in the statements

of financial position. If the Company were to sell other than an insignificant amounts of held-to-maturity investments, the

whole category would be tainted and reclassified as available-for-sale.

(4) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of

the other categories.

(5) Financial liabilities measured at amortized cost

The Company classifies non-derivative financial liabilities as financial liabilities carried at amortized cost, except for financial

liabilities at fair value through profit or loss or financial liabilities that arise when a transfer of a financial asset does not

qualify for derecognition. In this case, the transferred asset continues to be recognized and a financial liability is measured

as the consideration received.

2.6.2 Recognition and measurementRegular purchases and sales of financial assets are recognized on the trade date. Investments are initially recognized at fair

value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried

at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the statement

of comprehensive income. Available-for-sale financial assets and financial assets at fair value through profit or loss are

subsequently carried at fair value. Loans and receivables are subsequently carried at amortized cost using the effective

interest rate method.

Gains or losses arising from changes in the fair value of the financial assets carried at fair value through profit or loss are

presented in the income statement within ‘operating income and expenses’ in the period in which they arise. Dividend income

from financial assets at fair value through profit or loss is recognized in income when the Company’s right to receive dividend

payments is established.

Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognized in other

comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value

adjustments recognized in equity are reported in the statement of income as ‘operating income and expenses’.

Interest on available-for-sale and held-to-maturity investments calculated using the effective interest method is recognized in

the statement of income as part of ‘operating income’. Dividends on available-for-sale equity instruments are recognized in the

statement of income as part of ‘operating income’ when the Company’s right to receive dividend payments is established.

2.6.3 Offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a

legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset

and settle the liability simultaneously.

2.6.4 DerecognitionFinancial assets are derecognized when the contractual rights to receive cash from the investments have expired or have been

transferred, and the Company has substantially transferred all risks and rewards of ownership or when the risk and rewards of

ownership of transferred assets have not been substantially retained or transferred and the Company has not retained control

over these assets.

2.7 Impairment of Financial Assets(1) Assets carried at amortized cost

The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group

of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred

only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the

asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or a

group of financial assets that can be reliably estimated.

The criteria that the Company uses to determine that there is objective evidence of an impairment loss include:

- Significant financial difficulty of the issuer or obligor;

- Delinquency in interest or principal payments for more than three months;

- For economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that

the lender would not otherwise consider;

- It becomes probable that the borrower will enter bankruptcy or other financial reorganization;

- The disappearance of an active market for that financial asset because of financial difficulties; or

- Observable data suggesting that there is a measurable decrease in the estimated future cash flows from a portfolio of financial

assets since the initial recognition of those assets, even though the decrease cannot be identified with respect to individual

financial assets in the portfolio, such as:

1) adverse changes in the payment status of borrowers in the portfolio; 2) national or local economic conditions that correlate with defaults on the assets in the portfolio.

Financial Issues




Impairment loss is measured as the difference between the assets’ carrying amount and the present value of estimated future

cash flows (excluding future credit losses that have not been incurred) discounted using the initial effective interest rate.

The carrying amount of the asset is reduced by the impairment loss amount and the amount of the loss is recognized in the

statement of comprehensive income. In practice, the Company may measure impairment loss based on the fair value of financial

asset using an observable market price.

If, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event

occurring after the impairment was recognized (for example, an improvement in debtor’s credit rating), the reversal of the

previously recognized impairment loss is recognized in the statement of income.

(2) Assets classified as available-for-sale

The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group

of financial assets is impaired. For debt securities, the Company uses the criteria refer to in (a) above. In the case of equity

investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost, for

example decrease in fair value of the investments by more than 30% from its cost for more than six months, is also evidence

that the asset is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured

as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset

previously recognized in profit or loss – is removed from equity and recognized in the income statement. Impairment losses

recognized in the separate statement of comprehensive income on equity instruments are not reversed through the statement of

comprehensive income. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases

and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the

impairment loss is reversed through the statement of income.

2.8 Derivative Financial Instruments and hedging activitiesDerivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-

measured at their fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is

designated as a hedging instrument, and if so, the nature of the item being hedged. The resulting gain or loss is recognized in

‘operating income or expenses’.

The Company designates certain derivatives as either:

(1) hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedge);

(2) hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow

hedge);

The Company documents at the inception of the transaction the relationship between hedging instruments and hedged items,

as well as its risk management objectives and strategy for undertaking various hedging transactions. The Company also

documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging

transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of various derivative instruments used for hedging purposes are disclosed in Note 6. Movements on the hedging

reserve in other comprehensive income are shown in Note 6.

(1) Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the statement of

income, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The

gain or loss is recognized in the statement of income within ‘operating income or expenses’.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for

which the effective interest method is used is amortized to profit or loss over the period to maturity.

(2) Cash flow hedges

The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized directly in

other comprehensive income and the ineffective portion of the gain or loss on the hedging instrument is recognized in profit

or loss. The associated gains or losses that were previously recognized in other comprehensive income are reclassified from

equity to profit or loss as a reclassification adjustment in the same period or periods during which the hedged forecast cash

flows affects profit or loss. Cash flow hedge accounting is discontinued prospectively if the hedging instrument expires or

sold, terminated or exercised, or the hedge no longer meets the criteria for hedge accounting or the Company revokes the

designation. When the cash flow hedge accounting is discontinued, the cumulative gains or losses on the hedging instrument

that have been recognized in other comprehensive income are reclassified to profit or loss over the period in which the forecast

transaction occurs. If the forecast transaction is no longer expected to occur, the cumulative gains or losses that had been

recognized in other comprehensive income are immediately reclassified to profit or loss.

2.9 Property and EquipmentAll property and equipment are stated at historical cost or deemed cost less accumulated depreciation and accumulated

impairment loss. When the deemed cost is applied, the revaluation amount of property and equipment is considered as fair value

at the date of transition to Korean IFRS and as fair value at the date of the revaluation under the previous standard.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when

it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be

measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to

the statement of comprehensive income during the financial period in which they are incurred.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate the difference

between their cost and their residual values over their estimated useful lives, as follows:

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An

asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than

its estimated recoverable amount. Gain and losses on disposals are determined by comparing the proceeds with the carrying

amount and are recognized within ‘operating income and expenses’ in the statement of comprehensive income.

2.10 Investment PropertyInvestment property is held to earn rentals or for capital appreciation or both. Investment property also includes property that

is being constructed or developed for future use as investment property. Investment property is measured initially at its cost

including transaction costs incurred in acquiring the asset. After recognition as an asset, investment property is carried at cost

less accumulated depreciation and impairment losses.

Subsequent costs are include in the asset’s carrying amount or recognized as a separate asset, only when it is probable that

future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of

comprehensive income during the financial period in which they are incurred.

Description Estimated useful life

Buildings 26 - 52 years

Overseas real estate 31 years

Vehicles 5 years

Furniture and fixtures 5 years

Financial Issues




Land held for investment is not depreciated. Investment property, except for land, is depreciated using straight-line method over

their useful lives from 26 to 52 years.

The depreciation method, the residual value and the useful life of an asset are reviewed at the end of each financial year and,

if management judges that previous estimates should be adjusted, the change is accounted for as a change in an accounting

estimate.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within

‘operating income and expenses’ in the statement of comprehensive income.

The fair value of investment property disclosed in Note 10 reflects market conditions at the end of the reporting period, with

adjustment that reflects specific asset’s characteristics, condition and location. The book value for financial reporting purpose is

determined based on the evaluation of the investment property by an independent valuer, who holds a recognized and relevant

professional qualification and has recent experience in the location and category of the investment property being valued.

2.11 Intangible Assets(1) Computer software

Costs associated with maintaining computer software programs are recognized as an expense as incurred. Development costs

that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are

recognized as intangible assets when the following criteria are met:

- it is technically feasible to complete the software product so that it will be available for use;

- management intends to complete the software product and use or sell it;

- there is an ability to use or sell the software product;

- it can be demonstrated how the software product will generate probable future economic benefits; adequate technical,

financial and other resources to complete the development and to use or sell the software product are available; and

- the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalized as part of the software product include the software development employee costs

and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognized as an expense as incurred. Development costs

previously recognized as an expense are not recognized as an asset in a subsequent period.

Computer software development costs recognized as assets are amortized over their estimated useful lives, which does not

exceed five years.

(2) Membership rights

Membership rights are regarded as intangible assets with indefinite useful life and not amortized because there is no

foreseeable limit to the period over which the asset is expected be utilized.

(3) Other intangible assets

Separately acquired trademarks and licenses are shown at historical cost. Trademarks and licenses have a finite useful life and

are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost

of trademarks and licenses over their estimated useful lives of five years.

2.12 Impairment of Non-financial AssetsIntangible assets with indefinite useful lives are not subject to amortization and are tested annually for impairment. Assets that

are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying

amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds

its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For

the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash

flows (cash-generating units). Non-financial assets, other than goodwill, that suffered an impairment are reviewed for possible

reversal of the impairment at each reporting date.

2.13 LeaseLeases of property, plant and equipment where the Company has substantially all the risks and rewards of ownership are

classified as finance leases. Finance leases are capitalized at the lease’s commencement at the lower of the fair value of the

leased property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance

charges, are included in ‘borrowings’. The interest element of the finance cost is charged to the income statement over the lease

period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property,

plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease

term.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating

leases. Payments made under operating leases (net of any incentives received from the lessor are charged to the statement of

comprehensive income on a straight-line basis over the period of the lease.

2.14 Deferred Acquisition CostIn accordance with Article 31 of Accounting Standards for Insurance Industry and the Article 6-3 of Regulations on Supervision

of Insurance Business (“RSIB”), initial costs arising from long-term insurance contracts sold, excluding any excess amount over

estimated acquisition costs, are deferred and amortized over the term of contracts or seven years, whichever is shorter. For

cancellations, any unamortized portion is written off immediately.

2.15 Classification of Insurance and Investment ContractThe Company classifies a contract under which one party (the insurer) accepts significant insurance risk from another party

(the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely

affects the policyholder as an insurance contract until all rights and obligations are extinguished or expire. After classifying

contract by quantitative basis, Korean IFRS 1104, Insurance Contracts, is applied to insurance contract and financial instruments

that it issues with a discretionary participation feature and Korean IFRS 1039, Financial Instruments : Recognition and

Measurement, is applied to financial instruments that it issues without a discretionary participation feature.

Financial Issues




2.16 Insurance LiabilitiesIn accordance with Recognitions on Supervision of Insurance Business (“RSIB”), the Company is required to maintain insurance

liabilities at an amount determined as follows:

(1) Premium Reserves

Premium reserves represent the difference between the present value of claims payable to policyholders and the present value

of net premiums to be collected after the end of reporting period for long-term insurance contracts in effect as of the end of

reporting period.

(2) Reserves for Outstanding Claims

Reserves for outstanding claims represent estimated claims payable for accidents covered by insurance which occurred befor

the end of reporting period and for which the amount of claims payable is not yet determined. The expenses incurred in the

course of settlement of insured events, such as lawsuits, are added to and the claims to be reimbursed through sale of pledged

assets or exercise of reimbursement rights, which are obtained in the course of settlement of the insured event, are deducted

from the reserves.

(3) Unearned Premium Reserves

Unearned premium reserves represent premiums due, but whose recognition is deferred.

(4) Policyholders’ Dividend Reserves

Policyholders’ dividend reserves represent amounts payable to policyholders due to mortality gains, interest gains and expense

gains.

(5) Policyholders’ Profit Dividend Reserves

Pursuant to relevant laws and contracts, the Company may establish policyholders’ profit dividend reserves in accordance with

the operating results of related insurance products. The reserve may be used to pay the participating policyholder dividend or

additional dividend.

2.17 Liability Adequacy TestThe Company assesses at the end of each reporting period whether its recognized insurance liabilities are adequate, using

current estimates of future cash flows under its insurance contracts. The test considers current estimates of all contractual

cash flows, and of related cash flows such as claims handling costs, as well as cash flows resulting from embedded options

and guarantees. If that assessment shows that the carrying amount of its insurance liabilities is inadequate in the light of the

estimated future cash flows, the entire deficiency shall be recognized in profit or loss.

2.18 Claim Adjustment ExpensesClaims and loss adjustment expenses are charged to income as incurred based on the estimated liability for compensation owed

to contract holders or third parties damaged by the contract holders. They include direct and indirect claims settlement costs

and arise from events that have occurred up to the end of the reporting period even if they have not yet been reported to the

Company.

2.19 Compensation ReceivablesCompensation receivables represent recoverable claims arising from accidents. These claims are deducted from insurance

reserves. Compensation receivables are calculated by multiplying the average recovery ratio (recovery amount/net claims) for

the last three years from the prior year’s reporting period date to the amount of net claims for the last year in accordance with

RSIB.

2.20 Reinsurance ContractAccording to Korean IFRS 1104, Insurance Contracts, as a policyholder of reinsurance contracts, the Company shall not offset

reinsurance assets against the related insurance liabilities and income or expense from reinsurance contracts against the

expense or income from the related insurance contracts.

The Company considers whether its reinsurance assets are impaired and if reinsurance assets are impaired, the Company

reduces its carrying amount and recognizes that impairment loss in profit or loss.

2.21 Contingency ReservesNon-life insurance companies reserve a portion of net premium written by line of insurance as contingency reserves, up to

40–50% of the current year earned premiums. These reserves can be used against exceptionally large claims in the future.

2.22 Regulatory Reserve for Credit LossesThe RSIB requires the Company to appropriate, as a legal reserve, an amount for allowance for doubtful accounts which should

be established according to the regulation. The reserve is not available for the payment of cash dividends.

2.23 Special Account Assets and LiabilitiesIn accordance with Article No. 108 of the Insurance Business Law and Article No. 52 of its implementing ordinance, all assets

and liabilities related to retirement benefit insurance are managed and accounted for separately. According to RSIB, the

Company has changed the presentation of special account assets (liabilities). Due from (to) special account has been presented

as a deduction from special liabilities (assets).

2.24 ProvisionsProvisions are recognized when: the Company has a present legal or constructive obligation as a result of past events; it is

probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Provisions are not recognized for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax

rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in

the provision due to passage of time is recognized as interest expense.

The Company maintains for the corporate pension policies from general accounts in accordance with RSIB.

Financial Issues




2.25 Current and Deferred Income TaxThe tax expense for the period comprises current and deferred tax. Tax is recognized in the statement of comprehensive income,

except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is

also recognized in other comprehensive income or directly in equity.

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets

and liabilities and their carrying amounts in the separate financial statements. However, deferred tax assets and liabilities are

not recognized if they arise from initial recognition of an asset or liability in a transaction other than a business combination that

at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax

rates and laws that have been enacted or substantially enacted by the statement of financial position date and are expected to

apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against

which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for

deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Company and it is

probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against

current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation

authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net

basis.

2.26 Employee Benefits (1) Defined benefit liability

The Company operates pension schemes. The schemes are generally funded through payments to insurance companies or

trustee-administered funds, determined by periodic actuarial calculations. The Company has defined benefit plans.

A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount

of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of

service and compensation. The liability recognized in the statement of financial position in respect of defined benefit pension

plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets,

together with adjustments for unrecognized past-service costs. The defined benefit obligation is calculated annually by

independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined

by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in

the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension

obligation.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in profit or

loss in the period in which they arise. Past-service costs are recognized immediately in income, while costs are amortized over

the vesting period.

(2) Long-term employee benefits

The Company provides long-term employee benefits, which are entitled to employees with service period for ten years and

above. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology

as used for defined benefit pension plans.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in profit

or loss in the period in which they arise. These obligations are valued annually by independent qualified actuaries.

2.27 Share CapitalWhere the Company purchases its own equity share capital (treasury shares), the consideration paid, including any directly

attributable incremental costs is deducted from equity attributable to the Company’s equity holders until the shares are

cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received is included in equity

attributable to the Company’s equity holders.

2.28 Revenue RecognitionThe Company recognizes premium income at the due date. However, the revenues from the automobile insurance and long-

term and annuities contracts are recognized at the time of receipt.

2.29 Interest incomeInterest income is recognized using the effective interest method according to the time passed. When a loan and receivable is

impaired, the Company reduces the carrying amount to its recoverable amount and continues unwinding the discount as interest

income. Interest income on impaired loan and receivables is recognized using the original effective interest rate.

2.30 Dividend incomeDividend income is recognized when the right to receive payment is established.

2.31 Dividend DistributionDividend distribution to the Company’s shareholders is recognized as a liability in the financial statements in the period in which

the dividends are approved by the Company’s shareholders.

2.32 Approval of Issuance of the Financial StatementsThe issuance of the March 31, 2013 separate financial statements of the Company was approved by the Board of Directors on

May 15, 2013.

Financial Issues




5. Financial Assets5.1 Financial Assets at Fair Value through Profit or Loss

Financial assets at fair value through profit or loss as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

(2) Debt securities in financial assets at fair value through profit or loss as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

(3) Beneficiary certificates in financial assets at fair value through profit or loss as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

(4) Securities in foreign currency and other securities in financial assets at fair value through profit or loss as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

March 31, 2013 March 31, 2012Acquisition cost Book value Acquisition cost Book value

Type of debt 155,552 202,468 183,053 238,336

Others 27,544 27,544 35,004 35,004

Total 183,096 230,012 218,057 273,340


Securities in foreign currency 158,472 158,472 784,490 784,490

Other Securities(ELS) 60,000,000 60,008,221 - -

Total 60,158,472 60,166,693 784,490 784,490

3. Critical Accounting Estimates and JudgmentsThe Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,

seldom equal the related actual results. Estimations and assumptions are continuously evaluated with consideration to

factors such as events reasonably predictable in the foreseeable future within the present circumstance according to historical

experience. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying

amounts of assets and liabilities within the next financial year are addressed below.

(1) Income taxes

The Company recorded, based on its best estimate, current taxes and deferred taxes that the Company will be liable in the future

for the operating results as of the financial year end. However, the final tax outcome in the future may be different from the

amounts that were initially recorded. Such differences will impact the current and deferred income tax assets and liabilities in

the period in which such determination is made.

(2) Fair value of financial instruments

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The

Company uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions

existing at the end of each reporting period.

(3) Defined benefit liability

The present value of the defined benefit liability depends on a number of factors that are determined on an actuarial basis using

a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate.

Any changes in these assumptions will impact the carrying amount of the defined benefit liability. The Company determines

the appropriate discount rate at the end of each year. This is the interest rate that is used to determine the present value of

estimated future cash outflows expected to be required to settle the defined benefit liability. In determining the appropriate

discount rate, the Company considers the interest rates of high-quality corporate bonds that are denominated in the currency

in which the pension benefits will be paid, and that have terms to maturity approximating to the terms of the related pension

liability. Other key assumptions for defined benefit liability are based in part on current market conditions. Additional information

is disclosed in Note 20.

4. Cash and Cash EquivalentsCash and cash equivalents as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

March 31, 2013 March 31, 2012

Financial assets held for trading:

Debt Securities 59,364,703 270,619,429

Beneficiary certificates 230,012 273,340

Securities in foreign currency 158,472 784,490

Derivatives 683,008 356,540

Other Securities(ELS) 60,008,220 -

Financial assets designated at fair value through profit or loss:

Equity Securities 20,451,191 -

Total 140,895,606 272,033,799

March 31, 2013 March 31, 2012Par value Acquisition cost Book value Par value Acquisition cost Book value

Special bonds 60,000,000 59,359,178 59,364,703 273,000,000 270,635,227 270,619,429

March 31, 2013 March 31, 2012

Current deposits 1,420,977 672,141

Deposits on demand 21,699,835 61,824,260

Notes discounted 216,338,628 145,833,494

Other deposits foreign currencies 22,704,406 18,865,385

MMF 370,270,868 155,108,062

Other 86,054,387 21,136,913

Total 718,489,101 403,440,255

Financial Issues




(5) Details of financial assets at fair value through profit or loss as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

5.2 Available-for-sale financial assets

(1) Available-for-sale financial assets as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

(2) Equity securities in available-for-sale financial assets as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

Certain equity securities above that are not traded in an active market and their fair value cannot be reliably measured at cost.

For the year ended March 31, 2013, the Company recorded 7,230 million as impairment loss for the listed stocks of LG

Electronics Co., Ltd. and 19 other companies, and 3,648 million for the unlisted stocks of Hyundai Venture Investment Corp. due

to a significant or prolonged decline in the fair value of equity securities. In addition, the Company recorded 16,667 million as

impairment loss related to equities of TStone Fund II and three other investments due to a significant or prolonged decline in

their fair values.

(3) Debt securities in available-for-sale financial assets as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

As of March 31, 2013, special bonds amounting to 25,957 million are pledged as collateral to Industrial Bank of Korea for

currency swap contracts.

(4) Beneficiary certificates in available-for-sale financial assets as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

For the year ended March 31, 2013, the Company recorded 16,617 million as impairment loss related to beneficiary certificates

of Heungkuk high-class private placement No.2 and ten other beneficiary certificates due to a significant or prolonged decline in

the fair value.

(5) Securities in foreign currencies in available-for-sale financial assets as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

As of March 31, 2013, securities in foreign currency amounting to 38,221 million and 33,651 million are pledged as collateral

to ANZ Bank and Shinhan Bank, respectively, for the currency swap contracts. In addition, the securities of the Company’s

branches in the US amounting to 8,113 million and 14,120 million are also pledged to the Insurance Department of the U.S.

government in the State of California and four other states, as well as AIG, respectively, as collaterals for insurance contracts.

For the year ended March 31, 2013, the Company recorded 777 million as impairment loss related to MS Japan Core Property

Fund and three other securities due to a significant or prolonged decline in the fair value.


Financial assets designated at fair value through profit or loss: Equity Securities 20,118,000 20,451,191 - -


Equity securities 414,471,322 402,148,000 348,484,130 351,464,357

Debt securities 7,093,541,511 7,325,810,684 5,771,072,055 5,855,736,662

Beneficiary certificates 419,815,179 418,388,587 395,624,106 384,223,608

Securities in foreign currencies 529,398,497 467,963,965 417,184,146 354,578,182

Other securities 60,461,622 60,434,132 33,746,003 34,413,036

Total 8,517,688,131 8,674,745,368 6,966,110,440 6,980,415,845


Stocks in listed companies 249,863,486 239,671,150 220,683,001 210,778,376

Stocks in unlisted companies(*1) 72,985,992 89,943,071 67,385,992 83,828,974

Investments in partnerships(*2) 91,621,844 72,533,779 60,415,137 56,857,007

Total 414,471,322 402,148,000 348,484,130 351,464,357

March 31, 2013 March 31, 2012Par value Acquisition cost Book value Par value Acquisition cost Book value

Government and public bonds 262,337,790 234,164,623 250,209,277 312,337,790 275,177,118 287,349,993

Special bonds 2,602,000,000 2,646,480,574 2,732,934,737 2,201,230,000 2,220,303,804 2,256,829,507

Finance debentures 475,000,000 478,095,100 498,427,984 495,000,000 496,712,009 502,571,064

Corporate bonds 3,711,026,950 3,734,801,214 3,844,238,686 2,772,026,950 2,778,879,124 2,808,986,098

Total 7,050,364,740 7,093,541,511 7,325,810,684 5,780,594,740 5,771,072,055 5,855,736,662


Type of equity 249,550,840 243,528,588 280,435,856 267,902,692

Type of debt 170,264,339 174,859,999 115,188,250 116,320,916

Total 419,815,179 418,388,587 395,624,106 384,223,608


Stock 1,207,273 309,239 1,412,497 361,806

Bond 406,588,500 389,618,112 327,188,485 309,308,906

Beneficiary certificates - - 18,581,000 19,437,940

Others 121,602,724 78,036,614 70,002,164 25,469,530

Total 529,398,497 467,963,965 417,184,146 354,578,182

Financial Issues




5.3 Held-to-maturity investments

(1) Held-to-maturity investments as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

(2) Debt securities in held-to-maturity investments as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

As of March 31, 2013, government and public bonds amounting to 6,003 million and 15,171 million among the debt securities

above are pledged as collaterals to Woori Bank and Industrial Bank of Korea, respectively, for currency swap contracts.

(3) Securities in foreign currencies in held-to-maturity investments as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

As of March 31, 2013, overseas debt securities amounting to 334 million and 613 million are pledged as collaterals to the

Insurance Department of the U.S. government, and AIG and Lexington, respectively. In addition, overseas debt securities of

Japan branch amounting to 2,350 million are also pledged to the Bank of Japan as collaterals for insurance contracts.

(4) Maturities of held-to-maturity investments as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

(6) Other securities in available-for-sale financial assets as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

(7) Maturities of available-for-sale financial assets as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

Debt securities and bonds of securities in foreign currency are included in the above available-for-sale financial assets.

(8) Changes in unrealized gains and losses on valuation of available-for-sale financial assets for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

2) 2012

The Company changed the impairment recognition criteria for available-for-sale equity securities from a decrease in fair value

of the investments by more than 50% of cost or decrease below its cost for more than 12 months to a decrease in fair value of

the investments by more than 30% of its cost or decrease below its cost for more than six months. This change in estimates

is to reflect more precise economic facts through appropriate valuation of available-for-sale equity securities in the financial

statements. As a result of this change, impairment loss on available-for-sale securities is higher by 32,140 million as compared

to the amount under the previous criteria.


Mutual fund(*1) 29,461,622 29,422,321 31,746,003 31,833,225

Others 31,000,000 31,011,811 2,000,000 2,579,810

Total 60,461,622 60,434,132 33,746,003 34,413,035


Within 1 year 385,218,275 384,311,470 608,469,537 594,404,799

1 to 5 years 4,239,156,953 4,401,325,481 3,829,133,597 3,860,689,824

5 to 10 years 2,599,340,192 2,723,738,052 1,583,817,739 1,605,154,463

Over 10 years 231,885,976 206,053,793 166,835,327 150,065,759

Total 7,455,601,396 7,715,428,796 6,188,256,200 6,210,314,845

Beginning balance Reclassification Increasedue to valuation Currency translation Ending balance

Change in value of available-for-sale financial assets 108,732,030 (39,314,890) 155,650,618 (10,989) 225,056,769

Beginning balance Reclassification Increasedue to valuation Currency translation Ending balance

Change in value of available-for-sale financial assets 100,833,389 (32,660,546) 40,544,283 14,904 108,732,030

March 31, 2013 March 31, 2012Par value Book value Fair value Par value Book value Fair value

Debt securities 1,310,000,000 1,310,760,016 1,401,320,551 1,035,000,000 1,035,791,746 1,081,016,735

Securities in foreign currencies 15,097,431 14,494,600 15,380,200 17,108,528 16,744,688 17,860,830

Total 1,325,097,431 1,325,254,616 1,416,700,751 1,052,108,528 1,052,536,434 1,098,877,565


Government and public bonds 70,000,000 70,550,818 80,392,789 90,000,000 90,505,083 97,137,547

Special bonds 1,005,000,000 1,005,270,578 1,068,822,334 535,000,000 535,391,162 564,806,274

Finance debentures 150,000,000 150,000,000 157,611,591 320,000,000 320,000,000 326,441,920

Corporate bonds 85,000,000 84,938,620 94,493,837 90,000,000 89,895,501 92,630,994

Total 1,310,000,000 1,310,760,016 1,401,320,551 1,035,000,000 1,035,791,746 1,081,016,735


Overseas debt securities 15,097,431 14,494,600 15,380,200 17,108,528 16,744,688 17,860,830


Within 1 year 40,222,420 40,224,814 40,843,919 91,608,300 91,442,149 92,751,963

1 to 5 years 362,091,247 361,952,493 380,539,682 241,989,675 242,223,122 251,990,041

5 to 10 years 656,463,073 656,785,527 712,270,626 607,726,895 608,112,630 639,002,495

Over 10 years 266,320,691 266,291,782 283,046,524 110,783,658 110,758,533 115,133,066

Total 1,325,097,431 1,325,254,616 1,416,700,751 1,052,108,528 1,052,536,434 1,098,877,565

Financial Issues




5.4 Loans receivable

(1) Loans receivable as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

(2) Changes in allowance for loan losses for the years ended March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

1) 2013

2) 2012

(3) Interest income from impaired loans for the year ended March 31, 2013, is 1,655,617 thousand (2012: 1,035,865 thousand).

5.5 Other receivables

(1) Other receivables as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

2) 2012

(2) Restricted deposits as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

March 31, 2013 March 31, 2012

Policy loans 821,991,740 617,860,809

Loans secured by securities 2,000,000 -

Loans secured by real estate 2,312,927,693 1,990,687,669

Unsecured loans 277,847,934 318,783,129

Loans secured by third-party guarantee 48,333,502 52,379,850

Other loans 389,761,329 265,032,182

Sub-Total 3,852,862,198 3,244,743,639

Allowance for loan losses (15,311,240) (12,867,803)

Total 3,837,550,958 3,231,875,836

Fair value 3,868,923,046 3,234,682,884

Beginning balance Provision Written-offRecoveries from

written-offOther change Ending balance

Personal loan losses 4,787,275 1,111,074 (23,261) 48,961 (1,631,237) 4,292,812

Corporate loan losses 8,080,528 2,962,280 - - (24,380) 11,018,428

Total 12,867,803 4,073,354 (23,261) 48,961 (1,655,617) 15,311,240

Beginning balance Provision Written-offRecoveries from

written-offOther change Ending balance

Personal loan losses 3,930,755 1,650,808 (17,052) 98,262 (875,498) 4,787,275

Corporate loan losses 6,320,284 1,920,611 - - (160,367) 8,080,528

Total 10,251,039 3,571,419 (17,052) 98,262 (1,035,865) 12,867,803

Book value Fair value

Deposits 348,085,657 360,471,112

Insurance receivables 260,168,703 260,168,703

Other accounts receivable 68,082,175 68,082,175

Accrued income 111,429,280 111,429,280

Notes receivable 801,104 801,104

Dishonored bill 47,701 47,701

Leasehold deposits 38,163,106 37,448,129

Others 6,760,027 6,760,027

Sub-Total 833,537,753 845,208,231

Allowance for other receivables (7,395,162) (7,395,162)

Total 826,142,591 837,813,069

Book value Fair value

Deposits 380,146,887 411,975,403

Insurance receivables 259,867,320 259,867,320

Other accounts receivable 120,102,959 120,102,959

Accrued income 131,489,602 131,489,602

Notes receivable 477,037 477,037

Dishonored bill 47,701 47,701

Leasehold deposits 37,297,000 36,905,839

Others 6,485,350 6,485,349

Sub-Total 935,913,856 967,351,210

Allowance for other receivables (7,521,944) (7,521,944)

Total 928,391,912 959,829,266

March 31, 2013 March 31, 2012

Guarantee deposits for checking account 10,000 10,000

Pledged as collateral for L/C transaction 9,346,760 2,722,771

Regarding derivatives 33,363,000 -

Total 42,719,760 2,732,771

Financial Issues




(3) Changes in allowance for other receivables for the years ended March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

1) 2013

2) 2012

6. DerivativesAs of March 31, 2012, the Company has currency swap and currency forward contracts with Standard Chartered Bank and other

financial institutions to manage the exposure to changes in exchange rates and has option-linked stock price index for trading.

(1) Derivatives as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

2) 2012

(2) Gain (loss) on valuation of derivatives for the years ended March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

1) 2013

2) 2012

(3) Gain (loss) on valuation of cash flow hedging derivatives which are recognized as other comprehensive income as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

(4) Contract amounts of derivatives as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

Beginning balance

Provision Written-offRecoveries

from written-off receivables

Other changesEnding balance

Insurance receivables 6,701,511 (178,446) - - (14,913) 6,508,152

Other accounts receivable 619,947 261,932 - - - 881,879

Accrued income 16,071 2,191 - - - 18,262

Notes receivable 4,006 (1,620) - - - 2,386

Dishonored bill 47,701 - - - - 47,701

Others 5,926 57,638 - - - 63,564

Total 7,395,162 141,695 - - (14,913) 7,521,944

Beginning balance

Provision Written-offRecoveries

from written-off receivables

Other changesEnding balance

Insurance receivables 6,356,701 (699,449) - 1,040,618 3,641 6,701,511

Other accounts receivable 660,897 (40,950) - - - 619,947

Accrued income 12,137 3,934 - - - 16,071

Notes receivable 1,799 2,207 - - - 4,006

Dishonored bill 47,701 - - - - 47,701

Others 18,943 (13,017) - - - 5,926

Total 7,098,178 (747,275) - 1,040,618 3,641 7,395,162

Derivatives assets Derivatives liabilitiesNon-hedge accounting

instruments

Fair value hedging

instruments

Cash flow hedging

instrumentsTotal

Non-hedge accounting

instruments

Fair value hedging

instruments

Cash flow hedging

instrumentsTotal

Option 612,959 - - 612,959 - - - -

Swap 70,049 - 17,926,251 17,996,300 - 1,816,377 3,691,511 5,507,888

Total 683,008 - 17,926,251 18,609,259 - 1,816,377 3,691,511 5,507,888

Trading Fair value hedging instruments Cash flow hedging instrumentsGain on valuation Loss on valuation Gain on valuation Loss on valuation Gain on valuation Loss on valuation

Option - 487,375 - - - -

Swap - 1,924,475 3,418 258,978 909,583 5,611,859

Other - 519,890 - - - -

Total - 2,931,740 3,418 258,978 909,583 5,611,859

March 31, 2013 March 31, 2012Gain on valuation Loss on valuation Gain on valuation Loss on valuation

Currency derivation

Swap 1,901,373 2,937,917 1,233,525 8,420,554

Derivatives assets Derivatives liabilitiesNon-hedge accounting

instruments

Fair value hedging

instruments

Cash flow hedging

instrumentsTotal

Non-hedge accounting

instruments

Fair value hedging

instruments

Cash flow hedging

instrumentsTotal

Option 356,540 - - 356,540 - - - -

Swap - 3,418 10,174,025 10,177,443 2,116,534 258,978 3,375,844 5,751,356

Other - - - - 519,890 - - 519,890

Total 356,540 3,418 10,174,025 10,533,983 2,636,424 258,978 3,375,844 6,271,246

Trading Fair value hedging instruments Cash flow hedging instrumentsGain on valuation Loss on valuation Gain on valuation Loss on valuation Gain on valuation Loss on valuation

Option 4,727 275,368 - - - -

Swap 427,666 - - 1,816,377 12,710,848 3,641,113

Total 432,393 275,368 - 1,816,377 12,710,848 3,641,113

Non-hedge accounting instruments Fair value hedging instruments Cash flow hedging instruments

Option 34,166,648 - -

Swap 11,121,000 87,699,264 617,549,130

Total 45,287,648 87,699,264 617,549,130

Financial Issues




2) 2012

(5) Changes in gain and loss on valuation of derivatives recognized as other comprehensive income for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

2) 2012

(6) The ineffective portion recognized in the profit or loss that arises from cash flow hedges for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

(*) Recognized as foreign exchange gain or loss on statements of comprehensive income.

7. Fair Value Measurement of Financial InstrumentsThe table below analyzes financial instruments carried at fair value, by valuation method. The different levels have been defined

as follows:

· Quoted prices in active markets for identical assets or liabilities (Level 1).

· Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

(Level 2).

· Inputs for the asset or liability that are not based on observable market data (Level 3).

The fair value of financial instruments traded in active markets is based on quoted market prices at the statement of financial

position date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer,

broker, an entity within the same industry, pricing service, or regulatory agency, and those prices represent actual and regularly

occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Company

is the current bid price. These instruments are included in Level 1. Instruments included in Level 1 consist primarily of KOSPI

and KOSDAQ equity investments classified as trading securities or available for sale.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is

determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is

available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are

observable, the instrument is included in Level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

Specific valuation techniques used to value financial instruments include:

- Securities

Securities are measured at fair value using a quoted market price in an active market. If a quoted market price is not available,

they are measured by using a price quoted by a third party, such as a pricing service or broker. Considering the characteristics of

securities, one or more of the following valuation techniques are used in fair value measurement by such third party: Discounted

Cash Flow (“DCF”) model, Imputed Market Value (“IMV”) model, Free Cash Flow to Equity (“FCFE”) model, dividend discount

model, risk adjusted discounted rate model and net asset valuation.

- Loan receivables

Discounted Cash Flow Model is used to determine the fair value of loans. Fair value is determined by discounting the expected

cash flow, which are contractual cash flows adjusted by prepayment rate, at appropriate discount rate. For those loans with

residual maturities of less than three months as of the reporting date and the ones with interest rate reset period of less than

three months, carrying amount is regarded as fair value.

- Derivatives

For exchange traded derivatives, quoted price in an active market is used to determine fair value and for OTC derivatives, fair

value is determined by independent third-party pricing services. Pricing services use internally developed valuation models that

are widely used by market participants to determine fair values of plain vanilla OTC derivatives including options, interest rate

swaps, and currency swaps, based on observable market parameters. However, some complex financial instruments are valued

using valuation results from independent third-party pricing services.

(1) The following tables present the Company’s financial assets and financial liabilities that are measured at fair value as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

Beginning balances Increase(decrease) Ending balances

Gain on valuation of financial derivatives 362,545 870,980 1,233,525

Tax effect (90,961) (207,551) (298,512)

Total 271,584 663,429 935,013

Loss on valuation of financial derivatives (10,176,341) 1,755,787 (8,420,554)

Tax effect 2,238,795 (201,021) 2,037,774

Total (7,937,546) 1,554,766 (6,382,780)

2013 2012

Currency derivation(*) 1,948,868 28,586

Beginning balances Increase(decrease) Ending balances

Gain on valuation of financial derivatives 1,233,525 667,848 1,901,373

Tax effect (298,513) (161,620) (460,133)

Total 935,012 506,228 1,441,240

Loss on valuation of financial derivatives (8,420,554) 5,482,637 (2,937,917)

Tax effect 2,037,774 (1,326,798) 710,976

Total (6,382,780) 4,155,839 (2,226,941)

Level 1 Level 2 Level 3 Total

Financial assets at fair value through profit or loss:

Financial assets designated at fair value through profit or loss - - 20,451,191 20,451,191

Financial assets held for trading 49,836,233 69,925,174 - 119,761,407

Derivatives assets held for trading - 683,008 - 683,008

Sub-Total 49,836,233 70,608,182 20,451,191 140,895,606

Available-for-sale financial assets 430,661,379 7,759,549,694 376,020,963 8,566,232,036

Investment in subsidiaries and associates - - 17,369,634 17,369,634

Derivatives assets held for hedging - 17,926,251 - 17,926,251

Derivatives liabilities for hedging - 5,507,888 - 5,507,888

Non-hedge accounting instruments Fair value hedging instruments Cash flow hedging instruments

Option 30,739,892 - -

Swap 57,445,505 29,781,468 273,637,145

Other 19,342,600 - -

Total 107,527,997 29,781,468 273,637,145

Financial Issues




2) 2012

(2) The following tables present the changes in Level 3 instruments: (in thousands of Korean won)

1) 2013

2) 2012

(3) Details of financial assets at fair value measured at cost as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

(*1) As of March 31, 2013, unlisted stocks consist of Pyeongtaek Energy Service Co., Ltd. amounting to 15,000 million (2012: 15,000 million), KORAIL Airport Railroad amounting to 3,543 million (2012: 3,543 million), Yongin Clean Co., Ltd. amounting to 1,966 million (2012: 1,966 million) and other unlisted stocks. These equity securities are measured at cost because it is practically difficult to quantify the intrinsic values of the equity securities issued by unlisted public and non-profit entities. In addition, probabilities and range of estimated cash flows of the unlisted equity securities cannot be reasonably assessed. Therefore, these equity securities are measured at cost. The Company has no plan to sell these instruments in a short period of time, and is expected to measure their fair value upon further progress of the invested companies’ projects.

(*2) Equity investments consist of Shinhan-Stonebridge Petro Private Equity Fund amounting to 30,000 million, Macquarie Korea Opportunities Fund amounting to 22,411 million (2012: 22,411 million), IMM Investment 3rd Private Equity Inc. amounting to 4,000 million (2012: 4,000 million) and other share capitals. These equity investments are measured at cost since the variability of the estimated cash flows of each investment held by the investee companies is significant and the probabilities of the various estimates cannot be reasonably assessed.

(*3) As of March 31, 2013, mutual funds consist of BALHAE Infrastructure Fund amounting to 8,121 million (2012: 8,373 million) and Korea BTL Fund I amounting to 15,729 million (2012: 16,954 million). Assets in these mutual funds are loans receivable and unlisted stocks related to social overhead capital and are measured at costs since the variability of the estimated cash flows of each asset is significant and the probabilities of the various estimates cannot be reasonably assessed.

8. Investments in subsidiaries and associates(1) Details of investments in subsidiaries and associates as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

(2) Details of investments in subsidiaries as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

(*) For the year ended March 31, 2013, the Company recognized 8,152 million as impairment loss of investments in subsidiaries, whose net asset values declined significantly and are not expected to recover.

(3) Details of investments in associates and other investment securities as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

Beginning balance

PurchaseSales&

Settlements

Gain and losses of valuation

Transfers into Level3

Ending balance

Financial assets designated at fair value through profit or loss - 20,118,000 - 333,191 - 20,451,191

Available-for-sale financial assets 299,691,937 75,997,199 (27,554,580) 2,725,787 25,160,620 376,020,963

Investment in subsidiaries and associates - 17,473,000 - (103,366) - 17,369,634

Beginning balance

PurchaseSales&

Settlements

Gain and losses of valuation

Transfers into Level3

Ending balance

Available-for-sale financial assets 214,777,375 38,442,391 (44,878,555) 12,590,380 78,760,346 299,691,937

March 31, 2013 March 31, 2012

Unlisted stocks(*1) 20,614,880 20,614,880

Other equity investments(*2) 64,048,473 41,896,940

Mutual fund(*3) 23,849,979 25,326,997

Total 108,513,332 87,838,817

March 31, 2013 March 31, 2012

Investments in subsidiaries 216,396,878 224,549,379

Investments in associates 18,985,072 19,885,072

Other investment securities 17,369,634 -

Total 252,751,584 244,434,451

SubsidiariesMarch 31, 2013

March 31, 2012Percentage of ownership(%) Book value

Hyundai C&R Co., Ltd. 100 25,228,989 25,228,989

Hyundai Hicar Claims Service Co., Ltd. 100 29,092,480 29,092,480

Hyundai Investment Co., Ltd. 100 35,496,087 35,496,087

Hyundai Hilife Claims Service Co., Ltd. 100 7,752,145 7,752,145

Hyundai Hicar Direct Co., Ltd.(*) 100 49,299,315 57,451,816

Hyundai U.K. Underwriting Ltd. 100 1,959,710 1,959,710

Hyundai Investment (America) Ltd. 100 28,246,983 28,246,983

Hyundai Insurance (China) Company Limited 100 39,321,169 39,321,169

Total 216,396,878 224,549,379

SharesPercentage of ownership(%)

Acquisition cost Book value

(1) Investment in associates

KOCREF CR-REIT 6(*) 91,000 7.66 9,100,000 9,100,000

KOCREF CR-REIT 11(*) 500,000 10.00 9,500,000 9,340,094

Cosmos Risk Solutions Asia Pte. Ltd. 490,000 49.00 544,978 544,978

Sub-Total 19,144,978 18,985,072

(2) Other investment securities

Hyundai PE-REIT 6 - 97.85 11,400,000 11,153,190

Eujin Dream Squar PE-REIT 3 - 97.95 6,073,000 6,216,444

Sub-Total 17,473,000 17,369,634

Total 36,617,978 36,354,706

Level 1 Level 2 Level 3 Total

Financial assets at fair value through profit or loss:

Financial assets held for trading 179,588,130 92,089,129 - 271,677,259

Derivatives assets held for trading - 356,540 - 356,540

Sub-Total 179,588,130 92,445,669 - 272,033,799

Available-for-sale financial assets 475,753,801 6,117,131,290 299,691,937 6,892,577,028

Investment in subsidiaries and associates- - 10,177,443 - 10,177,443

3Derivatives assets held for hedging - 2,636,425 - 2,636,425

Derivatives liabilities for hedging - 3,634,822 - 3,634,822

Financial Issues




2) 2012

9. Property and Equipment (1) Changes in property and equipment for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

2) 2012

(*) KOCREF CR-REIT 6 and KOCREF CR-REIT 11, over which the Company exercises a significant influence, are classified as investment in associates even though the percentage of ownership is less than 20%.

(4) Changes in investments in subsidiaries and associates for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

2) 2012

(5) Details of financial information of subsidiaries, associates and other investment securities as of, and for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

Beginning balance Acquisition Valuation Impairment Disposal Ending balance

Investments in subsidiaries 224,549,379 - - (8,152,501) - 216,396,878

Investments in associates 19,885,072 9,100,000 - - (10,000,000) 18,985,072

Other investment securities - 17,473,000 (103,366) - - 17,369,634

Total 244,434,451 26,573,000 (103,366) (8,152,501) (10,000,000) 252,751,584

Beginning balance Acquisition Valuation Disposal Ending balance

Investments in subsidiaries 224,549,379 - - - 224,549,379

Investments in associates 19,885,072 - - - 19,885,072

Other investment securities 21,632,320 - - (21,632,320) -

Total 266,066,771 - - (21,632,320) 244,434,451

Total assets Total liabilities Revenues Net income (loss)

(1) Subsidiaries

Hyundai C&R Co., Ltd. 51,624,419 14,497,580 128,374,227 4,601,345

Hyundai Hicar Claims Service Co., Ltd. 52,925,871 28,644,609 72,752,727 (1,792,510)

Hyundai Investment Co., Ltd. 37,906,011 804,719 7,150,131 679,085

Hyundai Hilife Claims Service Co., Ltd. 25,625,357 10,004,879 64,334,044 4,009,134

Hyundai Hicar Direct Co., Ltd. 418,375,582 369,076,267 509,026,695 (11,291,807)

Hyundai HDS Co., Ltd. 40,176,744 26,536,027 100,493,026 1,481,466

Hicapital Co., Ltd. 156,641,899 114,270,843 45,217,894 4,867,252

Hyundai U.K. Underwriting Ltd. 2,048,770 - 23,563 12,748

Hyundai Investment (America) Ltd. 29,763,689 828,945 3,006,929 376,972

Hyundai Insurance (China) Company Limited 130,275,701 90,645,957 81,268,460 (224,754)

Total assets Total liabilities Revenues Net income (loss)

(1) Subsidiaries

Hyundai C&R Co., Ltd. 50,262,147 17,736,653 113,853,117 3,985,665

Hyundai Hicar Claims Service Co., Ltd. 52,555,170 26,481,398 69,492,537 414,582

Hyundai Investment Co., Ltd. 36,801,797 416,562 6,812,628 145,747

Hyundai Hilife Claims Service Co., Ltd. 21,017,548 9,406,204 58,787,438 2,299,874

Hyundai Hicar Direct Co., Ltd. 414,126,968 353,831,345 481,549,170 2,354,928

Hyundai HDS Co., Ltd. 40,864,704 353,831,345 89,632,955 452,651

Hicapital Co., Ltd. 168,362,049 130,858,244 48,645,643 6,219,035

Hyundai U.K. Underwriting Ltd. 2,652,879 465,267 18,449 77,688

Hyundai Investment (America) Ltd. 29,758,341 763,900 2,993,294 381,792

Hyundai Insurance (China) Company Limited 89,759,911 49,571,488 49,967,842 (1,535,854)

(2) Associates

KOCREF CR-REIT 6 280,868,905 163,100,499 25,500,717 9,232,207

KOCREF CR-REIT 11 218,707,354 129,732,194 23,928,410 9,647,460

Cosmos Risk Solutions Asia Pte. Ltd. 2,599,813 1,556,646 1,010,913 83,640

Land Buildings and structures

Furnitureand fixtures

Overseas real estate

Vehicles Financial lease assets

Construction in progress

Total

Beginning balance 222,714,533 205,792,571 38,409,279 683,856 1,528,381 1 13,331,199 482,459,820

Acquisition 4,865,304 17,205,120 15,613,885 - 828,402 - 64,510,813 103,023,524

Disposal - - (178,874) - (149,643) - - (328,517)

Transfer from investment property(transfer to investment property) 6,512,620 (38,360,065) - - - - 8,575,306 (23,272,139)

Depreciation - (7,518,542) (16,164,861) (7,014) (555,033) - - (24,245,450)

Currency translation differences - - (3,336) - (8,043) - - (11,379)

Other - 69,016,358 - - - - (69,016,358) -

Ending balance 234,092,457 246,135,442 37,676,093 676,842 1,644,064 1 17,400,960 537,625,859

SharesPercentage of ownership(%)

Acquisition cost Book value

(1) Investment in associates

KOCREF CR-REIT 6(*) 2,000,000 7.66 10,000,000 10,000,000

KOCREF CR-REIT 11(*) 500,000 10.00 9,500,000 9,340,094

Cosmos Risk Solutions Asia Pte. Ltd. 490,000 49.00 544,978 544,978

Sub-Total 20,044,978 19,885,072

Total 20,044,978 19,885,072

(2) Associates

KOCREF CR-REIT 6 221,088,792 157,010,300 19,964,074 15,496,506

KOCREF CR-REIT 11 216,649,591 129,889,628 24,646,630 19,994,853

Cosmos Risk Solutions Asia Pte. Ltd. 1,800,721 719,037 833,773 62,245

(3) Others

Hyundai PE-REIT 6 17,915,181 6,368,442 114,804 (103,261)

Eujin Dream Square PE-REIT 3 6,354,789 1,965 550,085 543,358

Financial Issues




(2) Rental income from investment property for the year ended March 31, 2013, amounts to 28,389,209 thousand (2012: 28,306,130 thousand).

(3) As of March 31, 2013, fair value of the investment property amounts to \472,999 million (2012: \494,343 million). The investment property is valued by qualified independent appraisers with experience in valuing similar properties in the same location.

11. Intangible AssetsChanges in intangible assets for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won).

1) 2013

2) 2012

12. Reinsurance AssetsChanges in reinsurance assets for the years ended March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

1) 2013

2) 2012

Property and equipment insured as of March 31, 2013, are as follows: (in thousands of Korean won)

10. Investment Property(1) Changes in investment property for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

2) 2012

Type Assets insured Covered amount Insurance company

Property All Risks Insurance

Buildings 573,299,980 Samsung Fire &Marine

InsuranceCo., Ltd.Furniture and Fixtures 77,715,937

Land Buildings and structures Construction in progress Total

Beginning balance 206,382,895 211,730,175 29,119,000 447,232,070

Acquisition - - - -

Disposal - - - -

Transfer from property and equipment(transfer to property and equipment) (6,512,620) 38,360,065 8,575,306) 23,272,139

Depreciation - (7,344,667) - (7,344,667)

Other - - - -

Ending balance 199,870,275 242,745,573 20,543,694 463,159,542

Land Buildings and structures Construction in progress Total


Acquisition - 153,977 - 153,977

Disposal (890,528) (122,497) - (1,013,025)

Transfer from property and equipment(transfer to property and equipment) (742,250) (3,938,800) 25,735,550 21,054,500

Depreciation - (7,051,342) - (7,051,342)

Other - 372,179 (372,179) -

Ending balance 206,382,895 211,730,175 29,119,000 447,232,070

Development costs Memberships Other intangibles Total


Acquisition 6,049,090 1,758,000 4,454,556 12,261,646

Reversal of impairment(impairment) - (326,800) - (326,800)

Amortization (13,065,576) - (7,115,198) (20,180,774)

Currency translation differences - 3,542 - 3,542

Ending balance 34,280,725 21,329,115 20,506,456 76,116,296

Development costs Memberships Other intangibles Total


Acquisition 5,565,645 955,000 4,317,914 10,838,559

Disposal - (358,000) - (358,000)

Reversal of impairment(impairment) - (1,449,917) - (1,449,917)

Amortization (13,083,403) - (7,775,047) (20,858,450)

Currency translation differences (39,117) (8,755) (5,386) (53,258)

Ending balance 26,723,850 20,467,443 17,043,938 64,235,231

Land Buildings and structures

Furnitureand fixtures

Overseas real estate

Vehicles Financial lease assets

Construction in progress

Total

Beginning balance 222,578,448 208,452,264 47,847,483 690,871 1,371,054 1 1,544,052 482,484,173

Acquisition - 166,747 6,376,817 - 673,668 - 37,766,338 44,983,570

Disposal (606,165) (82,965) (16,174) - (57,212) - - (762,516)

Transfer from investment property(transfer to investment property) 742,250 3,938,800 - - - - (25,735,550) (21,054,500)

Depreciation - (6,925,916) (15,804,197) (7,015) (462,356) - - (23,199,484)

Currency translation differences - - 5,350 - 3,227 - - 8,577

Other - 243,641 - - - - (243,641) -

Ending balance 222,714,533 205,792,571 38,409,279 683,856 1,528,381 1 13,331,199 482,459,820

Commercial Automobile Long term Annuities Total

Beginning balance 726,418,538 15,950,333 50,711,652 207,492 793,288,015

Unearned reinsurance premium ceded 5,465,167 (6,442,160) - - (976,993)

Reserve for reinsurance payment ceded 58,680,949 (697,141) 11,579,146 111,081 69,674,035

Impairment losses on reinsurance assets (9,976) - - - (9,976)

Overseas insurance (84,049,969) - - - (84,049,969)

Ending balance 706,504,709 8,811,032 62,290,798 318,573 777,925,112

Financial Issues




2) 2012

13. Compensation ReceivablesChanges in compensation receivables for the years ended March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

1) 2013

2) 2012

14. Deferred Acquisition CostsChanges in deferred acquisition costs for the years ended March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

1) 2013

2) 2012

15. Other AssetsDetails of other assets as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

16. Insurance liabilities(1) Details of insurance liabilities as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

1) 2013

2) 2012

(2) Changes in premium reserves for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

Fire Marine Automobile Guarantee Long term Other Total

Beginning balance 321,060 1,983,045 23,571,532 142,852 420,807 341,060 26,780,356

Increase (decrease) (93,521) 472,469 1,086,401 (3,232) 275,940 155,645 1,893,702

Ending balance 227,539 2,455,514 24,657,933 139,620 696,747 496,705 28,674,058


Beginning balance 567,410,740 16,355,834 41,165,296 265,371 625,197,241

Unearned reinsurance premium ceded 19,168,551 2,025,193 - - 21,193,744

Reserve for reinsurance payment ceded 33,043,008 (2,430,694) 9,546,356 (57,879) 40,100,791

Overseas insurance 106,796,239 - - - 106,796,239

Ending balance 726,418,538 15,950,333 50,711,652 207,492 793,288,015

Fire Marine Automobile Guarantee Long term Other Total

Beginning balance 338,882 2,116,881 25,040,493 143,064 311,044 528,145 28,478,509

Increase (decrease) (17,822) (133,836) (1,468,961) (212) 109,763 (187,085) (1,698,153)

Ending balance 321,060 1,983,045 23,571,532 142,852 420,807 341,060 26,780,356

Long term without dividends Annuities Asset related Total

Beginning balance 1,652,172,004 180,242,331 766,709 1,833,181,044

Deferred 965,499,754 68,123,134 5,809 1,033,628,697

Amortization (792,715,387) (65,042,025) (454,916) (858,212,328)

Ending balance 1,824,956,371 183,323,440 317,602 2,008,597,413

Long term without dividends Annuities Asset related Total

Beginning balance 1,400,719,603 120,128,966 1,957,203 1,522,805,772

Deferred 814,552,945 111,568,940 14,768 926,136,653

Amortization (563,100,544) (51,455,575) (1,205,262) (615,761,381)

Ending balance 1,652,172,004 180,242,331 766,709 1,833,181,044

March 31, 2013 March 31, 2012

Prepaid expenses 7,586,771 7,172,594

Advance payments 5,213,296 5,681,921

Prepaid value added tax 220,309 152,675

Total 13,020,376 13,007,190


Premium reserves - - 10,939,199,188 2,607,997,303 13,547,196,491

Reserves for outstanding claims 595,685,163 388,508,206 522,633,045 50,569,113 1,557,395,527

Unearned premium reserves 465,673,007 921,678,637 52,511,534 100,855 1,439,964,033

Policyholders’ dividend reserves - - - 54,744,262 54,744,262

Policyholders’ profit dividend reserves - - 12,939 1,590,752 1,603,691

Reserves for loss compensation on dividend - - - - -

Total 1,061,358,170 1,310,186,843 11,514,356,706 2,715,002,285 16,600,904,004


Premium reserves - - 8,903,262,298 2,049,402,023 10,952,664,321

Reserves for outstanding claims 605,628,856 377,259,356 439,319,821 34,433,652 1,456,641,685

Unearned premium reserves 439,596,070 950,491,242 36,233,799 109,379 1,426,430,490

Policyholders’ dividend reserves - - 997,928 52,410,214 53,408,142

Policyholders’ profit dividend reserves - - 11,904 3,875,146 3,887,050

Reserves for loss compensation on dividend - - - 1,927,230 1,927,230

Total 1,045,224,926 1,327,750,598 9,379,825,750 2,142,157,644 13,894,958,918

Long term Annuities Total

Beginning balance 8,903,262,298 2,049,402,023 10,952,664,321

Increase 2,035,936,890 558,595,280 2,594,532,170

Ending balance 10,939,199,188 2,607,997,303 13,547,196,491

Financial Issues




2) 2012

(3) Changes in reserves for outstanding claims for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

2) 2012

(4) Changes in unearned premium reserves for the years ended March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

1) 2013

2) 2012

(5) Changes in policyholders’ dividend reserves for the years ended March 31, 2013 and 2012, are as follows:(in thousands of Korean won)


Beginning balance 439,596,070 950,491,242 36,233,799 109,379 1,426,430,490

Increase 26,076,937 (28,812,605) 16,277,735 (8,524) 13,533,543

Ending balance 465,673,007 921,678,637 52,511,534 100,855 1,439,964,033


Beginning balance 6,757,552,825 1,573,611,085 8,331,163,910

Increase 2,145,709,473 475,790,938 2,621,500,411

Ending balance 8,903,262,298 2,049,402,023 10,952,664,321


Beginning balance 605,628,856 377,259,356 439,319,821 34,433,652 1,456,641,685

Increase (9,943,693) 11,248,850 83,313,224 16,135,461 100,753,842

Ending balance 595,685,163 388,508,206 522,633,045 50,569,113 1,557,395,527


Beginning balance 442,196,977 352,967,710 372,756,458 22,981,891 1,190,903,036

Increase 163,431,879 24,291,646 66,563,363 11,451,761 265,738,649

Ending balance 605,628,856 377,259,356 439,319,821 34,433,652 1,456,641,685


Beginning balance 391,725,110 924,352,305 24,884,257 74,399 1,341,036,071

Increase 47,870,960 26,138,937 11,349,542 34,980 85,394,419

Ending balance 439,596,070 950,491,242 36,233,799 109,379 1,426,430,490

1) 2013

2) 2012

(6) Changes in policyholders’ profit dividend reserves for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

2) 2012

(7) Changes in reserves for loss compensation on dividend for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

2) 2012


Beginning balance 997,928 52,410,214 53,408,142

Increase (997,928) 2,334,048 1,336,120

Ending balance - 54,744,262 54,744,262


Beginning balance 2,303,281 49,427,718 51,730,999

Increase (1,305,353) 2,982,496 1,677,143

Ending balance 997,928 52,410,214 53,408,142



Increase 1,035 (2,284,394) (2,283,359)

Ending balance 12,939 1,590,752 1,603,691



Increase (33,671) (2,881,173) (2,914,844)

Ending balance 11,904 3,875,146 3,887,050

Annuities

Beginning balance 1,927,230

Increase (1,927,230)

Ending balance -

Annuities

Beginning balance 1,811,371

Increase 115,859

Ending balance 1,927,230

Financial Issues




(8) Details of liability adequacy test (LAT) for insurance liabilities as of March 31, 2013, are as follows:(in thousands of Korean won)

As a result of LAT for premium reserves as of March 31, 2013, there is no premium deficiency.

Summary of experience rate and basis for liability adequacy test are as follows:

As a result of LAT for reserves for outstanding claims and unearned premium reserves, there is no premium deficiency.

17. Insurance Receivables and Insurance Payables(1) Details of insurance receivables as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

(2) Details of insurance payables as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

March 31, 2013

Long term withoutdividends Annuities Asset related2013

LAT estimations 8,789,341,157 2,268,666,101 51,316,909

LAT requirements 5,175,298,380 2,865,414,253 49,660,188

Deficiency recognized in profit or loss - - -

Basis

Discount rate Weighted-average yield from asset management based on the past performance and future expectations.

Expense ratio The ratio of expense based on historical data from April 1, 2011 to March 31, 2012.

Payment ratio The ratio of insurance claims per risks premium on insurance contract groups from April 1, 2007 to March 31, 2012

Maintenance ratio The ratio based on historical data from April 1, 2007 to March 31, 2012

March 31, 2013 March 31, 2012

Premium receivables 23,505,293 42,550,102

Agency receivables 25,040,990 1,239,901

Coinsurance receivables 11,321,106 10,614,000

Receivables related to agency business 28,555,053 31,062,922

Reinsurance receivables 138,022,593 147,576,161

Foreign reinsurance receivables 30,739,803 21,907,991

Deposits on assumed reinsurance treaties 2,682,482 5,217,626

Total 259,867,320 260,168,703

March 31, 2013 March 31, 2012

Claims payable 15,382,561 13,863,022

Due to agents 95,803,825 96,827,664

Premiums refund payable 17,747,609 9,263,575

Payables related to agency business 24,817,042 31,531,002

Reinsurance payable 164,396,964 155,540,214

Foreign reinsurance payable 37,618,457 32,838,404

Deposits on ceded reinsurance treaties 35,209,887 28,847,311

Total 390,976,345 368,711,192

18. Financial LiabilitiesDetails of financial liabilities as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

19. Provisions for Restoration CostsChanges in provisions for restoration costs for the years ended March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

The Company recognizes provisions for restoration based on the expenditures expected to be paid for the restoration of the lease

properties. The expected expenditures are estimated based on lease period and historical data.

Assumptions used in calculation of provisions for restoration costs above are as follows:

* Expected costs of restoration: 1,691,275 thousand

* Historical average inflation rate: 3.05%

* Discount rate based on credit risk: 3.70%

March 31, 2013 March 31, 2012Book value Fair value Book value Fair value

(1) Other Financial liabilities measured at amortized cost

Insurance payables 390,976,345 390,976,345 368,711,193 368,711,192

Accounts payable 21,766,954 21,766,954 9,945,396 9,945,396

Leasehold deposits 43,544,529 43,058,396 41,104,793 40,084,467

Sub-Total 456,287,828 455,801,695 419,761,382 418,741,055

(2) Financial liabilities at fair value through profit or loss

Derivative financial liabilities - - 2,636,425 2,636,425

(3) Derivatives held for hedging 5,507,888 5,507,888 3,634,822 3,634,822

(4) Other financial liabilities

Investment contracts liabilities 71,188,488 71,188,489 71,752,904 71,752,904

2013 2012

Beginning balance 1,544,993 1,452,452

Provision 168,666 239,094

Decrease (70,621) (48,823)

Reversal (43,770) (43,080)

Effects of lapse of time period and changes in foreign exchange rate (19,117) (54,650)

Ending balance 1,580,151 1,544,993

Financial Issues




(5) Principal actuarial assumptions as of March 31, 2013 and 2012, are as follows:

(6) Adjustments for the differences between initial assumptions and actual figures as of March 31, 2013, 2012 and 2011, and April 1, 2010, are as follows: (in thousands of Korean won)

21. Other LiabilitiesOther liabilities as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

22. Equity(1) Details of capital stock as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won, except per share amount)

March 31, 2013 March 31, 2012

Discount rate 3.12% 4.23%

Expected return on plan assets 4.63% 4.46%

Future salary increases 7.36% 7.91%

20. Retirement Benefit Obligations(1) The amounts of defined benefit obligations recognized in the statements of financial position are determined as follows: (in thousands of Korean won)

(2) Changes in the carrying amount of defined benefit obligations for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

(3) The movement in the fair value of plan assets for the years ended March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

Actual return of plan assets was 5,044 million for the year ended March 31, 2013 (2012: 3,488 million).

(4) The amounts recognized on the statement of comprehensive income for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

2013 2012


Current service cost 23,204,039 19,760,378

Interest expense 6,906,746 6,206,627

Acturial losses 30,866,093 14,072,772

Benefits paid (5,114,549) (2,926,162)

Currency translation differences (171,180) 37,400

Ending balance 202,271,114 146,579,965

2013 2012


Expected return on plan assets 4,497,743 3,606,746

Contributions of participants 546,112 (118,320)

Benefits paid 49,800,000 23,499,393

Acturial gains (losses) (4,219,265) (1,934,562)

Ending balance 152,860,763 102,236,173

2013 2012

Current service cost 23,204,039 19,760,378

Interest expenses 6,906,746 6,206,627

Expected return on plan assets (4,497,743) (3,606,746)

Acturial losses 30,319,981 14,191,092

Total 55,933,023 36,551,351

March 31, 2013 March 31, 2012 March 31, 2011 April 1, 2010

Present value of defined benefit liability 202,271,114 146,579,965 109,428,950 211,225,662

Fair value of plan assets (152,860,763) (102,236,173) (77,182,916) (125,497,020)

Deficit(surplus) of the funded plans 49,410,351 44,343,792 32,246,034 85,728,642

Defined benefit obligations adjustments 30,866,093 14,072,772 13,995,656 -

Plan assets adjustments 546,112 (118,320) (45,522) -

March 31, 2013 March 31, 2012

Present value of defined benefit obligations 202,271,114 146,579,965

Fair value of plan assets (152,860,763) (102,236,173)

Net defined benefit obligations 49,410,351 44,343,792

March 31, 2013 March 31, 2012

Accrued expenses 156,323,716 152,416,481

Advances received 11,453,917 8,114,857

Advance premiums received 4,845,494 6,086,974

Unearned income 777,272 716,264

Withholdings 34,177,040 35,193,484

Other 63,245,495 45,389,208

Total 270,822,934 247,917,268

March 31, 2013 March 31, 2012

Authorized shares 200,000,000 200,000,000

Issued common shares 89,400,000 89,400,000

Par value per share (in Korean won) 500 500

Capital stock 44,700,000 44,700,000

Financial Issues




(5-1) Contingency Reserves

1) The details of the contingency reserves as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

2) The adjustments to the contingency reserves as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

(5-2) Reserves for Credit Losses

1) The details of reserves for credit losses as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

2) The adjustments to the regulatory reserves for credit losses as of March 31, 2013 and 2012, are as follows:


(6) The appropriations of retained earnings for the years ended March 31, 2013 and 2012, are as follows:Dates of appropriation : June 7, 2013 for the year ended March 31, 2013 (2012: June 7, 2012).(in thousands of Korean won)

(2) Capital surplus as of March 31, 2013 and 2012, consists of: (in thousands of Korean won)

(3) Capital adjustment as of March 31, 2013 and 2012, is as follows: (in thousands of Korean won)

(4) Accumulated other comprehensive income and expense as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

(5) Retained earnings as of March 31, 2013 and 2012, consist of: (in thousands of Korean won)

(*) Limited dividends.

March 31, 2013 March 31, 2012

Capital in excess of par value 84,203,835 84,203,835

Revaluation reserve 22,754,518 22,754,518

Others 7,264,492 7,264,492

Total 114,222,845 114,222,845

March 31, 2013 March 31, 2012

Treasury stock (20,044,215) (20,044,215)

March 31, 2013 March 31, 2012

Gain on valuation of available-for-sale financial assets 232,234,074 123,692,603

Loss on valuation of available-for-sale financial assets (7,177,305) (14,960,573)

Gain on valuation of investments in subsidiaries and associates 108,731 -

Loss on valuation of investments in subsidiaries and associates (187,082) -

Currency translation differences (2,329,082) 1,306,187

Gain on valuation of cash flow hedging instruments 1,441,240 935,012

Loss on valuation of cash flow hedging instruments (2,226,941) (6,382,780)

Other comprehensive income in special accounts 19,197,982 3,602,834

Revaluation surplus 142,053,767 142,053,767

Total 383,115,384 250,247,050

March 31, 2013 March 31, 2012

Legal reserves(*) 22,350,000 22,350,000

Business rationalization reserves 188,152 188,152

Voluntary reserves 750,000,000 575,000,000

Contingency reserves(*) 451,708,012 -

Reserves for credit losses(*) 19,309,496 -

Revaluation reserves(*) 21,919,884 -

Retained earnings before appropriation 314,453,983 757,569,739

Total 1,579,929,527 1,355,107,891

2013 2012

Amounts estimated to be appropriated 49,698,066 451,708,012

Ending balance 501,406,078 451,708,012

2013 2012

Provision of contingency reserves 49,698,066 47,278,292

Adjusted profit after provision of contingency reserves 283,683,145 345,477,402

2013 2012

Amounts estimated to be appropriated 13,297,441 19,309,496

Ending balance 32,606,937 19,309,496

2013 2012

Provision of regulatory reserve for credit losses 13,297,441 3,428,886

Adjusted profit after provision of regulatory reserve for credit losses 320,083,770 389,326,808

2013 2012

Retained earnings before appropriations

1. Unappropriated retained earnings (undisposed deficit) carried over from prior year (18,927,229) 82,854,349

2. Cumulative effect on correction of accounting process - (18,040,305)

3. Net income 333,381,211 392,755,694

314,453,982 757,569,738

Transfers such as discretionary reserves

1. Asset revaluation reserves 718,526 -

Appropriation of retained earnings 718,526

1. Contingency reserves 49,698,066 451,708,012

2. Reserves for credit losses 13,297,441 19,309,496

3. Revaluation reserve - 21,919,884

4. Voluntary reserves 160,000,000 175,000,000

Dividends (ratio) for share common stock:

￦1,050 (210%) in 2013

￦1,350 (270%) in 2012 84,435,225 108,559,575

307,430,732 776,496,967

Unappropriated retained earnings (undisposed deficit) carried forward to the subsequent year 7,741,776 (18,927,229)

Financial Issues




(4) Changes in temporary differences and deferred tax assets (liabilities) for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

(*1) The Company did not recognize the deferred tax assets (liabilities) related to investments in subsidiaries and associates, except KOCREF CR-REIT 6 and 11, since it is not probable that the temporary differences can be realized.

23. Income Tax(1) Income tax expense for the years ended March 31, 2013 and 2012, consists of: (in thousands of Korean won)

(2) Deferred income taxes charged directly to the equity are as follows: (in thousands of Korean won)

(3) The reconciliation between income tax expense and accounting income before income tax expense for the years ended March 31, 2013 and 2012, follows: (in thousands of Korean won)

2013 2012

Current income taxes 108,529,485 102,402,941

Changes in deferred income taxes 38,651,874 42,198,283

Income taxes allocated directly to equity (38,157,009) (10,188,948)

Income Tax 109,024,350 134,412,276

2013 2012

Profit before income taxes 442,405,561 527,167,970

Income tax based on applicable statutory tax rate 106,600,146 127,112,649

Tax effects of : 2,424,204 7,299,627

Non taxable income (484,275) (532,987)

Expenses not deductible for tax purposes 1,318,168 1,058,271

Unrecognized deferred income tax (2,255,363) 5,090,541

Tax credit (2,020) (35,043)

Tax refunds (380,372) -

Others 4,228,066 1,718,845

Income tax expense 109,024,350 134,412,276

Beginning balances Income tax expenses Equity Ending balances

Income tax expenses

Financial asset at fair value through profit or loss (130,426) (424,105) - (554,531)

Investments in subsidiaries and associates 38,697 - - 38,697

Compensation receivables (6,480,846) (458,276) - (6,939,122)

Accrued receivable (20,474,505) (3,030,313) - (23,504,818)

Allowance for possible loan losses - - - -

Dormant claims recovered 5,519,267 2,216,905 - 7,736,172

Provions for restoration costs 373,888 8,508 - 382,396

Contingency reserve (109,313,339) (11,889,577) - (121,202,916)

Land (4,566,597) - - (4,566,597)

Impairment of available-for-sale financial assets 29,629,711 2,550,065 - 32,179,776

Depreciation 592,135 (3,472,562) - (2,880,427)

Gain (loss) on foreign currency (2,068,571) 3,508,803 - 1,440,232

Deposits insurance premium 2,695,268 951,251 - 3,646,519

Loss on revaluation of asset 1,240,521 - - 1,240,521

Other long-term employee benefits 5,226,628 1,992,085 - 7,218,713

Others (5,032,549) 7,552,350 - 2,519,801

(102,750,718) (494,866) - (103,245,584)

Equity

Change in value of available- for-sale financial assets (34,713,920) - (37,137,977) (71,851,897)

Gain (loss) on valuation of cash flow hedge derivatives 1,739,261 - (1,488,417) 250,844

Revaluation surplus (45,352,258) - 463,843 (44,888,415)

Revaluation reserve of asset (462,776) - - (462,776)

Others - - 5,542 5,542

(78,789,693) - (38,157,009) (116,946,702)

Total (181,540,411) (494,866) (38,157,009) (220,192,286)

Not recognized as deferred income tax assets(*1) 5,377,189 3,121,825

Recognized as deferred income tax assets (181,540,411) (220,192,286)

March 31, 2013 March 31,2012

Changes in value of available-for-sale financial assets (37,137,977) (5,412,628)

Changes in value of cash flow hedging instruments (1,488,417) (408,572)

Revaluation surplus 463,843 (4,126,463)

Revaluation reserves - (462,776)

Others 5,542 221,491

Total (38,157,009) (10,188,948)

Financial Issues




24. Special Accounts

(1) Details of special account assets (liabilities) as of March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

2) 2012

(*1) The Company did not recognize the deferred tax assets (liabilities) related to investments in subsidiaries and associates, and advanced depreciation of land, except KOCREF CR-REIT 6 and 11, since it is not probable that the temporary differences can be realized.

(5) The analysis of deferred tax liabilities as of March 31, 2013 and 2012, is as follows: (in thousands of Korean won)

Beginning balances Income tax expenses Equity Ending balances

Income tax expenses

Financial asset at fair value through profit or loss 159,494 (289,920) - (130,426)

Investments in subsidiaries and associates 141,133 (102,436) - 38,697

Compensation receivables (6,891,799) 410,953 - (6,480,846)

Accrued receivable (12,342,674) (8,131,831) - (20,474,505)

Allowance for possible loan losses 43,290 (43,290) - -

Dormant claims recovered 4,105,686 1,413,581 - 5,519,267

Provions for restoration costs - 373,888 - 373,888

Contingency reserve (88,974,538) (20,338,801) - (109,313,339)

Land - (4,566,597) - (4,566,597)

Impairment of available-for-sale financial assets 23,164,024 6,465,687 - 29,629,711

Depreciation 817,623 (225,488) - 592,135

Gain (loss) on foreign currency 900,230 (2,968,801) - (2,068,571)

Deposits insurance premium 2,537,416 157,852 - 2,695,268

Loss on revaluation of asset 1,540,784 (300,263) - 1,240,521

Other long-term employee benefits - 5,226,628 - 5,226,628

Others 4,057,948 (9,090,497) - (5,032,549)

(70,741,383) (32,009,335) - (102,750,718)

Equity

Change in value of available- for-sale financial assets (29,301,292) - (5,412,628) (34,713,920)

Gain (loss) on valuation of cash flow hedge derivatives 2,147,834 - (408,573) 1,739,261

Revaluation surplus (41,225,795) - (4,126,463) (45,352,258)

Revaluation reserve of asset - - (462,776) (462,776)

Others (221,492) - 221,492 -

(68,600,745) - (10,188,948) (78,789,693)

Total (139,342,128) (32,009,335) (10,188,948) (181,540,411)

Not recognized as deferred income tax assets(*1) 286,648 5,377,189

Recognized as deferred income tax assets (139,342,128) (181,540,411)

March 31, 2013 March 31, 2012

Current (18,972,598) (17,909,664)

Non-current (201,219,688) (163,630,747)

Total (220,192,286) (181,540,411)

March 31, 2013 March 31, 2012

Special account assets 1,085,500,089 902,688,034

Special account credit (6,985,222) (24,567,099)

Special account assets, net 1,078,514,867 878,120,935

Special account liabilities and reserve 1,060,172,936 899,085,200

Special account debit (184,652) (127,326)

Special account liabilities and reserve, net 1,059,988,284 898,957,874

(2) Statements of financial position of special accounts as of March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

March 31, 2013 March 31, 2012

Assets:

Cash and deposits 48,568,332 72,349,167

Securities 1,014,628,476 795,166,841

Other assets 15,318,059 10,604,927

General account credit 6,985,222 24,567,099

1,085,500,089 902,688,034

Liabilities:

Other liabilities 2,250,518 3,732,399

General account debit 184,652 127,326

2,435,170 3,859,725

Policyholder's reserves 38,472,779 95,380,004

Investment contract liabilities 1,019,264,987 799,845,471

1,057,737,766 895,225,475

1,060,172,936 899,085,200

Accumulated other comprehensive income 25,327,153 3,602,834

Total 1,085,500,089 902,688,034

Financial Issues




(3) Statements of comprehensive income on guaranteed principal and interest type special accounts for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) Pension

2) Retirements Insurance

2013 2012

Income

Interest income 35,816,026 21,191,501

Gain on disposal of securities 4,263,758 1,908,072

Gain on valuation of securities 11,287 82,416

Foreign exchange gains 6,010 3,772

Gain on valuation of derivatives 1,263,144 321,055

Gain on transactions of derivatives 373,690 -

Other income 140 431,715

Total 41,734,055 23,938,531

Expenses

Interest expenses of investment contract liabilities 37,154,402 21,278,784

Special accounts commission paid 3,204,026 1,548,969

Commissions and fees 180,252 42,788

Asset management expenses - -

Interest expenses 15,491 1,165

Loss on disposal of securities 22,976 736,627

Loss on valuation of securities 5,220 3,698

Foreign exchange losses 1,151,688 326,500

Total 41,734,055 23,938,531

2013 2012

Income

Premium income 216,364 22,447,581

Interest income 1,945,316 6,954,161

Gain on disposal of securities 49,907 89,346


Other income - 59,330

Total 2,552,176 29,708,177

Expenses

Provision for policyholders' reserves (56,907,225) (170,916,134)

Claims paid 58,813,972 198,454,814

Special accounts commission paid 344,339 875,142

Interest expenses 607 7,749

Loss on disposal of securities 300,483 1,173,582

Loss on valuation of securities - 113,024

Total 2,552,176 29,708,177

(4) Statements of comprehensive income on performance-based dividend type special accounts for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

2013 2012

Income

Interest income 79,341 118,529

Dividend income 12,870 18,353

Gain on disposal of securities 54,363 110,554


Other income 5,924 104,533

Total 275,586 507,077

Expenses

Interest expenses of investment contract liabilities 35,586 7,917Special accounts commission paid 17,572 16,724

Commissions and fees 1,393 2,216

Asset management expenses 10,930 13,790

Loss on disposal of securities 136,870 306,331

Loss on valuation of securities 60,274 145,745

Other expenses 12,961 14,354

Total 275,586 507,077

Financial Issues




26. Reinsurance(1) Reinsurance ceded transactions for the years ended March 31, 2013 and 2012, are as of follows:(in thousands of Korean won)

1) 2013

2) 2012

(2) Reinsurance assumed transactions for the years ended March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

25. Premium Income and Insurance Claims Paid(1) Premium income for the years ended March 31, 2013 and 2012, is as follows: (in thousands of Korean won)

1) 2013

2) 2012

(2) Insurance claims paid for the years ended March 31, 2013 and 2012, are as follows:


1) 2013

2) 2012

Claims paidReinsurance claims

paidRefund of claims

paidRefund of reinsuran

ceclaims paidInsurance claims

paid

Commercial 555,112,675 110,266,261 (9,184,530) (430,988) 655,763,418

Automobile 1,495,399,839 - (55,040,343) - 1,440,359,496

Long term 1,157,377,749 - (1,688,852) - 1,155,688,897

Annuities 4,247,985 - - - 4,247,985

Total 3,212,138,248 110,266,261 (65,913,725) (430,988) 3,256,059,796

Claims paidReinsurance claims

paidRefund of claims

paidRefund of reinsuran

ceclaims paidInsurance claims

paid

Commercial 517,803,854 44,529,852 (7,489,064) (654,764) 554,189,878

Automobile 1,433,787,263 - (51,975,018) - 1,381,812,245

Long term 1,014,421,013 - (876,603) - 1,013,544,410

Annuities 4,373,160 - - - 4,373,160

Total 2,970,385,290 44,529,852 (60,340,685) (654,764) 2,953,919,693


Reinsurance premium 728,189,459 16,002,206 212,801,729 1,702,532 958,695,926

Refund of return premium (6,283,739) (952,842) - - (7,236,581)

Reinsurance claims recovered 436,240,824 19,229,026 202,644,903 1,096,957 659,211,710

Refund of reinsurance claims recovered (5,892,453) (791,695) (485,978) - (7,170,126)

Reinsurance commission received 137,185,084 881,124 56,945 3,282 138,126,435

Reinsurance profit commission received 366,044 - - - 366,044


Reinsurance premium 687,667,763 35,344,457 179,252,495 1,730,713 903,995,428

Refund of return premium (4,635,316) (1,740,514) - - (6,375,830)

Reinsurance claims recovered 386,579,809 31,226,790 161,182,846 1,161,871 580,151,316

Refund of reinsurance claims recovered (4,364,637) (731,861) (325,059) - (5,421,557)

Reinsurance commission received 137,439,547 4,759,041 - - 142,198,588

Reinsurance profit commission received 2,111,586 65 4,497,742 636,947 7,246,340

2013 2012

Assumed reinsurance premium 123,504,569 108,784,790

Reinsurance claims received 110,266,261 44,529,852

Refund of reinsurance claims paid (430,988) (654,764)

Reinsurance commission paid 40,620,111 36,069,720

Reinsurance profit commission paid 82,302 106,981

Direct premiumwritten by the company

Assumed reinsurance premium

Cancellation refund Premium income

Commercial 986,169,796 123,504,569 (646,017) 1,109,028,348

Automobile 1,988,159,324 - (96,864,777) 1,891,294,547

Long term 6,492,109,409 - - 6,492,109,409

Annuities 691,225,804 - - 691,225,804

Total 10,157,664,333 123,504,569 (97,510,794) 10,183,658,108

Direct premiumwritten by the company

Assumed reinsurance premium

Cancellation refund Premium income

Commercial 910,859,261 108,784,790 (5,775,950) 1,013,868,101

Automobile 2,040,906,927 - (100,375,044) 1,940,531,883

Long term 5,791,928,263 - - 5,791,928,263

Annuities 572,962,989 - - 572,962,989

Total 9,316,657,440 108,784,790 (106,150,994) 9,319,291,236

Financial Issues




27. Profit and Loss from Financial InstrumentsProfit and loss from financial instruments for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

1) 2013

2) 2012

Interest income Dividend incomeCommission

incomeGain (loss)on

valuationGain (loss)on

DisposalImpairment

Gain (loss)on foreign currency transaction

Gain (loss)on foreign currency translation

Others Interest expenses Total

Financial assets:

Financial assets held for trading - - - - - - - - - - -

Financial assets designated 8,933,817 - - (22,983) 2,972,275 - - - - - 11,883,109

Available-for-sale financial assets 237,078,028 28,875,147 - - 54,166,248 (29,015,012) (31,296) 4,487,156 979 - 295,561,250

Held-to-maturity securities 50,133,643 - - - 10,744 - 5,649 305,503 - - 50,455,539

Loans receivable 172,086,366 - 20,153 - - (3,571,420) - - 2,473,131 - 171,008,230

Cash and deposits 16,244,324 - - - - - (348,380) 2,308,569 - - 18,204,513

Other receivables 1,254,488 - - - - 747,275 (1,230,416) 208,938 - - 980,285

Sub-Total 485,730,666 28,875,147 20,153 (22,983) 57,149,267 (31,839,157) (1,604,443) 7,310,166 2,474,110 - 548,092,926

Financial liabilities:

Borrowings - - - - - - - - - (4,752) (4,752)

Other financial liabilities - - 3,147,346 - - - - (8,791) (2,826,587) (2,550,745) (2,238,777)

Sub-Total - - 3,147,346 - - - - (8,791) (2,826,587) (2,555,497) (2,243,529)

Derivatives - - - (7,889,576) 1,167,443 - - - 355,176 - (6,366,957)

Total 485,730,666 28,875,147 3,167,499 (7,912,559) 58,316,710 (31,839,157) (1,604,443) 7,301,375 2,699 (2,555,497) 539,482,440

Interest income Dividend incomeCommission

incomeGain (loss)on

valuationGain (loss)on

DisposalImpairment

Gain (loss)on foreign currency transaction

Gain (loss)on foreign currency translation

Others Interest expenses Total

Financial assets:

Financial assets held for trading - 47,895 - 333,191 - - - - - - 381,086

Financial assets designated 1,903,381 3,102 - 14,777 4,574,516 - - - - - 6,495,776

Available-for-sale financial assets 301,780,855 27,351,050 - - 162,133,360 (44,049,954) (199,166) (3,187,843) 871,565 - 444,699,867

Held-to-maturity securities 61,094,029 - - - - - (7,962) (251,575) - - 60,834,492

Loans receivable 185,336,744 - 20,098 - - (4,073,354) - - 3,207,770 - 184,491,258

Cash and deposits 24,180,875 - - - - - 1,044,741 (3,494,441) - - 21,731,175

Other receivables 1,204,427 - - - - (141,695) 490,679 274,441 - - 1,827,852

Sub-Total 575,500,311 27,402,047 20,098 347,968 166,707,876 (48,265,003) 1,328,292 (6,659,418) 4,079,335 - 720,461,506

Financial liabilities:

Borrowings - - - - - - - - - (3,934) (3,934)

Other financial liabilities - - 8,692 - - - - 285,181 (259,756) (4,659,963) (4,625,846)

Sub-Total - - 8,692 - - - - 285,181 (259,756) (4,663,897) (4,629,780)

Derivatives - - - 7,410,383 (2,405,928) - - - (264,121) - 4,740,334

Total 575,500,311 27,402,047 28,790 7,758,351 164,301,948 (48,265,003) 1,328,292 (6,374,237) 3,555,458 (4,663,897) 720,572,060

Financial Issues




30. Asset Management Expenses, Maintenance Expenses on Property and Depreciation Expenses on InvestmentProperty

(1) Asset management expenses for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

(2) Maintenance expenses on property and depreciation expenses on investment property for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

28. Claims Survey ExpensesClaims survey expenses for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

29. Management ExpensesManagement expenses for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

2013 2012

Claim survey fee paid:

Salaries and wages 50,087,721 44,620,374

Severance benefits 11,218,236 7,262,467

Employee benefits 11,013,202 12,458,883

General administrative expenses 171,568,940 162,973,460

Sub-Total 243,888,099 227,315,184

Claim survey fee received (16,833,320) (20,520,902)

Total 227,054,779 206,794,282

2013 2012

General administration expenses 217,167,008 205,520,231

Agent commission paid 44,231,267 31,776,317

Salaries and wages 36,795,676 41,237,800

Acquisition expenses and collection expenses 413,198,212 368,910,360


Reinsurance commission paid 266,605,292 270,152,928

Employee fringe benefits 1,230,356 1,201,028

Co-insurance commission paid 270,372 502,699

Agency business commission paid 40,620,111 36,069,720

Reinsurance profit commission paid 82,302 106,981

Interest expense for deposit on ceded reinsurance treaties 481 1,273

Total 1,066,973,319 1,007,536,675

2013 2012

General administration expenses 4,453,074 4,528,693

Salaries and wages 686,938 413,342

Severance benefits 618,648 973,044

Employee fringe benefits 36,356,049 30,453,268

Total 42,114,709 36,368,347

2013 2012

Maintenance expenses on property

Commission 10,151,701 9,003,155

Taxes and other expense 1,685,416 1,904,925

Insurance premium 191,569 196,404

Light, heat and water expense 171,042 174,096

Repairs and maintenance expense 26,114 325,230

Supplies expenses 7,916 8,214

12,233,758 11,612,024

Depreciation on investment property 7,344,666 7,051,342

Financial Issues




32. Foreign Currency Translation(1) Foreign currency translation gain and loss for the years ended March 31, 2013 and 2012, are as follows:(in thousands of Korean won)

1) 2013

2) 2012

(2) Changes in foreign currencies translation recognized as other comprehensive income for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

31. Employee Benefit ExpenseEmployee benefit expenses for the years ended March 31, 2013 and 2012, are as follows: (in thousands of Korean won)

2013 2012

Short-term employee benefits 262,857,517 253,985,535

Social security service 15,497,505 15,622,676

Other long-term employee benefits 8,850,285 3,557,688


Total 343,341,748 309,744,099

2013 2012


Increase (3,635,270) 34,435

Ending balance (2,329,082) 1,306,188

Gain on foreign exchange translation

Loss on foreign exchange translation

Gain on foreign currency transactions

Loss on foreign currency transactions

Assets

Cash and deposits 2,900,255 6,394,696 3,914,181 2,869,440

Available-for-sale financial assets 2,888,817 6,076,660 45,400 244,566

Held-to-maturity investments 4,503 256,078 3,815 11,777

Insurance receivables 775,348 500,907 7,264,709 6,774,030

Sub-Total 6,568,923 13,228,341 11,228,104 9,899,813

Liabilities

Insurance payables 1,311,805 1,026,624 - -

Total 7,880,728 14,254,965 11,228,104 9,899,813

Gain on foreign exchange translation

Loss on foreign exchange translation

Gain on foreign currency transactions

Loss on foreign currency transactions

Assets

Cash and deposits 2,402,881 94,312 1,874,274 2,222,654

Available-for-sale financial assets 6,472,828 1,985,672 102,816 134,112

Held-to-maturity investments 305,503 - 11,502 5,853

Insurance receivables 435,573 226,635 6,151,139 7,381,555

Sub-Total 9,616,785 2,306,619 8,139,731 9,744,175

Liabilities

Insurance payables 1,380,121 1,388,912 - -

Total 10,996,906 3,695,531 8,139,731 9,744,175

Financial Issues




Executive Directors

Man-Woo Lee

Outside DirectorHyun-Myung Cho

Outside DirectorDong-Hoon Kim Outside Director

Eu-Gene SongOutside Director

Hi-Dong Kim Outside Director

Myung-Hyun Na

Standing Auditor Mong-Yoon Chung

ChairmanCheol-Young LeeCEO

Chan-Jong ParkCEO

Byoung-Tae KwonBancassurance Business Division

Jae-Choon Lee Automobile Claims Division 1

Sung-Jae LeeCCO [Chief Customer Officer]

Jong-Soo LeeCorporate Marketing Unit

Soon-Gye HongCorporate Marketing Strategy Unit

Young-Chul Lee Asset Management Division, Loan Business Unit

Jung-Dong YooCommercial Insurance Marketing Unit 1

Kab-Pil ChoiOverseas Business Unit

Rak-Hyoung Chung General Insurance Division

Jong-Seon KimGyeongin Regional Headquarter

Seong-Tae HongClaims Service Division

Seung-Ok Yang Long-Term Insurance Division

Young-Ju Kim Long-Term & General Ins. Claims Division

Yong-Koo ShimPersonal Line Group

Moon-Bok LeeCommercial Insurance Marketing Unit 2

Dae-Soon ShinLong-Term Underwriting Unit

Su-Sang HanGangnam Regional Headquarter

Jae-Jun RoGangbuk Regional Headquarter

Sung-Il Koh Honam Regional Headquarter

Se-Young JunCompliance Officer

Seung-Chan OhPresident of Hyundai Insurance (China) Co., Ltd.

Sang-Hwa Kim Daegu Gyeongbuk Regional Headquarter

Sang-Wan KimJungbu Regional Headquarter

Kyoung-Shik LeeClaims Services Unit

Chul-Hyun BaikCommercial Insurance Marketing Unit 4

Kyung-Ho AhnGeneral Manager of Internal Auditing Dept.

Jong-Ho KimAutomobile Claims Division 3

Neung-Sik KimGyeongnam Regional Headquarter

Min-Bong YounNew Channel Marketing Division

Du-Cheol ShinCorporate Planning Unit

Chul-Sik Choi CISO [Chief Information Security Officer]

In-Kwan HwangInvestment Unit

Yong-Chan Kang Busan Regional Headquarter

Ju-Sik ParkAutomobile Claims Division 2

Jae-Won HanCommercial Insurance Marketing Unit 3

Yong-Il Cho Commercial Insurance Marketing Group / Commercial Insurance Marketing Division 1, 2

Myung-Hyun Na Standing Auditor

Deok-Yong Park Marketing Division

Gab-Soo KimPersonnel, General Administration Division

Sung-Jug LeeClaims Group

Yun-Sun LeeManagement Support Division

CEO | Cheol-Young Lee CEO | Chan-Jong Park Management Support Group

The Board of Directors(as of July 1, 2013)

Major Status of the Company

The Board of Directors and Executive Directors

Organizational Chart

Subsidiary Companies / Company History

Global Networks


Certified Senior Actuary Actuary Support Team

Organization Chart

(as of July 1, 2013) The Board of Directors

Standing Auditor

Compliance Officer Compliance Dept.Legal Affairs Dept.

Internal Auditing Dept.

Claims Group

Personal Line Group

Automobile Claims Division 3 Daejeon Automobile Claims Service CenterCheonan Automobile Claims Service CenterGwangju Automobile Claims Service CenterJeonju Automobile Claims Service Center

Automobile Insurance Dept.Special Investigation Dept.

Claims Service Division Automobile Claims Support Dept.Automobile Litigation Dept.

Automobile Claims Division 1 Jungang Automobile Claims Service CenterGangnam Automobile Claims Service CenterGangseo Automobile Claims Service CenterBukbu Automobile Claims Service CenterSuwon Automobile Claims Service CenterIncheon Automobile Claims Service Center

Automobile Claims Division 2 Busan Automobile Claims Service CenterDaegu Automobile Claims Service CenterUlsan Automobile Claims Service Center

Gangwon Automobile Claims Service Center

Long-Term & General Ins. Claims Division

General Insurance Division

Overseas Business UnitOverseas Dept.

2 Overseas Branches, 1 Subsidiary Company and 4 Representative offices

Property & Casualty Dept.General Insurance Planning &

Development Dept.Marine Dept.

Commercial Insurance Marketing Group

Marketing Division Marketing Planning Dept.Marketing Support Dept.

New Channel Marketing Division New Channel Marketing Dept. 1New Channel Marketing Dept. 2New Channel Marketing Dept. 3

New Channel Marketing Support Team

Bancassurance Business Division

Bancassurance Business Dept.Gangbuk Bancassurance Marketing Dept.Gangnam Bancassurance Marketing Dept.Gyeongin Bancassurance Marketing Dept.Jungbu Bancassurance Marketing Dept.

Yeongnam Bancassurance Marketing Dept.

Gangbuk Regional Headquarter Gangbuk Headquarter Support Dept., 10 Regional Business Dept.

Gangnam Headquarter Support Dept., 10 Regional Business Dept.Gangnam Regional Headquarter

Gyeongin Headquarter Support Dept., 9 Regional Business Dept.Gyeongin Regional Headquarter

Jungbu Regional Headquarter Jungbu Headquarter Support Dept., 5 Regional Business Dept.

Honam Regional Headquarter Honam Headquarter Support Dept., 7 Regional Business Dept.

Busan Regional Headquarter Busan Headquarter Support Dept., 5 Regional Business Dept.

Daegu Gyeongbuk Regional Headquarter Daegu Gyeongbuk Headquarter Support Dept., 6 Regional Business Dept.

Gyeongnam Regional Headquarter Gyeongnam Headquarter Support Dept., 5 Regional Business Dept.

Commercial Insurance Marketing Division 1 Commercial Insurance Marketing Unit 1

Commercial Insurance Marketing Dept. 1Commercial Insurance Marketing Dept. 3Commercial Insurance Marketing Dept. 6

Commercial Insurance Marketing Unit 3Commercial Insurance Marketing Dept. 2Commercial Insurance Marketing Dept. 5

Commercial Insurance Marketing Unit 4Commercial Insurance Marketing Dept. 4Commercial Insurance Marketing Dept. 7

Commercial Insurance Marketing Unit 2Global Corporate Services Dept.

Public Institutions Insurance Dept.Commercial Insurance Marketing Dept. 8

Corporate Marketing UnitCorporate Marketing Dept. 1Corporate Marketing Dept. 2Corporate Marketing Dept. 3

Corporate Marketing Strategy UnitCommercial Insurance

Marketing Strategy Dept.Retirement Pension Dept.

Long-Term Insurance DivisionLong-Term Underwriting UnitLong-Term Insurance Dept.

Underwriting Center

Loan Business Unit Alternative Investment Dept.

Personal Loan Dept.

Marketing Actuarial Dept.Long-Term Insurance

Management Dept.

Claims Services UnitLong-Term Ins. Claims Support Dept.

Property & Casualty Claims Dept.

Long-Term Ins. Claims Dept.Asset Management Division

Management Support Group Management Support Division

Personnel,General Administration Division

Personnel Dept.General Affairs Dept.

Emergency Planning Dept.

Customer Satisfaction Promotion Dept.Customer Support Dept.Public Relations Team

CCO [Chief Customer Officer]

CISO [Chief Information Security Officer]

Information Strategy Dept.

Finance & Accounts Dept.Actuarial Dept.

Risk Management Dept.

Corporate Planning UnitCorporate Planning Dept.

Strategy Support Dept.Research Center

Investment UnitFinancial Planning Dept.

Investment Banking Dept.Retirement Pension Management Team

President & CEO

Commercial Insurance Marketing Division 2





Global Networks


5 Hyundai Hicar Direct Auto Insurance Co., Ltd. TYPE OF BUSINESS | Online Auto Insurance

CAPITAL STOCK | 140,000 million won

INVESTMENT BY HYUNDAI INSURANCE | No. of stocks

owned - 28,000,000 shares (100%)

6 Hyundai U.K. Underwriting Ltd. TYPE OF BUSINESS | Insurance

CAPITAL STOCK | GBP 3,450,000


owned - Nil (100%)

7 Hyundai Investment (America), Ltd. TYPE OF BUSINESS | Investment

CAPITAL STOCK | USD 25,000,000

INVESTMENT BY HYUNDAI INSURANCE | Number of stocks

owned- 2,500 shares (100%)

8 Hyundai Insurance (China) Co., Ltd. TYPE OF BUSINESS | Insurance

CAPITAL STOCK | RMB 300,000,000

INVESTMENT BY HYUNDAI INSURANCE | Number of stocks

owned- Nil (100%)

9 Cosmos Risk Solutions Asia Pte. Ltd. TYPE OF BUSINESS | Reinsurance Broker

CAPITAL STOCK | USD 1,000,000


owned – 490,000 shares (49%)

1 Hyundai C&R Co., Ltd. TYPE OF BUSINESS | Educational Business, Facility

Management, Call center Management



owned - 200,000 shares (100%)

2 Hyundai Hicar Claims Adjustment Service Co., Ltd. TYPE OF BUSINESS | Automobile Claims Service,

Emergency Road Service



owned - 200,000 shares (100%)

3 Hyundai Investments Co., Ltd. TYPE OF BUSINESS | Asset Management



owned - 6,000,000 shares (100%)

4 Hyundai Hilife Claims Service Co., Ltd. TYPE OF BUSINESS | Long-term & Commercial Claims

Service, Risk Management Service


INVESTMENT BY HYUNDAI INSURANCE | Number of

stocks owned- 500,000 shares (100%)

Mid- and long-term development plan “ Vision Hi 2010”

declared

Ethical management declared

Launched online automobile insurance dubbed “Hicar Direct”

Long-term Insurance brand “Hi-Life”adopted

Rated BBB+ in credit by S&P

Subsidiary (Hyundai Hicar Direct Auto Insurance Co., Ltd.)

established

US investment corporation [Hyundai Investment (America),

Ltd.] established

Established (Hyundai Insurance (China) Co., Ltd.)

Subsidiary (Hyundai Investment Co., Ltd.) launched

Subsidiary (Hicapital Co., Ltd.) launched

Opened the Shanghai Representative Office in China

Total assets surpassed 10 trillion won

Next-generation system CIS (Core Insurance System) opened

Selected as a formal non-life insurer for the Expo 2012

Yeosu Korea

Established the Hyundai Insurance Research Center

Risk premiums of long-term insurance surpassed 1 trillion won

Cosmos Risk Solutions Asia Pte. Ltd., a Singapore joint

venture broker, established

Declared Vision Hi 2015

Rated A-(Excellent) by A.M. Best for 9 consecutive years

Operated the Traffic Accident Claims Service team for the

2012 Seoul Nuclear Security Summit

Rated A (Excellent) by A.M. Best

Total assets exceeded 20 trillion won

Rated A- stable by S&P

2003. 04

2003. 05

2004. 09

2005. 10

2005. 11

2005. 12

2006. 09

2007. 03

2007. 12

2008. 04

2009. 02

2009. 09

2010. 01

2010. 02

2010. 07

2011. 02

2011. 02

2011. 04

2011. 11

2012. 03

2012. 10

2012. 12

2013. 06

Korea’s first marine insurance company established

(Company name: Dongbang Marine Insurance Co., Ltd.)

Opened the Japan branch

Opened the London Representative Office in the U.K.

Changed the company name to Hyundai Marine & Fire

Insurance Co., Ltd.

Opened the New York Representative Office in the U.S.

Stocks listed with KOSPI

Ranked No.1 in the FY 1989 General Management

Assessment for Non-Life Insurers

Acquired business authorization in the state of California, US

as the first company in Korea’s insurance industry to do so

Opened the U.S. branch

Annual direct premiums sales surpassed 1 trillion won

Acquired insurance business permit from the state

government of Oregon, US

Selected as the 40th standing non-life insurer by S&P

Acquired ISO 9002 certification for the first time ever in

Korea’s non-life insurance industry

Established the Ho Chi Minh Representative Office in Vietnam

Established a Lloyd’s subsidiary in London, U.K.

Opened the Beijing Representative Office in China

Opened the Hyundai Insurance Training Center

New CI declared

Acquired subsidiaries (Kyungil Industrial Development Co.,

Ltd., Hyundai Marine Claims Services Co., Ltd.)

Established a subsidiary

(Hyundai Investment Consulting Co., Ltd.)

Designated as the official insurer of the 2002 FIFA World Cup

Automobile insurance brand “Hicar”adopted

1955. 03

1976. 10

1979. 07

1985. 10

1987. 08

1989. 08

1990. 09

1992. 12

1994. 02

1994. 12

1996. 11

1996. 12

1997. 01

1997. 03

1997. 06

1997. 08

1998. 05

1999. 01

2000. 02

2000. 07

2000. 10

2002. 09

Subsidiary Companies Company History





Global Networks


Global NetworksSince launching the business in Japan for the first time ever in Korea’s insurance industry in October 1976, Hyundai Insurance has been

playing a role as a leading company in the globalization of Korea’s insurance industry from the start. Currently, Hyundai Insurance has the

following global network: China Subsidiary, US Investment Subsidiary, London Subsidiary, Singapore Joint Venture Broker, US Branch,

Japan Branch, London Representative Office, Ho Chi Minh Representative Office, Beijing Representative Office, and Shanghai Representative

Office. The branch in Japan is the only branch of a Korean non-life insurance company currently operating in Japan. It engages in the sale of

insurance products to Japanese businesses based on the know-how and experience it has accumulated over almost 40 years.

The branch in the United States, which was established in February 1994, has provided high-quality insurance services to Seoul-based

businesses in the world’s largest insurance market. It started selling home owners insurance in 2012. In September 2006, the company

established a local investment corporation in that country in an effort to learn more advanced investment techniques and enhance the

Company’s expertise in asset operation.

The London Representative Office that opened in July 1979 carries out prompt information collection activities on advanced insurance

products and market situation of Lloyd’s underwriters, which leads the world insurance industry, with long history and tradition in

London, U.K., the mecca for insurance. The Ho Chi Minh Representative Office in Vietnam was set up to offer customer services to Korean

companies that entered Vietnam and in response to the need to secure a local bridgehead for business penetration in Southeast Asia.

Since March 1997, the office has been operating its business. Currently, the office establishes a close cooperative relationship with the

local main insurers like Bao Viet and Bao Minh. It is collecting local information to establish a business office. With the importance of

China’s insurance market with its unlimited market potential increasing, Hyundai Insurance opened the Beijing Representative Office in

August 1997; it has been steadily building the base to penetrate China’s insurance market.

As a result, in March 2007, Hyundai Insurance (China) Co., Ltd., was established in Beijing. With the opening of the Shanghai Representative

Office in February 2009, we have laid the foundation for entry into the central and southern parts of China.

Japan Branch

Cosmos Risk Solutions Asia Pte. Ltd.

- Hyundai Insurance (China) Company Ltd.

- Beijing Representative Office- London Representative Office

Hochiminh Representative Office

Shanghai Representative Office





Global Networks

■ Hyundai Insurance (China) Company Ltd. Room No.508, Hyundai Motor Tower, 38 Xiaoyun Road,

Chaoyang District, Beijing, China

Tel : 86-10-8442-8100 / Fax : 86-10-8453-9103

■ Hyundai Investment (America), Ltd. 300 Sylvan Avenue, Englewood Cliffs, NJ 07632, U.S.A.

Tel : 1-201-871-8881 / Fax : 1-201-871-8890

■ Cosmos Risk Solutions Asia Pte. Ltd. #40-01, 9 Raffles Place, Republic Plaza, Singapore 048619

Tel : 65-6317-0320 / Fax : 65-6317-0329

■ U.S. Branch 300 Sylvan Avenue, Englewood Cliffs, NJ 07632, U.S.A.

Tel : 1-201-816-4084 / Fax : 1-201-816-4086

■ Japan Branch 8F, NBF Hibiya Bldg. 1-1-7, Uchisaiwai-Cho, Chiyoda-Ku,

Tokyo, Japan 100-0011

Tel : 81-3-5511-6565 / Fax : 81-3-5511-6566

■ London Representative Office 7F, 37-39 Lime Street, London EC3M 7AY, United Kingdom

Tel : 44-207-929-3822 / Fax : 44-207-929-3826

■ Hochiminh Representative Office Room 710, 7F, Sun Wah Tower, 115

Nguyen Hue Blvd., Dist.1, Ho Chi Minh City, Vietnam

Tel : 84-8-3827-8214 / Fax : 84-8-3827-8212

■ Beijing Representative Office Room No.518, Hyundai Motor Tower, 38 Xiaoyun Road,

Chaoyang District, Beijing, China

Tel : 86-10-8453-9071 / Fax : 86-10-8453-9082

■ Shanghai Representative Office Room No.1402 Part(C) Orient International Plaza,

85 Lou Shan Guan Road, Shanghai, China

Tel : 86-21-6278-7740 / Fax : 86-21-6278-7741

The Chinese subsidiary sells commercial insurance products,

such as property insurance and liability insurance, and group

accidental insurance. It has started to sell automobile insurance

in May 2008. The Chinese subsidiary is doing its best to offer

differentiated services including prompt claims service, products

meeting customers’ needs, and expert-level risk management as

it actively expands the business in China. To expand its business

area, it established its first branch in Qingdao in October 2011

and has begun operations there.

Cosmos Risk Solutions Asia Pte. Ltd., which the Company

established jointly with Cosmos Service Co. Ltd., a brokerage

business in Hong Kong, obtained the approval for its reinsurance

brokerage business from the Monetary Authority of Singapore in

March 2011, and provides insurance and reinsurance services for

customers throughout Asia. Singapore is the reinsurance market

hub where world-renowned reinsurance and broker companies

such as Lloyd’s do business. We expect to provide professional

insurance services to Korean companies that have penetrated

the Asia and Middle East markets and activate business with

local insurers through the establishment of a broker company.

- U.S. Branch

- Hyundai Investment (America), Ltd.

Documents

2013 Annual Report - Hyundai Insurance USA