This report is printed on an Fsc certified paper in soyink. · ings of KRW 1.09 trillion at the end of December, 2010, becoming the first domes-tic non-life insurance company to join

SAMSUNG FIRE & MARINE

INSURANCE

ANNUAL REPORT 2010

This report is printed on an Fsc certified paper in soyink.

We always care our customers and shareholders. www.samsungfire.com http://ir.samsungfire.com

Samsung Fire & Marine Insurance (SF&MI) guarantees you

affluence in your life and success in your business.

Then, what guarantees the sustainable growth of SF&MI?

InsIght

Contents

Message from CEO

Vision & Strategy

BOD & Governance

At a Glance

Global Issues & SF&MI Issues

04

20

24

28

30

Business Areas

InItIatIve

34

42

Management Infra

Improvement

54

Corporate Social Responsibility

InspIratIon

Financial Statements

Interest

66

“We are continuing to innovate today for our customers’ affluent tomorrow. Our innovation starts with deep and broad insight into the world as well as caring insight into our customers. It is by such innovation that SF&MI has seized the initiative in the non-life insur-ance market in Korea and will transform itself into a world-class insurance company. We continually reflect on our performance for a better future and return interest to our shareholders and investors. SF&MI will continue to derive inspiration from people and the world, maintaining the momentum in innovation.”

alfred FacklerUnderwriting AdvisorCommercial Lines Underwriting Division

InsIght

INNOvATION

1

SF&MI has shown a great deal of pioneering

spirit in venturing into the global market.

In order to expand its overseas footholds and

enter emerging markets, the company is

implementing multi-faceted global strategies.

01

HOW CAN WE MAINTAIN A bETTER PARTNER-SHIP?

DubaI, uae

total insurance marketunit: usD billion

SF&MI is the first original insurance company to enter

the 77.8 billion dollar Middle Eastern and African insurance market,

creating a crucial opportunity to leverage its competitive edge in the

energy and technology insurance market.

HOW CAN WE ENjOy A bETTER qUALITy OF LIFE?

LonDon, uK

ratio of elderly to children in europe in 2030

SF&MI acquired an insurance business license

in the European Economic Area (EEA) in 2011, securing a robust

beachhead to venture into the European insurance market.

HOW CAN WE MAKE dRIvING SAFER?

Chinese car insurance marketunit: cNY billion

The Chinese car insurance market totaled 290 billion yuan

(KRW 48.4 trillion) in 2010, soaring 34.5% over the previous year.

SF&MI is the first insurance company in the world to establish

a corporation in the exploding market, increasing its market share.

shanghaI, beIjIng, shenZhensuZhou, anD qIngDao, ChIna

insightto

venturing out into a bigger world for your more affluent future, SF&MI never loses sight of the importance of deep insight into your life. We know from experience that we can become your best partner only if we fully understand your life and business.

Part 1INsIGHT

014015

Our insight is clearly

unique

+20.4%

10 nations

worLDwIDe mIssIon

We are challenging the world market. SF&MI recorded operating income

of KRW 36.3 billion and sales of KRW 292.2 billion in 2010, up 20.4% from the

previous year. Considering 2011 as the year to pursue global business in earnest

and visualize achievement, the company is moving to advance into the overseas

market in full scale. Part of this effort entails establishing new footholds in Europe

and the Middle East to achieve the mid- and long-term vision of ‘Global Top 10

by 2020’.

gLobaL perFormanCes

Entering the chinese car insurance market. SF&MI entered the Chinese car

insurance market in 2010. It was the first foreign-invested insurance company

to establish a corporation in Shanghai, China in 2005. Since then, SF&MI has

pursued insurance business with focus on commercial insurance. It has recently

stepped up its operations in response to welcome improvements made to the

Chinese car insurance market including tightening of sales commission rules and

establishment of transparency in management of insurance premiums. It is now

actively attracting Chinese customers and Korean expatriates in China with high-

quality services.

Targeting the emerging market. SF&MI’s Vietnamese corporation, established

in 2002, recorded sales of USD 13.17 million in 2009, becoming the first Korean

insurance company to carve out a local market share exceeding one percent.

Backed by active operations in emerging markets including Indonesia, its

operating income continues to rise. SF&MI will leverage this competitive edge to

build its global business base by 2012, venture into the larger Asian market by

2015, and enter the markets of advanced countries by 2020. By that time, SF&MI

expects to fully develop the capabilities of a global top 10 company.

Countries where we do business

Foreign insurance premium growth rate

yang liqing28, singlefashion designer

shanghai, Chinakeyword

self-improvementpassion

Challengeinterest

drivingtravelling

relaxation

“ the roads Can be safe only with the unrivaledserviCes of sf&mi. ”

Our insight means careful consideration

beak, seong hyun & seung joofamily

seoul, koreakeyword

generationdream

stabilityinterest

familyhealthy life

third age

“ We feel much more secure about our current and future lives With sf&mi. the company meets all the needs of my family, from indemnity to pensions. ”

Part 1INsIGHT

016017

No.1

1.09 trillion

Customer satIsFaCtIon mIssIon

We innovate for customers’ satisfaction. SF&MI pursues innovation with its

customers’ interests in mind at all times. Our ultimate goal is to provide goods

and services that our customers really need, rather than just to make more prof-

its and attract more customers. SF&MI’s outstanding performance is due entirely

to this sincerity, and the company is increasingly recognized for it. Among the

awards and honors it has received are first prize in the Good Insurance Company

Awards by the Korea Insurance Consumer Federation, the first prize in the non-

life insurance field of the National Consumer Satisfaction Index for ten consecu-

tive years, and the grand prize in the Korea Service Grand Prix for seven consecu-

tive years, another first for any company in the insurance industry.

marKet DrIven perFormanCe

Multi-channel strategy focused on powerful tied agency channel. SF&MI has

a nation-wide sales network incorporating more than 500 branches and exclu-

sive sales networks two times bigger than those of non-life insurance companies

ranking in the second group in terms of insurance premiums. It also maximizes

risk consulting and individual asset management capabilities of the sales net-

work, strengthening competence as a comprehensive risk consulting company

for customers.

Unrivaled product competitiveness. SF&MI reported retirement pension hold-

ings of KRW 1.09 trillion at the end of December, 2010, becoming the first domes-

tic non-life insurance company to join the One Trillion Club. It offers distinguished

products for customers that provide security against specific risks such as the

‘Super Retirement Pension’, a retirement pension product combining fire, liability,

and group personal accident insurance. There is no other product like it in the

financial industry. SF&MI is beginning to advance into new markets by develop-

ing one new product after another that answers customers’ needs as well as new

services that make the most out of new technologies including the smart phone.

National Customer Satisfaction Index

Retirement pension holdings (unit: KRW)

Our insight originates from

accurate analysis

1,044 cases

r&D mIssIon

Our solutions lead expectations. SF&MI strives to provide goods and services

that exceed customers’ expectations. Such innovation is only possible with ex-

cellent human resources. Support for insurance contracts, improvement of anti-

disaster systems, and activities for accident prevention led by Samsung Loss

Control Center afford both individual customers and corporate customers new

values to thoroughly protect their precious lives and properties.

smart perFormanCe

From prevention of accidents to support for insurance contracts. SF&MI

analyzes and assesses many types of risks in customers’ workplaces by special-

ized means for each business field and provides proper means to prevent ac-

cidents, offering effective insurance programs that suit the unique needs of each

customer.

Loss adjustment experts. SF&MI answers customers’ needs by steadily mak-

ing more high-quality human resources available in each area; we hired Alfred

Fackler, an energy insurance expert, as a full-time advisor in charge of commer-

cial business. With the employment of Alfred Fackler, SF&MI plans to specialize

in underwriting of nuclear power and new renewable energy insurance in order

to become competitive at the world-class level in the area, and it will continue to

secure top-quality talent for each area in the future.

son, Min jaesf&Mijunior professional

seoul, Koreakeyword

sMartcustoMer-oriented

solutioninterest

itenvironMent

renewable energy

“ froM prevention of accidents to assessMent of worKplaces and insurance policy acquisition, sf&Mi provides coMpanies with all the non-life insurance

solutions they need.”

Part 1INsIGHT

018019

Number of risk consulting service

Dear shareholders of SF&MI,

First of all, we would like to express our deep gratitude to our shareholders for supporting SF&MI with

such unwavering confidence.

The corporate business environment for the 2010 fiscal year was filled with hardship at home and

abroad. The world economy showed signs of smooth recovery after the financial crisis but slowed

down again as a result of the spreading financial crisis in Europe and the sharp rise in prices of com-

modities in the international market. At home, the difficulties were compounded throughout most of the

economy as households reined in spending out of fear of further price hikes and the sharp slowdown in

the real estate market.

Substantial damage from natural disasters including typhoons, localized torrential rainfalls, and heavy

snow added to the difficulties of the non-life insurance industry. The loss rate in auto insurance was

the worst ever, further deepening the already chronic deficit. SF&MI, nevertheless, managed to record

premium revenues of KRW 12.77 trillion in the 2010 fiscal year, up 17.2% from the previous year. Net

profit reached KRW 664.9 billion due to unrivaled management efficiency and robust asset manage-

ment, and total assets stood at KRW 31,587.6 billion. An additional KRW 55.4 billion was accumulated

for the reserve fund for emergent risk, and the solvency margin ratio surpassed 430%, further bolster-

ing the company’s financial soundness.

The robust growth of SF&MI was also proven at home and abroad. A.M.Best granted the company an

international credit rating of A+ for the ninth consecutive year, and S&P granted an A+ rating for the

eighth consecutive year. In an evaluation of customer satisfaction in Korea, it ranked first by the Na-

tional Consumer Satisfaction Index (NCSI) for the tenth year in a row, firmly consolidating its position

as a company that always puts the customer first.

Based on these management achievements, SF&MI actively fulfills its corporate social responsibilities

and roles through on-going projects. Following the 500 Won Present for Hope and the Happy School

joined by risk consultants, the company recently signed a corporate social responsibility agreement

with the Ministry of Public Administration and Safety to expand support for children’s traffic safety.

In addition, SF&MI continues to support children of families affected by traffic accidents and con-

ducts the guide dog project for the blind, leading efforts to ensure that the underprivileged are not

neglected in society.

Part 1INsIGHT

020021

Message from CEO “We are continuing to advance relentlessly toward becoming the top insurer in the world.”

Dear customers, shareholders, and investors!

In the 2011 fiscal year, the world economy is expected to face greater uncertainty due to the on-going

exchange rate wars and spread of inflation, particularly in emerging countries. Korea, too, is beset by

inflation fears due to the general rise in oil prices and public utility charges, and economic growth is

likely to slow down. In the insurance industry, the major domestic market is entering the mature phase

and competition to be the first to tear down the barriers between different lines of business is intensify-

ing. The profits of global reinsurance companies are expected to fall due to the increasing incidence

of natural disasters in many places in the world, and this will make management all the more challeng-

ing. In order to achieve our vision, Global Top 10 Insurance Company by 2020, by actively responding

to the uncertainties in the changing environment, SF&MI has determined that 2011 is the year for the

company’s next great advancement through creativity and innovation and intends to carry out the fol-

lowing tasks.

First, we will redouble our resolve to always put the customer first. Our customers are our raison d’être,

so our primary objective is to satisfy their needs. We will, therefore, impress upon all executives, em-

ployees, and risk consultants the importance of treating customers like family.

We will reinvent ourselves as customer satisfaction experts who do not merely stick to established

practices but who instead actively find solutions to customers’ needs. We cannot imagine a company

without customers. The launching of ‘SF&MI 24 Hours’ last year was intended to provide services 24/7

and ensure the safety of our customers.

Second, we will establish an innovative and challenging corporate culture.

For a company to advance and become the world’s top company, it is necessary to constantly emphasize

the importance of innovation in the corporate culture as well as in products and services and in processes

and systems. We will create a corporate culture in which each executive and employee sets challenging

goals by themselves and tackles them creatively. In order to foster executives and employees with high

expertise based on such an innovative corporate culture, we will greatly improve our training system. We

believe that a company can possess a competitive edge and become a true global leader only if it refuses to

ever be satisfied with previous achievements and continues to innovate and challenge itself.

Third, we will strengthen our enterprise-wide capabilities to secure a new growth driver for continued

growth. We will turn to profit in the auto insurance business and achieve a 30% market share without

fail in every line of business in order to secure absolute superiority in the domestic market and, based

on that superiority, pursue overseas business in earnest.

The company established a corporation in London last May to venture into the European market and

is preparing to establish a company to manage business in the U.S. It is also trying to enter the car

insurance market in China and Indonesia and found a reinsurance company in Singapore. Based on

these efforts, we will further expand operation in the emerging markets in Asia. We will strengthen the

foundation of overseas business in major international markets and, at the same time, develop our ca-

pabilities for globalization by fostering global talents, organizations, and systems.

Respected customers and shareholders!

Backed by support of customers and shareholders, SF&MI is continuing to advance relentlessly

toward becoming one of the global top 10 insurance companies by 2020. SF&MI’s executives and

employees are well aware of the fact that their company’s survival depends on its customers and

shareholders and that the company is duty-bound to maximize value for them. Through continuous

innovation and challenge, we will without fail become the world’s top company that can compete

against any global company, and we will duly share the fruits of our efforts with our shareholders.

Thank you.

Dae-sub ChiPresident and CEOSF&MI

Samsung Fire & Marine InsuranceAnnual Report 2010

Part 1INsIGHT

022023

securing absolute superiority in the market

ranked first by the nCsI for ten consecutive years

ranked first by a.m.best for nine consecutive years

A.M.best positive

NCSI direct premiums up

Our vision engenders much more than merely financial achievements. Rather, it is based on the com-

plete determination of all its executives and employees to consider the future of customers and the

insurance industry, rather than settle for the present. Major tasks include development of core com-

petencies required of the world’s top insurance company, innovative transformation from merely an

insurance company to a customer service-oriented company, and realization of growth and efficiency

based on a corporate culture of creativity, innovation, and challenge. SF&MI is striving to reinvent itself

as the world’s top insurance company. It will bolster the capabilities of its corporate management and

overseas operations to blaze a trail into new growth markets in the global insurance market.

“SF&MI envisions becoming one of the world’s top 10 non-life insurance companies by 2020 and consolidating its position as a total risk solution partner to its customers.”

vision 2020

sales Krw 30 trillion, assets Krw 100 trillion

Korea2020 sales KRW 24 TRIllIoN (80%)

· 2012 acHIeve M/s 30%

· BusINess IN 5 MaIN R&D aReas

overseas2020 sales KRW 6 TRIllIoN (20%)

· successFul PeNeTRaTIoN INTo oveRseas MaRKeTs

· exPaND THRouGH M&a

Road map to global top 10

marKet

CoreCompe-tenCy

target

global top 20

global top 15

global top 10

· sales : KRW 15.5 trillion

· Domestic M/s 30%

· Ratio of overseas sales 3%

· enlarge domestic market

· strengthen R&D

· successful penetration into overseas markets

· Highest level in Korea

· create capabilities for global business

· sales : KRW 21 trillion

· Maintain market dominance


· expand business in the finan-cial services area

· commercialization of 5 main R&D areas

· active cross border M&a

· apply core competencies to global business

· Reinforce global management capabilities

· sales : KRW 30 trillion

· Maintain market dominance


· Provide a wide range of products (Insurance + Finance +service)

· apply R&D capabilities to overseas market

· entry into developed market

· achieve global top level

· completion of global management capabilities

active growth

global top level

build strong basis for growth

Stage 1 Stage 2 Stage 3~2012 ~2015 ~2020

Part 1INsIGHT

024025

(Total Risk Solution Partner)

Corporate

vision 2020



direction of innovation365 Days R&D “Press ahead for our customers.”

SF&MI’s innovation starts with its insight into and efforts for the market and customers. Real innovation

is set into motion by constant efforts to provide products and services that customers really need and

evolve into a financial service company, rather than merely an insurance company.

365% Satisfaction “Present surprise to customers.”

SF&MI’s innovation allows the company to offer services that far exceed customers’ expectations. We

aim to be a service-oriented company that maximizes customer satisfaction rather than simply provide

services that we promised or customers expect. We go the extra mile!

36.5° System “Change everything for the convenience of customers.”

SF&MI’s innovation is its strength to even change business practices for the convenience of custom-

ers. Its innovation stems from determination and execution to discard long-standing practices and

procedures that have outlived their usefulness.

Strategy for communication with customers SF&MI is pursuing a new growth strategy to evolve into a service-oriented company from merely an

insurance company while adhering more faithfully to the basics of the market- and customer-oriented

operation. Therefore, it is pursuing substantial innovation in overall areas including products, services,

and organization culture and, based on these efforts, “think Next,” a customer-oriented communica-

tion brand, was unveiled in July 2010.

“think Next,” meaning suggesting new ideas for the future in advance and realizing them before oth-

ers, is an external manifestation of SF&MI’s spirit of innovation. It is the company’s declaration that it

is Korea’s best insurance/financial company that considers the future of its customers and insurance

without settling for the present and, at the same time, a strong indication of its determination to grow

into a global company under the goal of 2020 Global Top 10.

The meaning and feeling of “think Next,” which was born out of such a spirit of innovation, is expressed

by the following brand identity system for effective communication.

think nextSF&MI starts anew.For the future of our customers!For the future of insurance!

365% satisfaction“Service Capabilities that Exceed Customers’ Expectations”

INNOvATIONfor the future

365 Days r&D“Insurance/Financial Capabilities thatExceed Customers’ Needs”

36.5° system“Process Capabilities that Maximize Customers’ Convenience”

servICe Company

Beyond Expectation

marKet DrIvenCompany

Customer Oriented

CreatIve Company

Creative Challenge

Part 1INsIGHT

026027

Corporate

brand Strategy

Lead transparent management and ethical growthSF&MI maximizes shareholder value through transparent and independent operation of the BOD and car-

rying out its social responsibilities. At present, the BOD consists of three inside directors and four outside

directors, with expertise and extensive experience in insurance, economics, management, and law. The

regular meeting of the BOD is held quarterly, and extraordinary meetings are held to review and make deci-

sions on major legal issues and the bylaws or issues critical to effective management of the company. The

BOD has separate committees, including the Management Committee, Audit Committee, Independent Di-

rector Recommendation Committee, Risk Management Committee, and Related Party Transactions Com-

mittee , to ensure rational decision making.

Corporate

Governance


Part 1INsIGHT

028029

Corporate

directory

President & CEOChi, Dae Sub

Executive director Outside director Inspection commissionerRhee, Jong Sung Kim, Kang Chung (BOD chairperson) Lee, Jae Sik

Lee, Won Chang (Inspection commissioner)

Shin, Heon Cheol (Inspection commissioner)

Shin, Dong Youb

Vice presidentYoon, Hyung Mo

Yoon, Yong Am

Nam, Jae Ho

Executive director Managing director

Chae, Moon Pyo Kim, Dae Kyung Chun, Byung Ho

Yoh, Nam Ku Jung, Hoe Yong Kwon, Dae Young

Park, Jae Hong Kim, Jong Woo Lee, Myeong Ho

Hwang, Hai Sun Ko, Jung Bin Lee, Deok Jae

Kim, Tae Hwan Choi, Young Kap Lee, Jong young

Ko, Young Chang Kim, Seong Gyu Cho, Hee Jong

Kim, Youn Gil Oh, Hoon Taek Kim, Suk Tae

Kim, Jeong Cheol Choi, Byung Seok Oh, Sang Hoon

Kwon, Tae Myung Lee, Yang Hee Hwang, Seong Yong

Choi, Young Moo Lee, Suk Han Hwang, Seung Mok

Park, Choon Weon Kim, Man Yong

Lee, Beom Shin, Dong Gu

Kang, Hyung Koo Lee, Soon Koo

Lee, Sang Kyung Chang, Duk Hee

Jeong, Hyun Jun Oh, Jae Uk

Kim, You Sang Kim, Ung Min

Sung, Ki Jae

Three Inside Directors &Four outside Directors

Sub-CommitteeManagement committee Two Inside Directors

Two outside Directors &one Inside Director

Two Inside Directors &Two outside Directors

Two Inside Directors &one outside Director

Three outside Directors

Two outside Directors & one Inside Director

audit committee

Independent Director Recommendation committee

Risk Management committee

Related Party Transactions committee

compensation committee

Innovative path towards becoming a global insurer


The globalpioneerventuring into the new market

Energy expert Alfred Fackler

2010-11At a glance

Part 1INsIGHT

030031

june aprIL marCh january DeCember. 2010

hiring energyexpert alfred FacklerApril. 2011

Alfred Fackler, a world-class energy expert, joined SF&MI as an executive advisor in charge of commercial lines business in April 2011. A global insurance expert who was responsible for underwriting in the energy field, including nuclear and wind power generation at Munich Re in Germany, the world’s biggest reinsurer, Mr. Fackler is recognized as the world’s leading expert in energy generation insurance. His recruitment at a time when there is such great interest in the safety of atomic energy and alternative energy has created an opportunity for SF&MI to specialize in energy underwrit-ing and conduct better research into state-of-the-art technology, thereby enhancing our global competitive-ness in this sector.

venturing into theeuropean market in earnestMarch. 2011

After acquiring business license from the Financial Services Authority (FSA) in March 2011 that autho-rized SF&MI to do insurance business in the European Economic Area (EEA), we opened SF&MI Company of Europe Ltd. in London in May. We have since begun business in Europe in earnest and plan to engage in insurance business with focus on commercial insurance for Korean companies and foreign-invested corpora-tions and then enter the local insurance market later on. To actively conduct overseas business, SF&MI is forg-ing ties of global business cooperation by concluding MOUs with AXA of France and Mapfre of Spain, both world-class insurance companies.

entering the middle easternand african marketjanuary. 2011

SF&MI established a foothold for business in the Middle East and Africa, the new 77.8 billion-dollar market which is rapidly rising as the largest engineering insur-ance market in the world. In January, SF&MI became the first insurance company to open a branch office in Dubai, thereby improving its capability to study the in-surance market in the region and establish partnerships with appropriate enterprises.

joining the ‘one trillion Club’ inretirement pensionsdecember. 2010

SF&MI is the first Korean non-life insurance company to have a KRW 1 trillion retirement pension reserve. As of end of December 2010, the reserve amounted to KRW 1.09 trillion, up 114% from KRW 508.9 billion in 2009. Such a remarkable achievement was enabled by active use of commercial insurance consultants and the offering of products of unmatched quality. SF&MI is the first do-mestic insurance company to develop and sell the “Super Retirement Pension,” a bundled specialty retirement pen-sion product with fire legal liability and group accident insurance in one. The company will continue to develop such new products that satisfy customers’ needs.

Launchingsmart phone call center,“Call to web”june. 2011

SF&MI launched the call center’s “Call to Web” service for smart phone users in June 2011. This service, the first of its kind in the financial industry, integrates an ARS call center with mobile equipment. A customer calling the call center may handle affairs using a smart phone instead of talking with counselors. The “Call to Web” service was designed to afford greater conve-nience to the swelling number of smart phone users. It enables customers to swiftly handle affairs without having to wait until they are connected to counselors. SF&MI constantly pursues this kind of innovation to im-press customers and give them maximum value.


2010-11At a glance

november oCtober june

Part 1INsIGHT

032033

One trillion club in retirement pensions

donating eight guide dogs

Launching “the s.”membership serviceOctober. 2010

“The S.” membership service was launched in October 2010 exclusively for “anycar” customers. The service is designed to offer services practically useful to customers. It provides various integrated benefits such as discounts and allows customers to pay premiums with points accumulated from using their credit cards. More specifically, this service pro-vides integrated auto maintenance service, which includes discounts on repairs at some 2,000 auto repair shops across the country such as “anycar Land”, Family Center, and Au-tooasis; discounts for the use of “S SHOP”, the nation’s big-gest service network encompassing restaurants and tourist destinations across the country; accumulation of points for purchasing or using products of leading brands, such as Samsung Electronics and CGV, and the option of using the points to pay premiums.

acquiring bCm certificationjune. 2010

SF&MI became the first Korean non-life insurer to ac-quire Business Continuity Management (BCM) certifica-tion. This certification is designed to assess whether or not core business functions are promptly resumed for a limited time in case business is suspended due to a sudden disaster or accident. BCM is supervised by the British Standards Institute, and it serves as an important standard for measuring whether overall company poli-cies and systems are established and effectively imple-mented even during and after a crisis. Assuming that a fire occurred at its headquarters, SF&MI conducted mock exercise for selecting an alternative workplace, risk management communication, resumption of core business, and restoration of electronic systems. The company was considered as having a well-established risk management system and recognized as having stable insurance business.

24 hours openNovember. 2010

In November 2010, we opened “SF&MI 24 hours” and established a situation room on the 2nd floor of the headquarters in Euljiro, Jung-gu, Seoul, provid-ing services for 24 hours, 365 day a year without any blind spots even on holidays or at nighttime. A quick response team stays on duty on weekdays from 8 p.m. to 8 a.m. the next day, checking the overall situation in-cluding business, compensation, and insurance review. In the event of an emergency, the team consults the executive and the related department personnel to im-mediately establish and take quick action. Together with the midnight express service, this service is expected to further enhance competitiveness in customer response during emergency situations, such as major accidents and heavy rain and snowfall.

juLy

Donating eight guide dogsfor the blindjuly. 2010

SF&MI’s guide dog school, one of SF&MI’s representa-tive corporate social responsibility organizations, do-nated eight guide dogs for the blind in July 2010. There were four new beneficiaries in 2010 including a college freshman. The other four received dogs to replace the previous guide dogs. A ceremony for delivery of the guide dogs was held with about 70 people present, in-cluding the beneficiaries, the volunteers who took care of them and guide dog trainers. SF&MI donated 141 guide dogs from 1995 to 2010, and they are presently providing service throughout the country.

02

Our ceaseless innovation has allowed SF&MI to seize the initiative in Korea. Ranging from “anycar,” Korea’s top car insurance, to long-term insurance leading changes in population and the world and commercial insurance promising happy life and successful business, we offer the best products and services.

Hong, Sung jin / Ryu, Kyung yup

best brand value

The auto insurance market in 2010 and SF&MI’s strategies and performance

Business conditions in 2010 were the worst ever. The loss ratio deteriorated due

to increased accident rates; customers’ needs were increasingly complex; and

competition between financial industries became even more severe. SF&MI never-

theless maintained a robust market standing in the 2010 fiscal year with a market

share of 27.3%. It achieved outstanding growth in online auto insurance, which

is seen as a successful response by the company based on accurate analyses to

customer needs amid the wave of informatization via the Internet. The company

suffered significant losses due to a high loss ratio of 75.9%, but it implemented

profit-oriented pricing policy and applied differential rates.

1) Increase in accident rates worsening loss ratio

Auto insurance experienced a worsening loss ratio for the year due to the rise in

accident rates. The rise in accident rates in property damage liability coverage was

especially sharp. The ratios of small accidents and property damage accidents in-

creased more significantly than for larger accidents and bodily injury accidents. The

worsening operating cash flow was primarily a result of the imbalanced loss ratio

in the collision damage waiver, and the amnesty for traffic rules violators (in August

2009) served to further worsen the loss ratio in auto insurance. In order to improve

the conditions in auto insurance, SF&MI applied appropriate premiums depending

on risks and performed underwriting actively. It also applied a fixed rate to the poli-

cyholder’s deductible in covering accidents and resolved the fairness issue in pre-

miums for imported vehicles by specifying vehicle classes in greater detail, fulfilling

the role of a leading company in the industry.

2) Enhancing corporate image by

developing environment-friendly and CSR-minded products

Recognizing environment-friendly auto insurance as a growth driver for the future,

SF&MI adopted eco naming; it offered the Eco e-Policy Clause and special policy

conditions for using eco (recycled) parts and stepped up efforts to develop environ-

ment-friendly products. The Eco e-Policy Clause will save money by reducing use

of paper. The savings will be used to offer lower premiums and support creation of

green zones in cities by the Korea Forest Service. The special policy conditions for

using eco (recycled) parts will reduce consumption of resources in manufacturing

vehicle parts and lessen carbon emissions, helping make environment protec-

tion an integral part of daily life and enhancing SF&MI’s image as an environment-

friendly company. The company also took steps to reduce costs for consumers. It

reduced business expenses and used the savings in offering special policy condi-

tions to discount auto insurance premiums for low-income people.

3) Strengthening efforts to prevent traffic accidents

The number of traffic accidents has continued to increase, causing the social costs

from traffic accidents to rise in tandem. Another way in which SF&MI is fulfilling

its corporate social responsibility is to help reduce traffic accidents. SF&MI held

publicity campaigns 139 times via the Samsung Traffic Safety Research Institute

through mass media outlets including television. It has produced and aired special

programs to show best traffic safety practices of advanced countries in coopera-

tion with major broadcasting companies since 2006. As of the end of December

2010, the company has trained mothers of elementary school children as honorary

teachers of traffic safety for nine years. About 18,000 honorary teachers are trained

on average annually to provide safety services for children on their way to and from

school and traffic safety education for children.

Outlook for the 2011 market and SF&MI’s strategies and plans

Backed by diversification of sales channels, the company’s channel competitive-

ness continues to improve, and its online channel, which was established only in

2009, is expected to bolster the company’s position in the market. SF&MI will step

up efforts to stabilize the loss ratio by creating sound competition environments

including profit-oriented pricing policies and acquisition strategies as well as take

the initiative to improve institutions. In conjunction with the Samsung Traffic Safety

Research Institute, it will offer upgraded special feature reports on traffic safety in

foreign countries via major TV broadcasts following the previous year to raise pub-

lic awareness of traffic safety and encourage the central and local governments to

invest in traffic infrastructure. The company will continuously strive to find diverse

methods to reinforce communications with consumers, contributing to sound de-

velopment of the insurance industry based on confidence of consumers.

AUTOMOBILEINSURANCE

(In billions of Korean Won)

FY 2010

FY 2009

FY 2008

+7.6%

Direct premiums written

market share

3,386.9

3,148.2

3,060.5

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Part 2INTIaTIve

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02

SF&MI will step up efforts to stabilize the loss ratio by creating sound competition environments.

27.3%

Incomparable products and services

LONG-TERMINSURANCE

+23.4%


02

0201

Management environment in 2010

The financial market had been recovering slowly from the American financial crisis

but experienced another downturn in 2010 due to the spread of the financial crisis

in Europe and the rise in international commodities prices.

Moreover, as the domestic insurance market has matured and as the population

demographics continue to shift, competition in the insurance industry has become

more intense. More and more consumers attach importance to value consumption

and enterprises’ social responsibility, and sales through independent channels,

such as the Internet and home shopping, are rising. Against this backdrop, the

management environment in the insurance market is in constant flux.

SF&MI Strategies

1) Maintain market leadership through continued growth based on profitability

Even in this market environment, SF&MI has realized steady growth in long-

term insurance through systematic and strategic product development and

underwriting policy, while securing profitability through precise risk and profit &

loss management. The company is actively coping with the rapid change in the

financial market by studying new growth engines for long-term insurance based

on customer value, developing products by identifying strategic markets, and

providing optimally designed products suited to each channel for balanced growth

between channels.

2) Enhance core competitiveness of

long-term products and ensure internal stability

SF&MI’s long-term insurance plays a key role in turnover as well as in future

profitability. With this in mind, the company has further consolidated its strong

position in long-term insurance by strengthening its core competency of product

development and underwriting, optimizing product portfolios, and solidifying

the compliance system. To secure a stable profit base, SF&MI has also set an

appropriate risk rate and run the renewal system. SF&MI also endeavors to

enhance value of customers and shareholders through risk management based on

statistical systems and scientific analysis.

3) Improve strategies in response to diversification of sales channels

New sales channels are rapidly emerging. Among these are independent channels

such as the Internet and home shopping. SF&MI is responding by focusing on

providing optimum products for individual channels and applying a specific sales

strategy for each channel. The company is striving to develop unmatched products

for individual customers and channels by analyzing the competitiveness of each

sales channel and monitoring the market competition in each product category.

Forecast for the 2011 insurance market and SF&MI’s strategies

The on-going economic slowdown is expected to further reduce demand for

insurance this year. Under these circumstances, consumer needs will change

significantly as a result of the rapidly aging population, the rise in consumption

power of women and the younger generation, and the increasing popularity of

social networking. The management environment in the insurance market will

likewise change in many respects as the laws and regulations on consumer

protection are tightened.

In response, SF&MI plans to implement long-term insurance strategies to achieve

continued M/S growth on a stable profit and loss basis. We will thoroughly identify

customer needs and develop and offer products from the viewpoints of customers.

SF&MI will develop new products by putting the highest priority on customer and

market value and make the first move in creating new markets, thereby maintaining

market leadership.

To accomplish stable profit and loss management, we will boost source

competitiveness for risk management based on statistical systems and scientific

analysis in such ways as establishing a risk management system for each security

based on statistics. The company will implement balanced product strategies

between sales and profit and loss by analyzing the profitability for each product

and managing products based on future estimations on gains and losses.

We have achieved uninterrupted growth via systematic and strategic product development and underwriting and have maximized profitability through adept risk management.

Part 2INTIaTIve

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FY 2010

FY 2009

FY 2008


new policy market share

26.5%

8,119.6

6,580.8

5,576.8

Reliable partner

Management environment in 2010

SF&MI’s commercial insurance for the 2010 fiscal year earned KRW 1,264.8 billion

in insurance premiums and recorded a high growth rate of 8.5% despite the slow-

down in economic growth and strength in the Korean won. The company recorded

operating profit of KRW 149.3 billion.

This strong operating performance is attributable to the company’s aggressive

expansion into new markets by exploring the in-house market (executives and

employees market) and introducing a new operating method in the format of B-to-

B-to-C (big companies↔companies↔company customers) for companies with

customer memberships, new marketing initiatives characterized by coordination

between in-house channels, and the new corporate culture of openness and com-

munication characterized by enterprise-wide information sharing and facilitation of

communication between executives and employees and between departments. In

addition, the company has created a profit-oriented operating atmosphere by im-

proving the operation paradigm. Among other things, it has changed the evaluation

management indices and established sales management standards via profitability

analysis for each product. It has also moved to maximize operating efficiency of

commercial insurance by transferring the line underwriting function to the operating

department to develop core capabilities of commercial insurance and is enhancing

competence as a global non-life insurer by establishing a system to standardize

underwriting/reinsurance operations.

SF&MI Strategies

This year, achieving management goals in commercial insurance is expected to be

difficult due to a smaller percentage increase in capital investment in response to

the slower economic growth, the slump in the construction market, and the decline

of sales in foreign currencies stemming from the appreciation of the Korean won.

The company is moving to counter these difficulties by realizing balanced growth

focusing on profitability, raising its competitiveness in the domestic market, and

consolidating the foundation for global businesses.

For balanced growth focusing on profitability, the company is working to improve

security conditions for commercial insurance business partners incurring losses

and to steadily increase profitable sales by conducting preemptive marketing in

the institutional insurance market (indemnity for facilities used by multiple people,

indemnity for personal information leakage, etc.) and facilitating partnership mar-

keting for companies with customer memberships. Also, it will continue structural

innovation of retention and reinsurance (increasing retention limits, offering a wider

range of contracts for fine small- and medium-sized articles, and diversification of

reinsurance sources), which has been on-going since early 2011 as part of efforts

to raise the global competence of commercial insurance, in the second half of this

year to steadily rachet up profits. To maximize competitiveness in the domestic

market, the company plans to increase the share of products on which it sets the

premium rates itself and provide unique, unmatched services by taking advantage

of high added-value consulting of the Samsung Loss Control Center. In addition, it

will step up efforts to tackle the in-house market by maximizing synergies between

internal channels and expanding the specialized CRC channel.

Finally, to consolidate the foundation for the global business of commercial insur-

ance, the company will establish operating policies for underwriting in overseas

bases, build needed systems, and steadily increase reinsurance business by

means of increased overseas acquisition and entry into a greater number of profit-

able treaty reinsurance contracts.

COMMERCIALINSURANCE


0201

Part 2INTIaTIve

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FY 2010

FY 2009

FY 2008


market share

1,264.7

1,166.1

1,107.6

+8.5%

02

We have enhanced our competence as a global non-life insurer and established a profit-oriented operating atmosphere by exploring new markets and developing the organizational culture with emphasis on effective communication.

28.5%

Innovation is sometimes not taken seriously since it is elusive or unquantifiable.However, innovation will become very important and real to you if you see the process and the system of SF&MI, which can make good performance into the best performance.

03

Lee, Eun jung / Lee, byung Kook

We pursue balanced growth

considering both

profitability and stability.

ENTERPRISE RISK MANAGEMENT

01


Part 3IMPRoveMeNT

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SF&MI is the most reliable company

As a financial institution, active risk management is one of the crucial processes

and core competencies of SF&MI. Managing risk is not merely about avoiding or

even minimizing it. Risk also needs to be considered as a potential opportunity.

Our ERM department manages current and emerging risk, aiming for an appropri-

ate balance between risk and return. To focus on both risk and return, SF&MI has

integrated the ERM framework for assisting with its day-to-day business activities

and strategic planning. The key elements of our ERM framework are:

Risk Appetite: Our risk appetite is an expression of the maximum risk we seek to take

within the constraints which comply with our policies on capital adequacy. The well de-

fined risk appetite is translated in consistent risk limits across all risk categories. Risk Modeling: We use a risk model to determine the risk capital to support the

risks which are defined by the risk appetite. Our risk model is based on a Value-at-

Risk (VaR) approach, which determines the maximum loss in our business port-

folio values. We measure the risk capital at 99.5% VaR, which calculates the loss

likely to occur once in two hundred years. Risk Strategy: Our risk modeling provides the amount of available capital. We

establish risk strategy to allocate the available capital to each line of business to

maximize the efficiency of our capital. Risk Control: We evaluate the amount of risk capital consumed across all lines

of business, periodically monitor the capital adequacy, and then rebalance the al-

location of risk capital to optimize the deployment of the capital. Performance Measurement: We evaluate risk-adjusted returns across the orga-

nization and then rebalance the business portfolio based on the feedback on the

risk-adjusted return evaluation.

SF&MI’s enterprise risk management principles

ERM is based on three principles that are applied throughout the company. Early Warning Risk Identification: Risk management and analyses involving pro-

jections for the future and requiring risk management forecasts and prognostica-

tions. Key Risk Indicators (KRIs) allow SF&MI’s risk managers to evaluate risk in

advance using real data.

02

02

To focus on both risk and return, SF&MI has integrated the ERM framework to facilitate its day-to-day business activities and strategic planning.

Lim, Il Kweon

Enterprise risk management organization and structure

SF&MI’s risk governance structure is designed for the integrated management

and control of all the risks across all lines of business with the objective of achiev-

ing an appropriate balance between risk and return. Board Of Directors: Approves the risk appetite and guidelines for ERM at SF&MI. ERM Committee: Reviews risk limit, risk strategy, and the capital allocation, and

reviews critical risk issues and exposures. Product Committee: Reviews potential risks of new products and reviewing criti-

cal market and credit risk-related issues. Asset RM Committee: Approves the investment policies and limits and makes

final approvals of the releases of the new products. Investment/loan Committee: Reviews potential risks for large amount transac-

tions of investments and loans and grants final approval of the transactions. ERM Department: Develops and implements methods and processes for iden-

tifying, assessing, monitoring, and controlling a wide range of possible risks in all

business units as well as company-wide based on systematic analysis. It sets up

the risk limits and risk strategies based on the risk modeling and monitors the ac-

cumulation of all the types of risks across business lines. A strong risk monitoring

system enables the ERM department to capture potential risks early and give top

management warning to take appropriate actions.

Risk categories Asset-liability Management (ALM) Risk: ALM manages structural risks (i.e., inter-

est rate, equity, and liquidity) from the perspective of optimized returns. Managing

for ALM Risk involves strategizing from the dual viewpoints of assets and liabili-

ties. Strategic Asset Allocation (SAA) involves the optimization of the asset invest-

ment portfolio, while Product Mix Strategy is concerned with the optimization of

the product portfolio. Insurance Risk (underwriting risk): Insurance Risk refers to the danger of incur-

ring a financial loss due to property, casualty, auto, or long-term insurance events.

Our ERM Department manages for the transfer of such risks—including setting

limits on underwriting authorizations and requiring approvals for transactions in-

volving new products. It also oversees the management of reinsurance and moni-

tors emerging issues that may affect the company’s overall exposure to risk. Market Risk: Market Risk refers to the danger of being negatively impacted by

movements in the financial markets—including equity prices, credit spreads, for-

eign exchange rates, and real estate prices. Through worst scenario & sensitivity

analysis, SF&MI measures the potential changes in the expected earnings based

on instantaneous changes in financial market factors. Credit Risk: Credit Risk refers to the danger of incurring a financial loss due to

the diminished credit-worthiness of counter-parties of SF&MI and/or third parties.

To help mitigate the possibility of such occurrences, SF&MI transfers a portion of

its new business to authorized reinsurers that are rated at least “A-.” For its invest-

ment portfolios, SF&MI maintains a well-diversified credit fixed-income portfolio

across companies and industries.

Regulatory capital adequacy

SF&MI is well capitalized and meeting its regulatory solvency requirement. The

SF&MI’s regulatory solvency ratio as of March 31, 2011 was 498.5%; this com-

pares starkly with the average of regulatory solvency ratios of the other four major

non-life insurance companies in Korea of 220.2%. SF&MI is clearly the strongest

non-life insurance company in the industry.

Strategic risk management decision making

SF&MI’s strategic decision is made by quantitative/qualitative analysis.

ERM involves the company’s future earnings, NPV, IRR, Capital collection periods

using quantitative analysis. SWOT analysis and reputation/compliance risk as-

sessment are also used in the company’s strategic decision making.

Strategic decisions are made by the ERM committee or the Board of Directors.

Risk management analysis is the one of major tools for making strategic deci-

sions. Both the financial impact and reputation/compliance risks are reviewed.

Strategic acquisition, if necessary, will be made through valuation by actuarial and

risk management concepts s in accordance with regional regulation.


Part 3IMPRoveMeNT

046047

Product committee

board of directorserm Framework

SF&MI’s strategic decision is made by quantitative/qualitative analysis.ERM involves the company’s future earnings, NPV, IRR, Capital collection periods using quantitative analysis.

asset RM committeeInvestment/loan committee

ERM Committee

CRO

ERM department

6.5 million customers choose SF&MI

On and off-line customer participation system

SF&MI became the first company in the non-life insurance industry to establish a

customer panel to actively reflect customers’ voices in management. The panel

mainly conducts such activities as on-the-spot service experience, monitor-

ing, and interviews with customers. The findings are discussed in groups once a

month, and they are shared once a year with the management and executives.

This helps us establish effective customer satisfaction strategies. We also collect

customers’ valuable opinions and provide high-quality customer services through

“I Am a Beginner,” “think NEXT supporters,” “Good Daddy,” etc.

Operating a customer satisfaction taskforce

SF&MI has organized and run a taskforce to support customers efficiently. We

have a number of consultation bodies that pursue company-wide customer ser-

vice innovation and improve quality. Among these are the customer business

quality improvement committee, the customer interest protection committee, the

mediation committee, and the dispute deliberation committee. SF&MI assesses

its system, management, and risks from customers’ perspectives and supports

fair and objective decision-making.

Swift handling of VOC

Voice of customer (VOC) received by SF&MI is handled, monitored, and resolved

through its process of dealing with customer dissatisfaction. Once VOC is received, its

acceptance is notified to the employee in charge, and a touch call is made within one

hour of VOC acceptance to the customer acknowledging the receipt of VOC. While

a complaint is handled, a callback is made to inform the customer of what happened

to minimize the possibility of an additional complaint. In 2009, we shortened the time

cycle for processing of VOC from within three days to within 24 hours.

Thorough CS training

All employees of SF&MI should undergo on and off-line training on customer

response. The training covers contents on basic service quality by class and po-

sition. While regular trainings are given, customer dissatisfaction cases are shared

between all employees and executives to prevent the same cases from reoccurring

repeatedly. VOC Daily is shared over the Intranet, and manuals on how to respond to

customer complaints and manuals on basic customer service quality are distributed.

CUSTOMERSATISTACTION

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02

All executives and employees of SF&MI are thoroughly educated for service quality.

For reasonable customer support,

we operate dedicated organizations and

always listen to our customers.

Lee, Won Jin / Yu, Dae Woong

SF&MI is the smart leader

SF&MI established a state-of-the-art IT system. Through next-generation projects

implemented in phases in 2007 and 2008, we constructed a one-stop service

channel for customers, achieved standardization of the mobile-based compen-

sation business, handled contract business quickly and precisely, established

a user-friendly next-generation business portal, and set up an informatization

service system specifically designed for the field.

Flawless management of customer information

SF&MI has diversified its data center and established a system to encode customer

information and to prevent forgery in electronic financial transactions. To deal with

threats to core internal information and network security, we have in place a server

security tool to prevent hacking, a dual firewall, an intrusion detection system, and

a web application firewall. We use encoding storage of customer information DB,

and we have strengthened “24X365 monitoring” through network encoding cyber

control. All of this helps ensure world-class customer information security.

Mobile homepage

In July 2010, SF&MI became the first domestic insurance company to open a mo-

bile homepage (m.samsungfire.com). The mobile homepage provides location-

based services for customers, acting as a gateway for mobile customer services.

We plan to develop contract management service based on the homepage,

making possible mobile inquiry about contracts, loans and compensation service

records, and subscription and planning of insurance.

Risk analysis and management

Using scientific risk measurement, we analyze scenarios and potential effects on

company profitability, and the analysis results are utilized to determine the price

of a new product, present guidelines on insurance product profitability, analyze

risks and losses of investment products, and manage duration, etc. Along with

this, we run BCM to cope with an emergency situation where business is sus-

pended because of damage to the IT system due to a disaster, such as a fire, gas

explosion, or heavy rainfall. SF&MI became the first domestic non-life insurance

company to acquire BCM certification in June 2010, which helped the company

garner due recognition for its distinguished accident response system.

ITINFRA

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Part 3IMPRoveMeNT

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In order to respond quickly to the changing

financial environment and maximize

customer service quality, SF&MI employs

the world's best IT system.

Jung, Pil Yong

02

The user-centered and site-centered IT system is a key factor in SF&MI’s becoming the world's best non-life insurer.

SF&MI guarantees a bright tomorrow

SF&MI’s image of talent

SF&MI’s code of conduct embraces customer-oriented spirit, sense of ownership,

sense of challenge, professionalism, and law-abiding spirit. Talents with “cus-

tomer-oriented spirit” are those who are sincere in all they do, putting themselves

in customers’ place, and talents with a “sense of ownership” are those who lead

changes in the company with their power of execution. Talents with “spirit of chal-

lenge” are those who take risks with a new pioneering spirit of passion. Talents

with professionalism are those who always think, study, and put something into

practice to become the best in a certain area. Talents with “law-abiding spirit” are

those who go along the right path and observe ethics in whatever they do.

System to connect personnel matters with training

We require all employees to have an individual development plan (IDP), linking

human resources affairs to training. Training for our employees is based on any

one of several competency models, including Samsung Insurance Value (SIV),

Samsung Insurance Leader (SIL), and Samsung Insurance Expert (SIE). Step-by-

step training takes place as it is connected to assessment, promotion, and annual

salaries in the company’s personnel affairs system.

Improvement of the service innovation mindset

Managers in the departments that are in contact with customers get separate ser-

vice innovation training. This is not one-way training. Rather, it is linked to continu-

ally presenting ideas for improving the field and to learning connected to practical

action, and employees compete with each other to perform better. The basic in-

surance marketing course and practical course are also unrivalled programs. De-

signed to cultivate the best financial insurance marketing experts, these courses

target those in the senior, responsible, and chief positions.

02

HUMAN RESOURCES

01


Part 3IMPRoveMeNT

052053

02

Our educational system provides for all our training needs, ranging from self-development to reinforcement of service-mindedness, for each position and business.

SF&MI spares no support for

its executives and employees to grow

into global financial pioneers.

Jung, Pil Yong / Lee, Hwa Shin / Lee, Jun Hyun

SF&MI does not merely want more customers or higher profits. We want a society that is safer, cares for those who cannot help themselves, provides opportunities for growth to everyone and lays a fertile ground where the flowers of diverse cultures can bloom.

04

WE ARE bECOMING THE FOUNdATION OF A MORE SECURE WORLd.

WE MAKE MORE FLOWERS OF SPORTS ANd CULTURE bLOOM.

WE REACH OUT WITH WARM HANdS TO THE UNdERPRIvILEGEd MEMbERS OF SOCIETy.

SF&MI communicates with the world on traffic, safety, health, culture, and the environment.

“MY bike allows Me to feel the refreshing green air. now, i can enjoY greener riding More safelY with sf&Mi.”SF&MI has designated the traffic safety project as its major social contribution. It is working hard to

prevent traffic accidents involving children and promoting traffic safety for prevention of traffic

accidents while continuing various traffic safety education programs and traffic safety campaigns.

It is also trying to spread its consideration for the environment to customers and all of society

through development of a wide range of products such as Green Bicycle Insurance.

SF&MI creates a sustainable environment as a leader in green management.

based on our professionalism, we make flowers of culture blossom everywhere in society.

“Listen intentLy to this reLiabLe friend. aLthough we cannot engage in conversation but you can feeL the beautifuL and precious spirit of sharing."

For the everyday safety of the blind, SF&MI donates guide dogs every year

and makes various efforts to improve the perception of the public about guide dogs.

Our efforts to contribute to society are not one-time event, and we intend to

spread and establish a sustainable culture of sharing.

We do not give merely donations, but sincerity tinged with consideration.


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060061

ENVIRONMENTALMANAGEMENT

01

“ bASIS OF TRANSPARENT MANAGE- MENT”

“ MOvINGAHEAd FOR CLEAN EARTH”

ETHICAL MANAGEMENT LEAdER

SF&MI became the first domestic insurance com-pany to declare intention of fair trade compliance in 2001, and it set 2002 as the first year of ethical management, holding a ceremony to formally an-nounce ethical management. At this event, the company set the 3Cs (clean, change, and chal-lenge) as its basic management directions, adopt-ing the code of ethics consisting of “transparent management” trusted by the people, “fair trade” respecting fair free competition, and market order and the “clean organization climate” preventing ir-regularities. In 2009, we announced five codes of conduct for executives and employees: customer-oriented spirit, sense of ownership, sense of chal-lenge, professionalism, and law-abiding spirit. Also, by starting in-company broadcasting and distribut-ing publications, SF&MI bolstered all employees’ intention to implement ethical management, and by receiving pledges to observe ethics and the law from all executives and employees regularly every year, we helped make ethical management an inte-gral part of the corporate culture. Furthermore, all employees move toward accurate compensation through proper sales with firm belief and confi-dence in the value of insurance products, and by doing so, they pursue customers’ total satisfaction.

INTERNAL CONTROLSince the “fair trade compliance declaration cer-emony” in 2001, SF&MI has devised “fair trade compliance programs” based on “fair trade com-pliance rules” established through hearings by the “fair trade compliance committee.” The programs mainly comprise the code of conduct on fair trade, action rules, handling rules, check lists, and inter-nal tip-offs. A fair trade compliance handbook has

been drafted under these programs and distribut-ed, and step-by-step training is provided for execu-tives and employees in departments or positions that entail high risk of violation of the Fair Trade Act. In order to firmly institutionalize fair trade compli-ance, we operate fair trade compliance programs and set up an “internal transaction committee” consisting of only outside directors to put transpar-ent management into practice.

INTERNAL WHISTLE bLOWING ANd TRAININGSF&MI actively hears employees’ opinions on unethical acts of management and business and their suggestions to take corrective action, thereby preventing many irregularities. “Whistle,” an inter-nal tip-off channel, enables the informer to directly contact the ethics office, and it allows reporting on ethics code offenses, irregularities by employ-ees, fair trade compliance program violations, and violations of insurance collection orders, as well as submission of suggestions. Confidentiality is guaranteed for the informers and the contents of their reports under the operating guidelines of the internal report system. If confidentiality is violated, sanctions are imposed on those responsible. We also established ethical management training courses that focus on internal report cases, model cases and failure cases. All executives and employ-ees undergo this training every year.

ETHICAL MANAGEMENT

02

ESTAbLISHMENT OF ENvIRONMENTAL MANAGEMENT SySTEM

In 2010, SF&MI formed a “general consultation body,” an organization that reviews and makes decisions on environmental issues, and appointed a person in charge of practical affairs, thereby laying the ground-work for systematically implementing environmental management. The body formulates environmental management policies, such as the environmental management vision, five principles of action, action plans, and runs an administration office.

INTROdUCTION OF ELECTRONIC POLICySF&MI adopted electronic policies in 2009 to re-duce the quantity of paper used, making the work environment more environment-friendly. In addi-tion to long-term and auto insurance, electronic policies were also introduced for Internet insur-ance products in 2010. If a customer receives electronic policies and an insurance application through e-mail, not in writing, then a certain amount (KRW 540 for auto insurance/1% of the initial insurance premium of long-term insurance) is set aside to be later donated to environmental organizations, and the amount accumulated from reducing the use of paper is utilized to fund envi-ronment projects by the Korea Forest Service.

ACTIvITIES TO CUT GREENHOUSE GASES SF&MI minimizes environmental pollution and greenhouse gas emissions by creating eco-offices. We introduced an electronic approval system to decrease the quantity of paper used, while adopting a personal Net Fax system in which faxes are transmitted to personal e-mails, not fax machines, of executives and employees. We also make offices more environment-friendly

by controlling computer monitor power, observ-ing operation time of air conditioners and heat-ers, and enforcing automatic lights-out times in offices. We recommend employees use public transportation to reduce indirect greenhouse gas emissions when they commute or take busi-ness trips. Toward that end, the company offers discounts on KTX for business trips and runs commuting buses. In addition, SF&MI joined the Carbon Disclosure Project (CDP) in 2010, releas-ing information on its greenhouse gas emissions, crises, and opportunities by climate change and carbon management strategies.

CARING FOR THE ENvIRONMENT TOGETHER

We link the environment to various products to help spread a spirit of caring for the environment among our customer base and throughout so-ciety. “Green Bicycle Insurance” developed by SF&MI is a unique form of personal bicycle insur-ance that compensates for accidents suffered by the policyholder as well as physical trauma and property accidents caused by the policyholder to others. It has been well received as an appropri-ate insurance product for bicycle users. SF&MI has also been selected as an insurance company for the “consumer relief insurance system” de-signed to help consumers purchase eco-friendly agricultural products in Jeollabuk-do without anxiety. SF&MI pays compensation if agricultural pesticides are detected in eco-friendly farm prod-ucts purchased by consumers or if consumers suffer illness from ingesting foreign substances or damaged or rotten products. In addition, we sell insurance against damage from storms and flood-ing and liability insurance against environmental pollution, and, since June 2010, we have offered non-driving day auto insurance.

Part 4INsPIRaTIoN

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CORPORATE SOCIAL RESPONSIBILITY

03

PRINCIPLES ANd TASK FORCE Our corporate social responsibility activities are sustainable programs that make the most of the characteristics of non-life insurance. It is much more substantial than donations or one-off events. The “Samsung anycar volunteer team” was set up in 1994, and 15 volunteer centers and 180 volunteer teams are now in operation across the country. Our employees participated in volunteer work about 3.2 times, or 12.6 hours, on average in 2010. SF&MI collects approximately KRW 400 million every year through the “Dream Fund,” a volunteer service fund of its employees, and the company matches the do-nations made into the fund for its twinned volunteer service organizations.

SAFE dRIvING PROjECT

SF&MI initiated the “safe driving project”. It is suited to the company’s nature and is now its represen-tative corporate social responsibility project. Its primary purpose is to prevent child traffic accidents and promote safe driving to prevent traffic accidents in general. The company has offered a number of traffic safety training programs and staged traffic safety campaigns led by the Samsung Traffic Safety Research Institute and Samsung Transportation Museum. SF&MI is twinned with 93 children whose parents died in traffic accidents or were traffic po-licemen who died in the line of duty, and provides them funds for living expenses on a monthly basis as well as college scholarships, school entrance gifts, and funds to pay private educational institution fees. In addition, we give them emotional assistance by encouraging one department to support one such child. As part of these activities, the company, along with Seoul City, held since 2009 “Safe Seoul,” a comprehensive safety experience festival where

citizens are given tips on how to respond to disas-ters and environmental and living safety accidents, and children are given early training.

SUPPORT FOR COMMUNITIES ANdTHE UNdERPRIvILEGEd

Since 2004, we have supported scholarships for distinguished students at Seoul School for the Blind, and provided scholarships and learning materials for 13 to 15 students every year. We hold the “SF&MI Junior Global Leaders’ Forum” for teenagers to foster them as global leaders. The forum comprises tests for measuring aptitudes for global leadership and a junior global leaders’ camp to cultivate global manners and English ability. Since 2009, about 25,600 elementary and middle school students across the country have participated in the forum, and it is taking root as a representative program for nurturing talented teenagers with good manners and healthy mindset as global citizens. We operate a college development fund and grant grade-based scholarships for high school students, helping foster distinguished young talents and future leaders.

PROjECT TO SUPPORT THE dISAbLEd

SF&MI engages in corporate social responsibility activities for the handicapped. Along with the “Korea Callphone Volunteers,” we help the blind and the disabled in wheelchairs adapt themselves to society.

Together with the “Disabled First Movement Organi-zation,” we have waged campaigns to raise aware-ness of the handicapped by holding music camps and autumn concerts for disabled teenagers and events for inviting and awarding prizes to excellent classes that helped the disabled adapt themselves to the integrated school environment. From 2008 to 2010, SF&MI concluded a “social agreement to raise awareness of the disabled” with the Ministry of Education, Science and Technology and the Disabled First Movement Organization. Under this agreement, the company produced videos entitled ‘My Friends,” “Good Friends,” and “Good as You Are (Best Friends),” as training materials for better understanding of handicapped teenagers, and it distributed these materials to elementary, middle, and high schools throughout the country to improve perception of the disabled. The “Samsung guide dog school” donated 141 guide dogs from 1995 to 2010 to the blind through training programs and guide dog donation ceremo-nies in the first and second half of every year. By waging guide dog campaigns, we make efforts to raise public awareness of guide dogs’ approaching public facilities and using public transportation.

HAPPy SCHOOL SUPPORT PROjECT

Since May 2005, SF&MI risk consultants (RCs) have donated KRW 500 per long-term insurance contract to raise funds for “500-Won Hope Gift,” a project designed to improve living space, such as kitchens, bathrooms, and child study rooms in houses and facilities of the disabled. About 19,000 RCs have participated so far and raised approximately KRW 2.3 billion. Through this project, 115 houses and facilities for the handicapped have received gifts of new hope. Since May 2010, the company has held an agreement ceremony for the “child traffic and

safety accident prevention project” with Safe Kids Korea. We raised funds by setting aside KRW 500 for every new auto insurance sale, and gave safety training and delivered safety accident prevention supplies (safety kits, transparent umbrellas, and traf-fic safety animation CDs) to lower-grade elementary school students across the country. We also waged campaigns to install safety accident prevention signs inside schools. In 2010, five schools received benefits, and some 25,000 RCs joined this project, accumulating KRW 120 million in 2010 alone.

SHARING TOGETHER

Our customers as well as our employees and RCs make efforts to contribute to society in many ways. We operate the “honey bean points” system for the members who subscribe to the SF&MI homepage. In 2010, we designated “Plant for the Planet’, an environmental campaign by the UNEP, as a program for which honey bean points could be used. SF&MI encouraged its customers to voluntarily contribute their points and donated all unused points to the program. In this way, we put caring for the environ-ment into action together with our customers. In 2010 alone, about KRW 10 million was saved up, with 17.6% of customers participating.

“IdEAS ANd PRACTICES ENAbLEd ONLy by SF&MI”


SPORTS

04

“ FROMACTIvITIES TOCULTURE”

PROjECT TO SUPPORT AMATEUR SPORTS

SF&MI has supported amateur sports since 1997. Presently, the company is a sponsor of the Korea Skating Union, the Korea Athletics Federation, and the College Volleyball Association, and we identify excellent players and run programs for cultivating sports dream trees, or promising young sports players. We held a speed skating match for teenagers to identify distinguished speed skaters and granted scholarships to the winners. We unsparingly cover the expenses of their overseas training and for hiring first-class coaches.

WORLd MASTERS bAdUK Having hosted 15 World Masters Baduk since 1996, SF&MI has endeavored to make baduk a sport and to widely popularize it among the public by holding international baduk contests. This is also our way of leading cultural exchange between people around the world. Along with this, the company set up “Korean Baduk Dream Tree Sponsor Programs” in 2010, supporting promising baduk players in their teens. SF&MI set aside funds whenever Korean players won games during 58 matches from the top 32 to the final four of World Masters Baduk for the Samsung Cup, raising KRW 9.15 million. This money was granted to five promising baduk players as scholarships of KRW 1.83 million each.

bLUEFANGS, SF&MIPROFESSIONAL vOLLEybALL TEAM

Established in 1995, the Bluefangs recorded four consecutive victories after winning the champion-ship in the 1997 Korea Volleyball Super League. The Bluefangs give the thrilling pleasure of victory to volleyball fans every year and produce talented players, and they play an important role in publiciz-ing Korea in world matches. The Bluefangs were also appointed as honorary ambassadors to stage the “Disabled First” movement, in which they join events for handicapped students, appear on public campaign videos, join the campaign to prevent the disabled from becoming neglected, and partici-pate in the event for model classes that helped the disabled adapt themselves well to the integrated school environment. The members of the volley-ball team serve as honorary ambassadors to raise awareness of the disabled and provide encourage-ment to handicapped kids.

Part 4INsPIRaTIoN

064065

“ THE SIGNIFICANCE OF CULTURE ANd HISTORy”

CULTURE

05

1 COMPANy 1 CULTURAL PROPERTyCAMPAIGNAlong with Cultural Heritage Administration, SF&MI wages the “1 company 1 cultural property” movement, spearheading the conservation of Ko-rea’s precious cultural heritage. Its executives and employees clean up Gyeongbokgung Palace once every month, and the company participates in a project to preserve intangible cultural assets for posterity by working in cooperation with tight-rope walkers and by covering expenses for activities.

SAMSUNG TRANSPORTATION MUSEUM

Samsung Transportation Museum is the nation’s first auto museum that was established to introduce and spread auto culture by examining the history and culture of vehicles. Over 2.3 million people have visited the museum since its establishment in 1998. The museum has gathered, studied, and pre-served automobiles and relevant cultural heritage, while providing traffic safety training for children to prevent traffic accidents and administering bicycle license tests.

SAMSUNG LOSS CONTROL CENTER (SLCC)

To create a comfortable corporate environment without disasters, SF&MI became the first domes-tic non-life insurance company to form a disaster management organization in 1979. The company has since offered risk management services to prevent accidents at its customer workplaces. SLCC experts master technology theories and acquire on-site experience in architecture, civil engineering, machinery, electricity, and chemi-cal engineering, etc. They make utmost efforts to prevent customers from suffering any accidents by studying risk management theories based on engineering theories, developing measures to cope with new risks that occur in an advanced industry, establishing practical accident preven-tion measures through on-site checkups, holding seminars, and publishing materials.

management DIsCussIon & anaLysIs

FInanCIaL statements

05

SF&MI repays the confidence of customers, shareholders, and investors with strong performance and profits. We will continue robust growth and keep dividends high, venturing into the world market with strong confidence.


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MANAGEMENT DISCUSSION & ANALYSIS

A. OperAtiOnAl results

1. Overview

In the 2010 fiscal year, the global economy, which had been recovering gradually after the financial crisis, stalled

again due to the spread of the financial crisis in Europe and the rise in commodities prices in the international

market. Domestically, private consumption contracted on fears of continued price hikes and depression in the

real estate market, adding to the difficulties in the overall economy. The non-life insurance industry incurred a

worsening operating loss, with auto insurance recording the worst loss ratio ever. Sales of protection type products

recorded negative growth after the product standardization of medical indemnity insurance in 2009.

Despite the difficult business environment in 2010, SF&MI posted KRW 12.8 trillion in direct premiums written,

an increase of 17.2% from the previous year. Backed by differentiated management efficiency and robust asset

management, net profit reached KRW 664.9 billion in spite of the worsening loss ratio in auto insurance. Total

assets recorded KRW 31.6 trillion, and the solvency margin ratio exceeded 430%, further bolstering the company’s

financial condition.

Although initial premium of long term insurance recorded negative growth in the overall insurance industry

in the 2010 Fiscal year, SF&MI took the initiative in releasing products for home owners and business owners

preemptively and achieved high growth by generating new contracts in the property insurance market.

SF&MI has continued to focus on tied agency channel to increase sales of highly profitable protection type

products while simultaneously developing new channels to ensure strong growth in the future. The company has

actively sold savings products such as annuity and installment savings via the bancassurance, home shopping,

and telemarketing channels. The proportion of auto insurance sales made through online channel, launched in

March 2009, has steadily grown up. SF&MI offer the purely internet based online product and is realizing an even

better loss ratio than through off-line channels.

Net profit 341.2 476.5 598.7 524.5 664.9Change 30.2% 39.7% 25.6% -12.4 26.8Adjusted net profit 379.5 527.8 671.3 598.0 720.3Change 16.7% 39.1% 27.2% -10.9 20.5

Net Profit by Year FY06 FY07 FY08 FY09 FY10

In KRW billions

2. incOme stAtement

Direct premiums written and net premiums in the 2010 fiscal year rose 17.2% and 19.6% to KRW 12,771 billion

and KRW 11,861 billion respectively. The increase of catastrophe reserve declined 24.6% to KRW 55 billion.

Underwriting losses increased by KRW 42 billion due to losses in auto insurance. This was attributed to an

increased loss ratio caused by torrential rain, heavy snow, and an increase in driving rate as well as the regulation

change permitting diversification of the property damage surcharge threshold.

Backed by high growth of invested assets and effective portfolio management, investment income increased by

KRW 239 billion.

Net profit before tax posted KRW 888.4 billion, up KRW 200 billion from the previous year, and net profit increased

26.8% to KRW 664.9 billion. Adjusted net profit including the catastrophe reserve rose 20.5% to KRW 720.3 billion.

Direct premiums written 10,895.1 12,771.3 1,876.2 17.2Net premiums earned 9,917.0 11,861.1 1,944.1 19.6Increase in catastrophe reserves 73.5 55.4 -18.1 -24.6Underwriting profit -284.9 -326.9 -42.0 14.7Investment profit 1,009.7 1,248.7 239.0 23.7Operating profit 724.8 921.8 197.0 27.2Non-operating profit -36.6 -33.4 3.2 N/A Pre-tax profit 688.2 888.4 200.2 29.1 Net profit 524.5 664.9 140.4 26.8Adjusted net profit 598.0 720.3 122.3 20.5Adjusted EPS (in KRW) 13,707 16,492 2,785.0 20.3

In KRW billions

FY09 FY10 Amount %Income Statement Summary

YoY


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3. eArnings by business line

In terms of sales and growth by product line for the 2010 fiscal year, long-term insurance sales rose 23.4% YoY to

KRW 8.1 trillion. Initial premiums and recurring premiums realized growth rates of 99.2% and 19.7% respectively.

The long-term insurance loss ratio increased by 1.0%p due to the increase in saving reserves in line with the

increased sales of savings products. However, the long-term insurance pure risk loss ratio posted 77.5%, an

improvement of 3.9%p, further widening the gap with other companies in the industry.

Commercial insurance sales rose 8.5% to KRW 1.3 trillion over the previous year, especially in casualty insurance

as companies increased investment in facilities in response to the economic recovery.

Auto insurance grew 7.6%, posting sales of KRW 3.4 trillion. Although the auto insurance loss ratio recorded

75.9%, the highest in the last five years, loss ratio gap with other companies in the industry widened further. This is

attributed to the company’s unrivaled underwriting and claim adjustment capabilities.

Meanwhile, the expense ratio recorded 20.3%, improved by 2.4%p due to the decrease in distribution costs and

wages & severance benefits.

Regarding distribution costs, up-front commissions of health insurance were decreased due to the product

portfolio change. The expense ratio of wages & severance benefits and business maintenance expenses

decreased thanks to the enlarged economy of scale.


Loss ratio 79.0 % 81.7 2.7Commercial 53.9 % 62.1 8.2Long-term 84.7 % 85.7 1.0Automobile 71.7 % 75.9 4.2

Expense ratio 22.7 % 20.3 -2.4Commercial 18.6 % 14.7 -3.9Long-term 18.8 % 16.4 -2.4Automobile 32.0 % 31.3 -0.7

Combined ratio 101.6 % 102.0 0.4

Underwriting Efficiency FY09 FY10 Change

1) Acquisition and collection cost, agent commissions, and amortization of acquisition cost2) Reinsurance commission, reinsurance profit commissions

Wages & severance benefits 5.4 % 4.6 % -0.8Distribution costs 1) 12.0 % 10.3 % -1.7Business maintenance costs 6.8 % 6.7 % -0.1Expenses recovered 2) -1.5 % -1.4 % 0.1

Total 22.7 % 20.3 % -2.4

Expense Ratio Breakdown FY09 FY10 Change

4. investment prOfit

The yield on investment for the 2010 fiscal year was 5.2%, up 0.3%p from the previous year in spite of lower market

interest rates such as the government bond rate. The volume of invested assets rose 18.4% to KRW 26.9 trillion,

and investment income rose 23.7% to KRW 1,249 billion.

Factors behind the improvement in investment yield were as follows. The bond yield was maintained at the same

level of 5.7% as the previous year because of an increased investment in the corporate bonds and the government

agency bonds; overseas securities realized a good profit of 5.8% on increasing investment in Korea Paper; and

stocks recorded 4.9% profit with the disposition gain of marketable securities.

Cash & equivalents 16.9 3.8 15.6 4.9 -7.7 1.1Stocks 85.0 3.7 144.4 4.9 69.9 1.2Bonds 587.5 5.7 650.4 5.7 10.7 0.0Loans 335.6 6.7 380.7 6.2 13.4 -0.5Overseas securities 63.0 4.2 134.7 5.8 113.8 1.6Real estate 12.9 1.2 22.5 2.1 74.4 0.9

Total 1,100.9 1,248.7 13.4Investment administration expenses 91.2 99.6 9.2Investment income 1,009.7 4.9 1,248.7 5.2 23.7 0.3Invested assets 22,734.2 26,924.0 18.4

Investment Income Amount Yield Amount Yield Amount Yield

FY09 FY10 YoY

In KRW billions, %, %p

Commercial 1,166.1 10.7 1,264.7 9.9 98.6 8.5Long-term 6,580.8 60.4 8,119.6 63.6 1,538.8 23.4

Initial premiums 304.0 2.8 606.0 4.7 302.0 99.2Recurring premiums 6,276.7 57.6 7,513.9 58.8 1,237.2 19.7

Automobile 3,148.2 28.9 3,386.9 26.5 238.7 7.6Total 10,895.1 100.0 12,771.3 100.0 1,876.2 17.2

Direct Premiums Written by Line Amount % Amount % Amount %

In KRW billions

FY09 FY10 YoY


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b. bAlAnce sheet

1. finAnciAl pOsitiOns

In the 2010 fiscal year, total assets increased 18.5% to KRW 31,588 billion YoY. Stocks posted KRW 3,246 billion,

up 18.3%. This was primarily attributed to increased valuation gains of affiliates shares holding. Bond assets rose

17.1% to KRW 12,682 billion, mainly because of high interest-rate bonds such as government agency bonds and

corporate bonds. Loan assets rose 24.0% to KRW 6,957 billion, with focus on secured loans such as real estate

and policy loans. Overseas securities rose 20.3% to KRW 2,594 billion.

Total liabilities posted KRW 25,783 billion, up 18.7% up from the previous year. Policy reserves, which account

for the highest proportion, increased 19.7% to KRW 21,655 billion. Catastrophe reserves rose 4.9% to KRW 1,188

billion, and separate account liabilities increased by 24.0%. The solvency margin ratio rose 10.1%p by the end of

March, 2011 to 436.5%.

In KRW billions, %

Cash & equivalents 303.2 1.1 345.1 1.1 41.9 13.8Stocks 2,743.3 10.3 3,246.2 10.3 502.9 18.3Bonds 10,827.9 40.6 12,681.6 40.1 1,853.7 17.1Loans 5,610.4 21.0 6,957.4 22.0 1,347 24.0Overseas securities 2,156.2 8.1 2,593.9 8.2 437.7 20.3Real estate 1,093.2 4.1 1,099.8 3.5 6.6 0.6Non-invested assets 3,921.7 14.7 4,663.6 14.8 741.9 18.9

Total assets 26,655.9 100.0 31,587.6 100.0 4,931.7 18.5Policy reserves 18,085.5 67.8% 21,655.2 68.6% 3,569.7 19.7%Catastrophe reserves 1,132.8 4.2% 1,188.2 3.8% 55.4 4.9%Other liabilities 1,373.9 5.2% 1,519.4 4.8% 145.5 10.6%Special account liabilities 1,123.4 4.2% 1,393.5 4.4% 270.1 24.0%

Total liabilities 21,715.6 81.5% 25,782.6 81.6% 4,067.0 18.7%Shareholders’ equity 4,940.3 18.5% 5,805.0 18.4% 864.7 17.5%

Total liabilities & shareholders’ equity 26,655.9 100.0% 31,587.6 100.0% 4,931.7 18.5%Solvency margin ratio 426.4% 436.5 10.1%p 2.4%

Financial Position Summary Amount % Amount % Amount %

FY09 FY10 YoY

2. securities

As of the end of the 2010 fiscal year, securities assets including stocks, bonds, and overseas securities were up

17.8% to KRW 18,522 billion. Stocks rose 18.3% to KRW 3,246 billion, attributed to increased valuation gain of

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

securities.

Bond holdings were up 17.1% to KRW 12,681.6 billion. The volume of trading bonds increased significantly because

market interest rates didn’t pick up as expected. Overseas securities rose 21.3% to KRW 2,594 billion as Korea

Paper, a bond that Korean companies issue in foreign currency, realized good yield rates.

Stocks 2,743.3 3,246.2 502.9 18.3Equity method 115.2 140.0 24.8 21.5Trading 0.5 0 -0.5 -100.0Available-for-sale 2,627.6 3,106.2 478.6 18.2

Bonds 10,827.9 12,681.6 1,853.7 17.1Trading 61.3 742.9 681.6 1,111.9Available-for-sale 10,636.5 11,828.6 1,192.1 11.2Held-to-maturity 130.1 110.1 -20.0 -15.4

Overseas securities 21,562 25,939 4,377 20.3Trading 1,099 1,109 10 0.9Available-for-sale 20,463 24,829 4,366 21.3Held-to-maturity - - -

Total 157,274 185,217 27,943 17.8%

In KRW billions

FY09 FY10 Amount %Securities

Change



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Total loans 5,656.4 7,012.8 1,356.4 24.0Normal 5,644.6 7,042.2 1,397.6 24.8Precautionary 3.7 2.5 -1.2 -32.4Substandard 6.8 9.1 2.3 33.8Doubtful 0.6 0.8 0.2 33.3Estimated loss 0.7 0.5 -0.2 -28.6Substandard & below loans 8.1 10.4 2.3 28.4Non-performing loans to total loans ratio 0.1% 0.1 0.0 Loan loss provisions to substandard & below loans ratio 528.6% 505.3 -23.3 Delinquency ratio 0.2% 0.2 0.0

Retail 0.3% 0.3 0.0 Corporate 0.0% 0.0 0.0

In KRW billions, %, %p

FY09 FY10 Amount %Asset Quality

Change


4. Asset & liAbility mAnAgement

The ALM spread on long-term insurance for the 2010 fiscal year recorded 105bps, up 4bps from the previous year.

This is because interest rate on the liabilities dropped by 8bps, while returns on the matching assets fell by 4bps to

5.61% due to the decrease in market interest rates. The duration matching rate between assets and liabilities rose

8.1%p to 88.6%.

3. lOAns And Asset QuAlity

Loans increased 24.0% to KRW 7,013 billion, retail loans rose 19.0% to KRW 5,162 billion, of which mortgage loans

increased 20.4% to KRW 2,875 billion and policyholder loans rose 17.7% to KRW 2,248 billion. Corporate loans

increased 40.2% to KRW 1,851 billion.

The quality of loans has been maintained at the best level in the industry. Substandard and below loans rose only

by KRW 2.3 billion to KRW 10.4 billion due to an increase in the volume of loans, and the non-performing loans

(NPL) ratio was maintained at the same level of 0.1% as in the previous year. As of the end of the period, loan loss

provisions to substandard & below loans ratio stood at 505.3%, and the delinquency ratio was maintained at 0.2%.

1) Sum of invested assets and unamortized deferred assets 2) Sum of reserves for savings, unearned policy reserves, and reserves for lapsed policies3) Spread in the column of duration refers to the matching rate of asset and liability duration.

FY09 FY10 Change

Assets 1) 15,387.1 5.65 3.27 16,136.9 5.61 3.95 749.8 -0.04 0.68Liabilities 2) 14,958.8 4.64 3.92 15,776.4 4.56 4.46 817.6 -0.08 0.54Spread 428.3 1.01 80.5 360.5 1.05 -0.51 88.6 0.04 0.14

ALM on Long-term Insurance Amount Yield Duration Amount Yield Duration Amount Yield Duration

In KRW billions, %, %p, yr

3) 3)

Retail loans 4,336.2 76.7 5,161.8 73.6 825.6 19.0%Mortgages 2,387.4 42.2 2,874.7 41.0 487.3 20.4%Policyholder 1,910.9 33.8 2,248.5 32.1 337.6 17.7%Non-secured 37.9 0.7 38.4 0.5 0.5 1.3%Corporate loans 1,320.2 23.3 1,851.0 26.4 530.8 40.2%Secured 1,140.1 20.2 1,821.0 26.0 680.9 59.7%Non-secured 180.1 3.2 30.0 0.4 -150.1 -83.3%

Total 1) 5,656.4 100 7,012.8 100.0 1,356.4 24.0%

Loans Amount % Amount % Amount %

FY09 FY10 Change

In KRW billions

1) Excluding call loan and prior to subtracting loan provision, deferred additional income


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the bOArd Of directOrs And stOckhOlders

sAmsung fire & mArine insurAnce cO., ltd.:

We have audited the accompanying non-consolidated statements of financial position of Samsung Fire & Marine

Insurance Co., Ltd. (the “Company”) as of March 31, 2011 and the related non-consolidated statements of

income, appropriation of retained earnings, changes in equity and cash flows for the year then ended. These non-

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

express an opinion on these non-consolidated financial statements based on our audit. The accompanying non-

consolidated financial statements of the Company as of March 31, 2010, were audited by other auditors, whose

report thereon dated May 20, 2010, expressed an unqualified opinion on those statements.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

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

the financial position of the Company as of March 31, 2011 and the results of its operations, appropriation of its

retained earnings, the changes in its equity and its cash flows for the year then ended in conformity with accounting

principles generally accepted in the Republic of Korea.

The accompanying non-consolidated financial statements as of and for the years ended March 31, 2011 and

2010 have been translated into United States dollars solely for the convenience of the reader. We have audited the

translation and, in our opinion, the non-consolidated financial statements expressed in Korean won have been

translated into dollars on the basis set forth in note 3 to the non-consolidated financial statements.

withOut QuAlifying Our OpiniOn, we drAw AttentiOn tO the fOllOwing:

As discussed in note 2(a) to the non-consolidated financial statements, accounting principles and auditing

standards and their application in practice vary among countries. The accompanying non-consolidated financial

statements are not intended to present the financial position, results of operations, changes in equity and cash

flows in accordance with accounting principles and practices generally accepted in countries other than the

Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to audit such non-

consolidated financial statements may differ from those generally accepted and applied in other countries.

Accordingly, this report and the accompanying non-consolidated financial statements are for use by those

knowledgeable about Korean accounting principles and auditing standards and their application in practice.

This report is effective as of May 26, 2011, 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 non-consolidated 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.

INDEpENDENT AUDITOrS’ rEpOrT

BASED ON A REPORT

ORIgINALLY ISSUED IN KOREA

KPMg Samjong Accounting Corp.Seoul, KoreaMay 26, 2011


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NON-CONSOLIDATED STATEMENTS Of fINANCIAL pOSITIONAS OF MARCH 31, 2011 AND 2010

NON-CONSOLIDATED STATEMENTS Of INCOMEFOR THE YEARS ENDED MARCH 31, 2011 AND 2010

note 2011 2010 2011 2010OperAting revenuesPremium income 21, 30 ￦ 12,832,830 ￦ 10,923,472 $ 11,703,448 $ 9,962,126Reinsurance income 22, 32 399,385 316,109 364,236 288,289Compensation income 15 16,436 12,132 14,990 11,064 Interest income:

Interest on deposits 16,057 17,226 14,643 15,710Interest on securities 5, 6, 7 729,969 655,987 665,727 598,256Interest on loans 386,859 340,694 352,813 310,710

1,132,885 1,013,907 1,033,183 924,676Trading and investment gain:

gain on valuation of trading securities 5, 9 11,053 1,528 10,080 1,394gain on disposal of trading securities 10,633 5,290 9,697 4,825gain on disposal of available-for-sale securities 106,950 58,497 97,538 53,349

128,636 65,315 117,315 59,568Reversal of allowance for doubtful accounts 9 2,187 8 1,995gain on foreign currency transactions 23,918 22,112 21,813 20,166Dividend income 60,086 33,699 54,798 30,733Commission income 897 567 818 517Rental income 44,522 41,861 40,603 38,177Expenses recovered 164,984 150,561 150,464 137,311Other operating income:

gain on valuation of derivatives 32 1,736 2,658 1,583 2,424gain on transaction of derivatives 24,393 39,469 22,246 35,995Miscellaneous investment income 1,104 493 1,007 450Miscellaneous income 673 710 614 647

27,906 43,330 25,450 39,516Separate account income 33 1,110,444 637,012 1,012,717 580,951

15,942,938 13,262,264 14,539,843 12,095,089OperAting expenses:Provision for policy reserves 17, 32 3,571,872 2,337,732 3,257,522 2,131,995Provision for catastrophe reserves 18 55,412 73,540 50,536 67,068Claims paid 30 4,174,689 3,711,895 3,807,286 3,385,222Reinsurance premium expenses 22, 32 827,166 791,879 754,370 722,189 Dividend expense 9,875 9,410 9,006 8,582Refund of long-term insurance policies 2,497,240 2,313,472 2,277,465 2,109,869general and administrative expense 11, 23, 34 1,894,325 1,796,503 1,727,611 1,638,398Amortization of deferred acquisition costs 16 742,638 683,330 677,280 623,192Interest expense 2,109 1,556 1,923 1,419Trading and investment loss:

Loss on valuation of trading securities 5, 9 755 6 688 5Loss on disposal of trading securities 2,754 141 2,511 128Loss on disposal of available-for-sale securities 8,370 15,889 7,633 14,491Impairment loss of available-for-sale securities 6 2,625 18,872 2,394 17,211

14,504 34,908 13,226 31,835

CONTINUEDSee accompanying notes to non-consolidated financial statements.

In KRW millions In USD thousands (note 3)

note 2011 2010 2011 2010AssetsCash and due from banks 4, 19 ￦ 345,112 ￦ 303,237 $ 314,740 $ 276,550Trading securities 5, 9 853,812 171,696 778,671 156,586Available-for-sale securities 6, 9, 19, 32 17,417,719 15,310,394 15,884,831 13,962,967Held-to-maturity securities 7 110,115 130,131 100,424 118,678Equity-method investments 8 139,984 115,157 127,665 105,023Loans, net of allowance for doubtful accounts 10, 30 6,957,436 5,610,366 6,345,132 5,116,613Property and equipment, net 11, 12, 25 1,147,643 1,141,559 1,046,642 1,041,093Insurance receivables, net of allowance for

doubtful accounts of ￦8,763 million in 2011 and ￦8,730 million in 2010 10, 14, 19, 30 339,389 265,947 309,520 242,542

Leasehold and other deposits 221,624 206,992 202,119 188,775Accrued income, net of allowance for doubtful

accounts of ￦170 million in 2011 and ￦156 million in 2010 10 220,659 201,478 201,239 183,747

Compensation receivables 15 134,168 117,732 122,360 107,371Deferred acquisition costs 16 1,931,257 1,638,606 1,761,292 1,494,397Other assets 10, 13, 32, 35 383,318 324,012 349,584 295,496Separate account assets, net of due to

separate account of ￦22,686 million in 2011 and ￦34,260 million in 2010 33 1,385,323 1,118,579 1,263,406 1,020,135

total assets ￦ 31,587,559 ￦ 26,655,886 $ 28,807,625 $ 24,309,973

liAbilitiesPolicy reserves 17, 32, 39 ￦21,655,244 ￦ 18,085,463 $ 19,749,424 $ 16,493,809

Catastrophe reserves 18 1,188,237 1,132,825 1,083,664 1,033,128Borrowings 6, 20 26,300 36,700 23,985 33,470Insurance payables 14, 19, 30 362,431 329,596 330,534 300,589Accrued expenses 191,118 157,485 174,298 143,625Income tax payables 24 73,171 31,162 66,731 28,420Rental deposits received 43,818 42,820 39,962 39,051Deferred tax liabilities 24 590,192 518,561 538,250 472,924Other liabilities 23, 32, 35 258,525 257,582 235,774 234,913Separate account liabilities, net of due from

separate account of ￦8,467 million in 2011 and ￦22,118 million in 2010 33 1,393,518 1,123,364 1,270,877 1,024,500

total liabilities ￦ 25,782,554 ￦ 21,715,558 $ 23,513,499 $ 19,804,429

stOckhOlders’ eQuityCapital stock of ￦500 par value

Authorized (100,000,000 shares)Issued and outstanding:- Common stock (47,374,837 shares) ￦ 24,802 ￦ 24,802 $ 22,620 $ 22,620- Preferred stock (3,192,000 shares) 25 1,671 1,671 1,524 1,524 26,473 26,473 24,144 24,144

Capital surplus 25, 27 738,412 736,626 673,427 671,798Capital adjustments 27, 28 (92,807) (92,496) (84,639) (84,355)Accumulated other comprehensive income 6, 7, 24, 26, 32 1,965,569 1,627,537 1,792,586 1,484,301Retained earnings 3,167,358 2,642,188 2,888,608 2,409,656total stockholders’ equity 5,805,005 4,940,328 5,294,126 4,505,544

total liabilities and stockholders’ equity ￦ 31,587,559 ￦ 26,655,886 $ 28,807,625 $ 24,309,973

See accompanying notes to non-consolidated financial statements.



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080081

NON-CONSOLIDATED STATEMENTS Of INCOMEFOR THE YEARS ENDED MARCH 31, 2011 AND 2010


NON-CONSOLIDATED STATEMENTS Of ApprOprIATION Of rETAINED EArNINGSFOR THE YEARS ENDED MARCH 31, 2011 AND 2010

Date of Appropriation for 2011: June 3, 2011Date of Appropriation for 2010: June 1, 2010

note 2011 2010 2011 2010

In KRW millions In USD thousands (note 3) (except earnings per share) (except earnings per share)

Bad debts expense ￦ 8,759 ￦ 3,992 $ 7,988 $ 3,640Loss on foreign currency transactions 27,155 63,246 24,765 57,679Investment administrative expenses 11, 23 90,859 91,508 82,863 83,455Maintenance expenses on investments 20,550 19,835 18,741 18,090Depreciation expense on investments 11 9,104 8,861 8,303 8,082Other operating expenses:

Loss on valuation of derivatives 32 2,437 1,641 2,223 1,496Loss on transaction of derivatives 12,308 9,622 11,225 8,776Miscellaneous investment expenses 6,578 4,699 5,999 4,284Miscellaneous expenses 949 840 865 766 22,272 16,802 20,312 15,322

Separate account expense 33 1,110,444 637,012 1,012,717 580,951 15,078,973 12,595,481 13,751,914 11,486,988

OperAting incOme 863,965 666,783 787,929 608,101

Other incOme (expenses):gain on valuation of equity-method

investments, net 8 13,086 19,241 11,934 17,548gain on disposal of equity-method investments 8 857 - 782 -gain on disposal of property and equipment, net 7,644 337 6,971 308Donation 36 (14,017) (15,760) (12,783) (14,373)Separate account commission, net 33 5,595 11,111 5,103 10,133Miscellaneous, net 11,212 6,493 10,225 5,921

24,377 21,422 22,232 19,537

incOme befOre incOme tAxes 888,342 688,205 810,161 627,638

Income taxes 24 223,490 163,695 203,821 149,289

net incOme ￦ 664,852 ￦ 524,510 $ 606,340 $ 478,349

eArnings per shAreBasic earnings per share 31 ￦ 14,975 ￦ 11,823 $ 13.66 $ 10.78Diluted earnings per share 31 ￦ 14,945 ￦ 11,789 $ 13.63 $ 10.75


note 2011 2010 2011 2010unApprOpriAted retAined eArningsBalance at beginning of year ￦ 259 ￦ 431 $ 236 $ 393Net income 664,852 524,510 606,340 478,349

bAlAnce At end Of yeAr befOreApprOpriAtiOn 665,111 524,941 606,576 478,742

ApprOpriAtiOn Of retAined eArningsDividends 29 174,745 139,682 159,366 127,389Voluntary reserves 490,000 385,000 446,876 351,117

unApprOpriAted retAined eArnings tO be cArried Over tO subseQuent yeAr ￦ 366 ￦ 259 $ 334 $ 236



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NON-CONSOLIDATEDSTATEMENTS Of ChANGES IN EqUITYFOR THE YEARS ENDED MARCH 31, 2011 AND 2010


NON-CONSOLIDATED STATEMENTS Of ChANGES IN EqUITYFOR THE YEARS ENDED MARCH 31, 2011 AND 2010

In KRW millions

As of April 1, 2009 ￦ 26,473 ￦ 734,867 ￦ (92,708) ￦ 937,168 ￦ 2,257,171 ￦ 3,862,971Annual dividends - - - - (139,493) (139,493)Balance after appropriations 26,473 734,867 (92,708) 937,168 2,117,678 3,723,478Net income - - - - 524,510 524,510gain on disposal of treasury stock - 1,759 - - - 1,759Disposal of treasury stock - - 1,558 - - 1,558Exercise of stock options - - (1,346) - - (1,346)gain on valuation of available-for-sale

securities - - - 556,334 - 556,334Changes in equity-method investee

with accumulatedcomprehensive income - - - (12,806) - (12,806)

Changes in equity-methodinvestees with accumulatedcomprehensive loss - - - (838) - (838)

Translation loss on foreigncurrency financial statements - - - (15,465) - (15,465)

Loss on valuation of cash flowhedge derivatives - - - 157,521 - 157,521

Accumulated othercomprehensive income of theseparate account - - - 5,623 - 5,623

As of march 31, 2010 ￦ 26,473 ￦ 736,626 ￦ (92,496) ￦ 1,627,537 ￦ 2,642,188 ￦ 4,940,328

As of April 1, 2010 ￦ 26,473 ￦ 736,626 ￦ (92,496) ￦ 1,627,537 ￦ 2,642,188 ￦ 4,940,328Annual dividends - - - - (139,682) (139,682)Balance after appropriations 26,473 734,626 (92,496) 1,627,537 2,502,506 4,800,646Net income - - - - 664,852 664,852gain on disposal of treasury stock - 1,591 - - - 1,591Disposal of treasury stock - - 964 - - 964Exercise of stock options - - (1,017) - - (1,017)Forfeiture of stock options - 195 (258) - - (63)gain on valuation of available-for-sale


with accumulatedcomprehensive income - - - 489 - 489

Changes in equity-methodinvestees with accumulatedcomprehensive loss - - - (1,018) - (1,018)

Translation gain on foreigncurrency financial statements - - - (400) - (400)


Accumulated othercomprehensive income of theseparate account - - - (1,332) - (1,332)

As of march 31, 2011 ￦ 26,473 ￦ 738,412 ￦ (92,807) ￦ 1,965,569 ￦ 3,167,358 ￦ 5,805,005

Accumulated other Capital Capital Capital comprehensive Retained stock surplus adjustment income earnings Total

In USD thousands (note 3)

As of April 1, 2009 $ 24,144 $ 670,193 $ (84,549) $ 854,690 $ 2,058,524 $ 3,523,002Annual dividends - - - - (127,217) (127,217)Balance after appropriations 24,144 670,193 (84,549) 854,690 1,931,307 3,395,785Net income - - - - 478,349 478,349gain on disposal of treasury stock - 1,605 - - - 1,605Disposal of treasury stock - - 1,421 - - 1,421Exercise of stock options - - (1,227) - - (1,227)gain on valuation of available-for-sale


with accumulatedcomprehensive income - - - (11,679) - (11,679)


Translation loss on foreigncurrency financial statements - - - (14,104) - (14,104)


Accumulated other comprehensiveincome of the separate account - - - 5,128 - 5,128

As of march 31, 2010 $ 24,144 $ 671,798 $ (84,355) $ 1,484,301 $ 2,409,656 $ 4,505,544

As of April 1, 2010 $ 24,144 $ 671,798 $ (84,355) $ 1,484,301 $ 2,409,656 $ 4,505,544Annual dividends - - - - (127,388) (127,388)Balance after appropriations 24,144 671,798 (84,355) 1,484,301 2,282,268 4,378,156Net income - - - - 606,340 606,340gain on disposal of treasury stock - 1,451 - - - 1,451Disposal of treasury stock - - 879 - - 879Exercise of stock options - - (928) - - (928)Forfeiture of stock options - 178 (235) - - (57)gain on valuation of available-for-sale


with accumulatedcomprehensive income - - - 446 - 446


Translation gain on foreigncurrency financial statements - - - (365) - (365)


Accumulated other comprehensiveincome of the separate account - - - (1,215) - (1,215)

As of march 31, 2011 $ 24,144 $ 673,427 $ (84,639) $ 1,792,586 $ 2,888,608 $ 5,294,126

Accumulated other Capital Capital Capital comprehensive Retained stock surplus adjustment income earnings Total

See accompanying notes to non-consolidated financial statements. CONTINUED


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NON-CONSOLIDATEDSTATEMENTS Of CASh fLOwSFOR THE YEARS ENDED MARCH 31, 2011 AND 2010

NON-CONSOLIDATED STATEMENTS Of CASh fLOwSFOR THE YEARS ENDED MARCH 31, 2011 AND 2010

note 2011 2010 2011 2010 note 2011 2010 2011 2010

CONTINUEDSee accompanying notes to non-consolidated financial statements.


cAsh flOws frOm OperAting Activities:Net income ￦ 664,852 ￦ 524,510 $ 606,340 $ 478,349Adjustments for:

gain on valuation of trading securities, net 5, 9 (10,298) (1,522) (9,392) (1,389)Impairment loss on available-for-sale securities 6 2,625 18,872 2,394 17,211Amortization of deferred acquisition cost 16 742,638 683,330 677,280 623,192Loss (gain) on valuation of derivatives, net 32 701 (1,017) 640 (928)gain on valuation of equity-method investment

securities (14,103) (19,402) (12,861) (17,694)gain on disposal of equity-method investment

securities (857) - (782) -Loss on valuation of equity-method investment

securities 1,017 160 927 146Depreciation 11 52,803 53,338 48,156 48,643gain on disposal of property and equipment, net (7,644) (337) (6,971) (308)Amortization 13 32,960 30,682 30,059 27,982Loss on foreign currency transactions, net 2,021 10,219 1,843 9,320Bad debts expense 9,816 9,032 8,953 8,237Net provision for policy and

catastrophe reserves 17, 18, 32 3,627,284 2,411,272 3,308,058 2,199,063Provision for retirement and severance benefits 23 39,628 36,095 36,140 32,918Miscellaneous loss, net 331 286 303 260Interest income (12,681) (15,924) (11,566) (14,522)Reversal of allowance for doubtful accounts (9) (2,187) (8) (1,995)Compensation income 15 (16,436) (12,132) (14,990) (11,064) ￦ 4,449,796 ￦ 3,200,765 $ 4,058,183 $ 2,919,072Changes in assets and liabilities:

Decrease (increase) in bank deposits (45,200) 224,463 (41,222) 204,709Decrease (increase) in trading securities (671,912) 58,524 (612,779) 53,373Increase in available-for-sale securities (1,737,509) (1,748,667) (1,584,595) (1,594,772)Increase in held-to-maturity securities 20,000 - 18,240 -Receipt of dividends 558 9,157 509 8,352Increase in loans, net 8 (1,354,858) (891,544) (1,235,622) (813,082)Increase in insurance receivables (75,552) (61,816) (68,903) (56,376)Increase in leasehold and other deposits (14,632) (3,592) (13,345) (3,276)Decrease in accrued income (19,512) (24,436) (17,795) (22,285)Increase in deferred acquisition costs (1,035,289) (1,017,000) (944,176) (927,497)Decrease in derivative assets 7,999 2,924 7,295 2,667Increase in other assets (13,763) (43,545) (12,549) (39,714)Decrease in due from separate account 13,651 9,259 12,449 8,444Increase in insurance payables 33,835 57,124 30,857 52,097Increase in accrued expenses 33,633 6,370 30,673 5,809Increase (decrease) in deferred tax liabilities ￦ (23,379) ￦ 33,084 $ (21,321) $ 30,172

Payment of retirement and severance benefits 23 ￦ (17,352) ￦ (15,495) $ (15,825) $ (14,131)Decrease in transfers to the National Pension Fund 23 56 76 51 70Retirement and severance benefits transferred

from affiliates 23 364 - 332 -Increase in pension plan assets (16,813) (14,746) (15,333) (13,448)Increase (decrease) in income tax payables 42,009 (145,162) 38,312 (132,387)Increase in rental deposits received 998 11,892 910 10,846Increase (decrease) in derivative liabilities (4,977) (16,009) (4,539) (14,600)Increase (decrease) in other liabilities 11,134 (5,188) 10,154 (4,731)Increase (decrease) in due to separate account (11,574) (15,878) (10,555) (14,480)Increase (decrease) in translation gain on foreign

currency financial statements (2,492) (15,465) (2,273) (14,104)

net cash provided by operating activities 234,071 119,605 213,473 109,077

cAsh flOws frOm investing Activities:Disposal of equity-method investment securities 8 6,994 - 6,378 -Disposal of property and equipment 11 11,129 734 10,149 670Acquisition of property and equipment 11 (62,373) (52,775) (56,884) (48,129)Acquisition of equity-method investment securities 8 (19,064) (3,545) (17,386) (3,233)Acquisition of intangible assets 13 (26,058) (6,452) (23,764) (5,884)

net cash used in investing activities (89,372) (62,038) (81,507) (56,576)

cAsh flOws frOm finAncing Activities:Payment of dividends (139,682) (139,493) (127,389) (127,217)Increase in borrowings, net (10,400) 11,200 (9,485) 10,214Disposal of treasury stock 27 2,046 2,533 1,866 2,310

net cash used in financing activities (148,036) (125,760) (135,008) (114,693)

net decreAse in cAsh And cAsh eQuivAlents (3,337) (68,193) (3,042) (62,192)

Cash and cash equivalents at beginning of year 37 150,390 218,583 137,154 199,346

cAsh And cAsh eQuivAlents At end Of yeAr 37 ￦ 147,053 ￦ 150,390 $ 134,112 $ 137,154

In KRW millions In USD thousands (note 3)In KRW millions In USD thousands (note 3)


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NOTES TO NON-CONSOLIDATEDfINANCIAL STATEMENTSFOR THE YEARS ENDED MARCH 31, 2011 AND 2010


1. OrgAnizAtiOn And descriptiOn Of business

Samsung Fire & Marine Insurance Co., Ltd. (the “Company”) was established on January 26, 1952 under the Commercial Code of the Republic of Korea to engage in non-life insurance and other related insurance services. The shares of the Company have been listed on the Korea Stock Exchange since 1975. As of March 31, 2011, the Company’s issued common shares and preferred shares amounting to ￦24,802 million and ￦1,671 million, respectively.

The Company’s shares as of March 31, 2011 are owned as follows:

(b) Revenue Recognition

Premium income is recognized at the time when such premium payments become due. However, in the case of insurance contracts of which the first premium payment or lump-sum premium payment are uncollected at the first day of the insured period under the grace period allowed by the Company, such uncollected payments are recognized as revenue in the period in which the inception date of the insurance contract begins. Insurance premiums received in advance are deferred as unearned revenue at the time of receipt. Interest income on bank deposits, loans and securities is recognized when earned, but the Company recognizes interest income from overdue loans and defaulted loans on a cash basis.

(c) Investment Securities other than Equity-Method Investment Securities

Debt and equity securities are initially stated at the market value of consideration given for acquisition (market value of securities acquired if market value of consideration given is not available) plus incidental costs attributable to the acquisition of the securities and are classified into trading, available-for-sale and held-to-maturity securities depending on the purpose and nature of acquisition. The Company presents trading securities as short-term investments, and available-for-sale securities and held-to-maturity securities as short-term investments or long-term investment securities depending on their nature in the statements of financial position.

The moving average method for equity securities and the specific identification method for debt securities are used to determine the cost of securities for the calculation of gain (loss) on disposal of those securities.

The following is the specific valuation method applied for debt and equity securities:

1) TrADING SECUrITIESSecurities that are bought and held principally for the purpose of selling them in the near term with active and frequent buying and selling, including securities which consist of a portfolio of securities with the clear objective of generating profits on short-term differences in price, are classified as trading securities. Trading securities are recorded at their fair value and unrealized gains or losses from trading securities are recorded as gain (loss) on valuation of trading securities included in the operating income (expense).

2) hELD-TO-MATUrITY SECUrITIESDebt securities that have fixed or determinable payments with a fixed maturity are classified as held-to-maturity securities only if the Company has both the positive intent and ability to hold those securities to maturity. However, debt securities, whose maturity dates are due within one year from the end of the reporting period, are classified as current assets.

After initial recognition, held-to-maturity securities are stated at amortized cost in the statements of financial position. When held-to-maturity securities are measured at amortized costs, the difference between their acquisition cost and face value is amortized using the effective interest rate method and the amortization is included in the cost and interest income.

When the possibility of not being able to collect the principal and interest of held-to-maturity securities according to the terms of the contracts is high, the difference between the recoverable amount (the present value of expected cash flows using the effective interest rate upon acquisition of the securities) and book value is recorded as loss on impairment of held-to-maturity securities included in the operating expense and the held-to-maturity securities are stated at the recoverable amount after impairment loss. If the value of impaired securities subsequently recovers and the recovery can be objectively related to an event occurring after the impairment loss was recognized, the reversal of impairment loss is recorded as reversal of impairment loss on held-to-maturity securities included in operating income. However, the resulting carrying amount after the reversal of impairment loss shall not exceed the amortized cost that would have been measured at the date of the reversal, if no impairment loss was recognized.

Samsung Life Insurance Co., Ltd. 4,905,718 10.36 720 0.02Shinhan Bank 1,788,152 3.77 - -Tokio Marine & Nichido Fire Insurance Co., Ltd. 1,488,150 3.14 - -Samsung Foundation of Culture 1,451,241 3.06 - -Woori Bank (Korea Investment Management Co., Ltd.) 1,360,822 2.87 - -Others 36,380,754 76.80 3,191,280 99.98

47,374,837 100.00 3,192,000 100.00

Number Percentage of Number Percentage ofShareholders of shares ownership (%) of shares ownership (%)

Common stock Preferred stock

2. bAsis Of presenting finAnciAl stAtements And summAry Of significAnt AccOunting pOlicies

(a) Basis of Presenting Financial Statements

The Company maintains its accounting records in Korean won and prepares statutory non-consolidated financial statements in the Korean language in conformity with accounting principles generally accepted in the Republic of Korea. Certain accounting principles applied by the Company that conform with financial accounting standards and accounting principles in the Republic of Korea may not conform with generally accepted accounting principles in other countries. Accordingly, these financial statements are intended solely for use by those who are informed about Korean accounting principles and practices. The accompanying non-consolidated financial statements have been condensed, restructured and translated into English (with certain expanded descriptions) from the Korean language non-consolidated financial statements.

Certain information attached to the Korean language non-consolidated financial statements, but not required for a fair presentation of the Company's financial position, results of operations, cash flows or changes in equity is not presented in the accompanying non-consolidated financial statements.

The Company prepares the non-consolidated financial statements in accordance with generally accepted accounting principles in the Republic of Korea, the Statements of Korea Accounting Standards (the “SKAS”), SKAS No.1 through No.25 (except for No.14), and Insurance Accounting Standard. The Company applied the same accounting policies that were adopted in the previous year’s non-consolidated financial statements.

The accompanying non-consolidated financial statements for the year ended March 31, 2011 were authorized for issue on May 9, 2011, at the Board of Directors Meeting.


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3) AvAILAbLE-fOr-SALE SECUrITIESDebt and equity securities that do not fall under the classifications of trading or held-to-maturity securities are categorized and presented as available-for-sale securities included in investment assets. However, if an available-for-sale security matures or it is certain that such security will be disposed of within one year from the end of the reporting period, it is classified as a current asset.Available-for-sale securities are recorded at fair value. Unrealized gain or loss from available-for-sale securities are presented as gain or loss on valuation of available-for-sale securities included in accumulated other comprehensive income (loss) under shareholders’ equity. In addition, accumulated gain or loss on valuation of available-for-sale securities is reflected in either gain or loss on disposal of available-for-sale securities or loss on impairment of available-for-sale securities upon disposal or recognition of impairment of the securities. However, available-for-sale equity securities that are not marketable and whose fair value cannot be reliably measured are recorded at acquisition cost.

When there is objective evidence that the available-for-sale securities are impaired and the recoverable amount is lower than the cost (amortized cost for debt securities) of the available-for-sale securities, an impairment loss is recognized as loss on impairment of available-for-sale securities in operating expense and the related unrealized gain or loss remaining in shareholders’ equity is adjusted to impairment loss. If the value of impaired securities subsequently recovers and the recovery can be objectively related to an event occurring after the impairment loss was recognized, the reversal of impairment loss can be recognized up to the previously recorded impairment loss as a reversal of loss on impairment of available-for-sale securities in operating income. However, if the fair value increases after the impairment loss is recognized but does not relate to the recovery of impairment loss as described above, the increase in fair value is recorded in shareholders’ equity.

4) rECLASSIfICATION Of SECUrITIESTrading securities cannot be reclassified as other categories of securities. However, when those securities can no longer be held for sale in the near-term to generate profits from short-term price differences, the trading securities can be reclassified as available-for-sale or held-to-maturity securities. When those securities are no longer traded in an active market, such securities are reclassified as available-for-sale securities.

When trading securities are reclassified to other categories, the fair value (latest market value) as of the date of the reclassification becomes new acquisition cost of the security and the security’s unrealized holding gain or loss through the date of the reclassification is recorded in the current income or expenses.

(d) Equity-Method Investment Securities

Investments in equity securities of companies, over which the Company exercises significant influence, are accounted for using the equity method.

1) ACCOUNTING fOr ChANGES IN ThE EqUITY Of ThE INvESTEEUnder the equity method the Company records changes in its proportionate equity of the net assets of the investee depending on the nature of the underlying changes in the investee as follows: (i) “gain (loss) on valuation of equity-method investment securities” in the non-operating income (expense); (ii) “increase (decrease) in retained earnings of associates” in the retained earnings for changes in beginning retained earnings of the investee; and (iii) “increase (decrease) in equity of associates” in accumulated other comprehensive income (loss) for other changes in shareholders’ equity of the investee.

When the equity method investee’s unappropriated retained earnings carried over from prior period changes due to significant error corrections, the Company records the changes in equity as “gain (loss) on valuation of equity-method investment securities” included in the non-operating income (expense) if the impact of the changes on the Company’s non-consolidated financial

statements is not significant. If the changes results from the changes in accounting policies of the equity method investee, they are reflected in unappropriated retained earnings carried over from prior period in accordance with SKAS on changes in accounting policy and errors corrections. When the investee declares cash dividends, the dividends to be received are deducted directly from equity-method investment securities.

2) TrEATMENT Of INvESTMENT DIffErENCEDifference between the acquisition cost and the Company’s proportionate equity in the fair value of net assets of the investee upon acquisition (“Investment difference”) is considered as (negative) goodwill and accounted for in accordance with accounting standards for business combination. The goodwill portion is amortized over useful lives within 20 years on a straight line method while the negative goodwill portion is amortized over the weighted average useful lives of depreciable non-monetary assets of the investee. The amortization is included in “gain (loss) on valuation of equity-method investment securities”.

When the Company’s equity interest in the investee increases due to an increase (or decrease) in contributed capital with (or without) consideration, the changes in the Company’s proportionate equity in the investee are accounted for as investment difference. If the Company’s equity interest decreases, the changes are accounted for as “gain (loss) on sales of equity-method investment securities”. However, if the investee is the Company’s subsidiary, those changes are accounted for in the capital surplus (capital adjustments).

3) DIffErENCE bETwEEN ThE fAIr vALUE AND bOOk vALUE Of NET ASSET Of ThE INvESTEEUpon acquisition of the equity-method investment securities, the Company’s proportionate shares in the differences between the fair values and book values of the identifiable assets and liabilities of the investee are amortized/reversed and included in “gain (loss) on valuation of equity-method investment securities” in accordance with the investee’s methods of accounting for the assets and liabilities.

4) ELIMINATION Of UNrEALIzED GAIN Or LOSS frOM INTErCOMpANY TrANSACTIONSThe Company’s proportionate share in the gain (loss) arising from transactions between the Company and the investee, which remains in the book value of assets held as of end of the reporting period, is considered unrealized gain (loss) and adjusted to equity-method investment securities. If the investee is a subsidiary of the Company, unrealized gain (loss) from sale of an asset by the Company to the investee (downstream transaction) is fully eliminated and adjusted to equity-method investment securities.

5) IMpAIrMENT LOSS ON EqUITY-METhOD INvESTMENT SECUrITIESWhen there is objective evidence that the equity-method investment securities is impaired and the recoverable amount is lower than the carrying amount of the equity-method investment securities, an impairment loss is recognized as “loss on impairment of equity-method investment securities” included in non-operating expense and the unamortized investment difference is first reduced. When the recoverable amount is recovered after the recognition of impairment loss, the reversal of impairment loss is recognized as income up to the previously recorded impairment loss. The book value of the equity-method investment securities after the reversal of the impairment loss cannot exceed the book value calculated as if the impairment loss would not been originally recognized. The reversal of the impairment loss recognized against the unamortized investment difference is not allowed.

6) TrANSLATION Of fINANCIAL STATEMENTS Of OvErSEAS INvESTEESFor overseas investees whose financial statements are prepared in foreign currencies, the equity-method of accounting is applied after assets and liabilities are translated in accordance with the accounting treatments for the translation of the financial statements of overseas’ subsidiaries for consolidated financial statements. The Company’s proportionate share of the difference between assets net of liabilities and shareholders’ equity after translation into Korean won is accounted for as “Changes in equity-method investee with accumulated comprehensive income (loss)” included in accumulated other comprehensive income (loss).




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(e) Allowance for Doubtful Accounts

In accordance with the Regulation on Supervision of Insurance Business (the “Supervisory Regulation”) legislated by the Korean Financial Supervisory Service (FSS) and the Company’s analysis of its assets and estimated loss on uncollectible accounts computed using past collection experience, the Company classifies all credits into five categories as normal, precautionary, substandard, doubtful or estimated loss, based on borrowers’ repayment capability and historical financial transaction records. The Supervisory Regulation also requires the Company to provide the minimum rate of loss provision for each category balance using the prescribed minimum percentages of 0.5 percent (individual loan is 0.75 percent) or more, 2 percent (individual loan is 5 percent) or more, 20 percent or more, 50 percent or more and 100 percent, respectively. Also, real estate project financing loans are classified into five categories as normal, precautionary, substandard, doubtful or estimated loss and an allowance for doubtful accounts is then calculated on loans and other applicable assets using the percentage or more than 0.9%, 7%, 20%, 50% and 100%, respectively.

However, the Company does not provide allowances for loans to the Korean government and local government entities, and call loans, which are classified as normal, in accordance with the Regulation on Supervision of Insurance Business. For household credit provision calculation, the Company uses roll-rate on default through past one year’s historical loss rate and compare with household credit provision to choose larger amount as provision.

(f) Troubled Debt Restructurings

The difference between the face value of the restructured receivable (payables) is recognized as bad debt expense or income for circumstances in which contractual terms such as those on the face amount, interest rate, or maturity, have been modified to alleviate the debtor’s burdens, as a result of an agreement between the creditor and the debtor or of an initiation of corporate reorganization procedures under court trustee or under debtor’s management.

(g) Property and Equipment

Property and equipment are stated at cost, except in the case of revaluations made in accordance with the Asset Revaluation Law, which allowed for asset revaluation prior to the Law being revoked on December 31, 2000. Assets acquired through investment in kind or donation are recorded at their fair value upon acquisition.

The Company assesses any possible recognition of impairment loss when there is an indication that expected future economic benefits of a tangible asset is considerably less than its carrying amount, as result of technological obsolescence, rapid decline in market value or other causes of impairment. When it is determined that an asset may have been impaired and that its estimated total future cash flows from continued use or disposal is less than its carrying amount, the carrying amount of a tangible asset is reduced to its recoverable amount and the difference is recognized as an impairment loss. If the recoverable amount of the impaired asset exceeds its carrying amount in subsequent reporting period, the amount equal to the excess is treated as the reversal of the impairment loss, however, it cannot exceed the carrying amount that would have been determined had no impairment loss been recognized.

Interest costs on borrowings for property and equipment are expensed as incurred.

Depreciation is computed by the declining-balance method (straight-line method for buildings and structures purchased from January 1, 1995) using the rates based on the useful lives of the respective assets as follows:

(h) Development Costs and Other Intangible Assets

Expenditure on development incurred in conjunction with new software, in which the elements of cost can be identified and future economic benefits are clearly expected, is capitalized and amortized on a straight-line basis over the expected periods to be benefited.

Other intangible assets, which are acquired by the Company, are stated at cost less accumulated amortization and impairment losses. Such assets are amortized using the straight-line method over a reasonable period, based on the nature of the assets as follows:

(i) Insurance Reserves

In accordance with Article 120 of the Insurance Business Law, the Company is required to maintain insurance reserves determined as follows:

1) rESErvE fOr OUTSTANDING CLAIMS Reserve for outstanding claims is based on the accumulation of estimates for losses reported and incurred but not reported (IBNR) prior to the end of the reporting period on the direct business written by the Company and estimates received from ceding companies.

In accordance with the amended Regulation on Supervision of Insurance Business and Enforcement Rules of Supervision of Insurance Business, the Company is required to report IBNR against long-term non-life insurance as reserve for outstanding claims.

2) LONG-TErM INSUrANCE prEMIUM rESErvE The Company maintains a reserve for the portion of premiums (and investment income on such portion), which is refundable to policyholders upon maturity and cancellation of the policy under long-term deposit-type insurance, unless there has been a substantial claim for payment under the policy.

Buildings & Structures 10-60 Equipment 4-20 Vehicles 4

Useful lives (years)

goodwill 5 Development cost 5 Software 4 Others 4

Useful lives (years)




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3) UNEArNED prEMIUM rESErvE The Company is required to maintain an unearned premium reserve at amounts determined based on lines of insurance and types of policy.

4) rESErvES fOr pArTICIpATING pOLICYhOLDEr DIvIDEND The Company is required to maintain a reserve for participating policyholder dividend based on the regulations approved by the governor of the Financial Supervisory Service.

5) ExCESS pArTICIpATING pOLICYhOLDEr DIvIDEND rESErvE Pursuant to relevant laws and contracts, the Company may establish excess participating policyholder dividend reserve depending on the operating results of related insurance products. The reserve may be used to pay participating policyholder dividend or additional dividend.

(j) Catastrophe Reserves

Catastrophe reserves are required based on the regulations approved by the governor of the Financial Supervisory Service. Non-life insurance companies may establish a catastrophe reserve amounting to 35%~100% multiplied net cash premiums by reserve basic rate for each type of insurance products in proportion to underwriting profit for the year, if any, up to 50% (in case of car insurance, 40%) of the current year earned premiums. These reserves can be used against exceptionally large claims in the future.

(k) Compensation Receivables

The Company recognizes compensation receivables according to Accounting Standards for the Insurance Industry and Insurance Supervisory Regulations. Compensation receivables are calculated by multiplying the average recovery ratio (recovery amount/net claims) for the last three years from the prior year end of the reporting period to the amount of net claims for the last year from the prior year end of the reporting period claimed.

(l) Retirement and Severance benefits

The Company introduced a defined benefit pension plan, where each eligible employee receives a fixed amount of pension after retirement. The Company accrued, as a liability for retirement and severance benefits, lump-sum payments payable to employees who are currently in service, assuming that they left the Company as of the end of the reporting period. All employees with a minimum of one year of service are eligible to participate and must elect to participate in the plan. Participants accrue estimated benefits based on actuarial assumptions measured at the end of the reporting period at the discounted present value.

The Company deposited a certain portion of severance benefits to the National Pension Service according to the prior National Pension Law. The deposit amount is recorded as a deduction from accrued severance benefits.

(m) Separate Account Assets and Liabilities

In accordance with Article 108 of the Insurance Business Law and Insurance Supervisory Regulations, all assets and liabilities related to retirement benefit insurance and retirement benefit pension are managed and accounted for separately. Appropriate assets/liabilities are accounted as separate account assets and separate account liabilities. Separate account assets are valued by individual separate accounts and securities related to retirement pension merit allocation base products are calculated in accordance with rules and regulation of financial investment act. Assets other than the above mentioned follows general accounts’ method. Also, amounts occurred from transaction between general accounts and separate accounts are recognized as separate account receivables (separate account payable).

(n) Deferred Acquisition Costs

Deferred acquisition costs are equally amortized over the period of premium payment of insurance contracts or over seven years for insurance contracts of which premium payment period exceeds seven years. Further, if the insurance contracts are surrendered or have lapsed, the related unamortized balance of deferred acquisition costs is charged to current operations.

(o) Premium Deficiency

When the pre-assumed interest rate to be applied in accumulating premium reserve is higher than the interest rate for one year time deposits and this situation is expected to continue for a long period, the Company is considered to have a premium deficiency. This situation is becoming more common given the current low interest rate environment in Korea. The above reserve for premium deficiency is initially offset against any unamortized deferred acquisition costs and then against the excess dividend reserve. The remaining balance, if any, is charged to current operations.

(p) Accounting for Foreign Currency Transactions and Translation

The Company maintains its accounts in Korean won. Transactions in foreign currencies are recorded in Korean won based on the prevailing rates of exchange on the transaction date. Monetary accounts with balances denominated in foreign currencies are recorded and reported in the accompanying financial statements at the exchange rates prevailing at the end of the reporting periods. The balances have been translated using the basic rate announced by Seoul Money Brokerage Services, Ltd., and the resulting translation gains and losses are reflected in current operations.

(q) Translation of Financial Statements of Overseas Affiliates Stated in Foreign Currency

For overseas affiliates whose financial statements are prepared in foreign currency, assets and liabilities are translated at the exchange rate at the end of the reporting period, shareholders’ equity is translated at the historical exchange rate, and items in statements of income are recorded at the average exchange rate of the reporting period. gain (loss) from foreign currency translation of overseas affiliate is recorded as accumulated other comprehensive income (loss). When subsequent gain (loss) from foreign currency translation of overseas affiliate arises, it is offset against the previously recognized gain (loss) and charged to gain or loss on the accounting period in which such overseas affiliates are liquidated, closed or disposed of.

(r) Income Taxes

When the Company recognizes deferred income tax assets or liabilities for the temporary differences between the carrying amount of an asset and liability and tax base, a deferred income tax liability for taxable temporary difference is fully recognized except to the extent in accordance with related SKAS while a deferred tax asset for deductible temporary difference is recognized to the extent that it is almost certain that taxable profit will be available against which the deductible temporary difference can be utilized. Deferred income tax assets and liabilities in the same tax jurisdiction are presented on a net basis.

Current and deferred income tax expense are included in income tax expense in the statements of income and additional income tax or tax refunds for the prior periods are included in income tax expense for the current period when recognized. However, income tax resulting from transactions or events, which was directly recognized in shareholders’ equity in current or prior periods, or business combinations, is directly adjusted to equity account or goodwill (or negative goodwill).

(s) Derivatives

Derivative instruments are presented as assets or liabilities valued principally at fair value of the rights or obligations associated with the derivative contracts. The unrealized gain or loss from derivative transactions is recognized in current operations. However, for derivative instruments for the purpose of hedging the exposure to the variability of cash flows of a forecasted transaction, the




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effective portion of the derivative’s gain or loss is deferred as accumulated other comprehensive income (loss), a component of shareholders’ equity. The ineffective portion of the gain or loss is charged or credited to current operations.

However, it’s considered for all portion of the hedge to be effective when evaluating the hedge effectiveness provided that the maturity, the contract amount and the timing of the cash flows between the hedged items and the hedging instruments agreed with the principal contents of the hedge contract.

(t) Share-based Payments

The stock option program allows the Company’s employees to acquire shares of the Company. The option exercise price is generally fixed below the market price of underlying shares at the date of the grant. The Company values stock options based on option pricing model under the fair value method and recognizes this value as an expense over the period in which the options vest. When the options are exercised, equity is increased by the amount of the proceeds received, and the difference between the exercise price and market price is included in compensation cost and credited to the capital adjustment account.

(u) Provisions, Contingent Assets and Contingent Liabilities

Provisions are recognized when all of the following are met: (1) an entity has a present obligation as a result of a past event, (2) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and (3) a reliable estimate can be made of the amount of the obligation. Where the effect of the time value of money is material, a provision is recorded at the present value of the expenditures expected to be required to settle the obligation.

Where the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognized as a separate asset when, and only when, it is virtually certain that reimbursement will be received if the Company settles the obligation. The expense generated by the provision is presented net of the amount of expected reimbursement.

(v) Recognition of Liabilities on Expired Insurance

If the payment obligation is actually granted to the Company in view of the public character of insurance transaction and the practice of insurance industries, even though the extinctive prescription of insurance payment expired, the Company recognizes the amount expected to pay as other liabilities.

(w) Use of Estimates

The preparation of (non-consolidated) financial statements in accordance with accounting principles generally accepted in the Republic of Korea requires management to make estimates and assumptions that affect the amounts reported in the non-consolidated financial statements and related notes to non-consolidated financial statements. Actual results could differ from those estimates.

3. bAsis Of trAnslAting finAnciAl stAtements

The non-consolidated financial statements are expressed in Korean won and have been translated into US dollars at the rate of ￦1,096.50 to $1, the basic exchange rate on March 31, 2011 posted by Seoul Money Brokerage Services, solely for the convenience of the reader. These translations should not be construed as a representation that any or all of the amounts shown could be converted into US dollars at this or any other rate.

4. due frOm bAnks

Restricted due from banks as of March 31, 2011 and 2010 are as follows:

5. trAding securities

(1) Trading securities as of March 31, 2011 and 2010 are as follows:

The fair value of trading equity securities is assessed by the closing price quoted as of the end of the reporting period and the fair value of trading debt securities is measured at the yield rates provided by independent securities valuation institutions. Overseas trading securities is determined by yields or quoted price provided by foreign based securities management company. The fair value of beneficiary certificates is referred to the standard price by the fund management company.

As trading securities are assessed at fair value, the Company recorded the gain on valuation of trading securities amounting to ￦11,053 million ($10,080 thousand) and the loss on valuation of trading securities amounting to ￦755 million ($ 689 thousand) for the year ended March 31, 2011.

(2) The Company recognized interest incomes from trading debt securities amounting to ￦4,983 million ($ 4,545 thousand) and ￦3,363 million ($3,067 thousand) for the years ended March 31, 2011 and 2010, respectively.



2011 2010 2011 2010Equity securities ￦ - ￦ 529 $ - $ 482government and public bonds 40,972 9,966 37,366 9,089Special bonds 80,100 - 73,051 -Corporate bonds 180,877 153 164,959 140Beneficiary certificates 440,918 51,134 402,114 46,634Securities in foreign currencies 110,945 109,914 101,181 100,241

￦ 853,812 ￦ 171,696 $ 778,671 $ 156,586


2011 2010 2011 2010Opening deposit for checking accounts ￦ 11 ￦ 11 $ 10 $ 10 Collateral for guarantee deposits 448 437 409 399

￦ 459 ￦ 448 $ 419 $ 409



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6. AvAilAble-fOr-sAle securities

(1) Available-for-sale securities as of March 31, 2011 and 2010 are as follows:

Equity securities ￦ 1,680,483 ￦ 319,532 ￦ 82 ￦ 1,999,933government and public bonds 38,636 28,633 7,629 59,640Special bonds 137,898 56,038 11,715 179,593Financial company bonds 61,011 (7,795) 3,071 50,145Corporate bonds 66,156 (5,697) 9,564 53,523Beneficiary certificates 37,635 49,239 25,934 60,940Securities in foreign currencies 56,584 (22,700) 3,193 30,691Others 43,382 8,413 2,794 49,001Sub total ￦ 2,121,785 ￦ 425,663 ￦ 63,982 ￦ 2,483,466

Tax (469,444) (547,913)

1,652,341 1,935,553

Translation into U.S. dollars (in thousands) (Note 3) $ 1,506,923 $ 1,765,210

Beginning gain (loss) on Realized on EndingDescription balance valuation disposal balance

government and public bonds ￦ 65,505 ￦ 818,958 ￦ 1,129,950 ￦ 2,014,413Special bonds 100,545 1,388,475 2,820,636 4,309,656Financial company bonds 445,445 1,024,427 201,376 1,671,248Corporate bonds 282,522 2,069,592 135,568 2,487,682Securities in foreign currencies 45,524 1,699,844 566,390 2,311,758Others 24,316 327,528 905,775 1,257,619

￦ 963,857 ￦ 7,328,824 ￦ 5,759,695 ￦ 14,052,376

Translation into U.S. dollars (in thousands) (Note 3) $ 879,031 $ 6,683,834 $ 5,252,800 $ 12,815,665

Within Within More than Description 1 year 1 - 5 years 5 years Total

(5) The Company recognized interest incomes on available-for-sale debt securities amounting to ￦716,905 million ($653,812 thousand) and ￦643,733 million ($587,080 thousand) for the years ended March 31, 2011 and 2010, respectively.

(6) Available-for-sale securities pledged as collateral as of March 31, 2011 and 2010 are as follows:

( * ) As of March 31, 2011 and 2010, the Company pledged available-for-sale securities for foreign currency swap.( ** ) As of March 31, 2011 and 2010, the Company pledged available-for-sale securities for bond sold under repurchase agreements.

As of March 31, 2011, the Company lend government bonds amounting to ￦212,616 million ($193,904 thousand) in its securities lending transactions with KSFC.

(2) For the years ended March 31, 2011 and 2010, the Company recorded impairment loss on available-for-sale securities amounting to ￦2,625 million ($2,394 thousand) and ￦18,872 million ($17,211 thousand), respectively, which are not expected to be recovered.

(3) Changes in gain (loss) on valuation of available-for-sale securities recorded as accumulated other comprehensive income, all of which are stated at fair value for the year ended March 31, 2011, are as follows (Unit: In KRW millions):

(4) Maturities of debt securities included in available-for-sale securities as of March 31, 2011 are as follows (Unit: In KRW millions):



2011 2010 2011 2010

UBS ( * ) ￦ 93,498 ￦ 51,854 $ 85,269 $ 45,856ABN AMRO ( * ) 25,293 22,462 23,067 19,864JP Morgan chase ( * ) 35,515 2,230 32,389 1,972Industrial Bank of Korea ( * ) - 60,865 - 53,825KSFC ( ** ) 29,640 26,788 27,031 23,689

￦ 183,946 ￦ 164,199 $ 167,756 $ 145,206


2011 2010 2011 2010Equity securities ￦ 2,239,929 ￦ 1,911,158 $ 2,042,798 $ 1,742,962Investments in partnerships 37,882 25,153 34,548 22,939government and public bonds 2,014,413 1,746,200 1,837,130 1,592,522Special bonds 4,309,656 3,873,631 3,930,375 3,532,723Financial company bonds 1,671,248 1,640,620 1,524,166 1,496,233Corporate bonds 2,487,682 1,891,437 2,268,748 1,724,977Beneficiary certificates 896,593 915,917 817,686 835,310Securities in foreign currencies 2,482,937 2,046,307 2,264,420 1,866,217Others 1, 277,379 1,259,971 1,164,960 1,149,084

￦ 17,417,719 ￦ 15,310,394 $ 15,884,831 $ 13,962,967



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( * ) The equity method has been applied as the Company is able to exercise significant influence over the operating and financial policies of the investees, which the employees of the Company hold position as directors of the investees.

P.T Asuransi Samsung Tugu 70.00 ￦ 3,761 ￦ 7,793 ￦ 7,793 $ 7,107Samsung Fire & Marine Insurance

Claim Adjustment Service 96.79 880 1,908 1,908 1,740Anycar Claim Adjustment Service 100.00 250 690 690 629Macquarie Central ( * ) 4.98 3,800 493 493 450New Airport Hiway ( * ) 1.38 3,042 5,150 5,150 4,697KRII ( ** ) 14.00 3,570 3,465 3,465 3,160KOCREPVII ( ** ) 4.83 2,900 2,817 2,817 2,569Samsung Vina Insurance 50.00 10,155 10,316 10,316 9,408Samsung Fire & Marine Insurance of China Limited 100.00 32,594 82,123 82,123 74,896Samsung Fire & Marine Consultoria em Seguros Ltda. 100.00 509 402 402 368

￦ 61,461 ￦ 115,157 ￦ 115,157 $ 105,023

Equity in Translation Ownership Acquisition net asset Book into U.S.Investees ratio (%) cost value value dollars (Note 3)

2010

P.T Asuransi Samsung Tugu 70.00 ￦ 3,761 ￦ 9,207 ￦ 9,207 $ 8,397Samsung Fire & Marine Insurance

Claim Adjustment Service 96.79 880 1,151 1,151 1,050Anycar Claim Adjustment Service 100.00 250 781 781 712Macquarie Central ( * ) 4.98 3,800 154 154 140New Airport Hiway ( * ) 1.38 3,042 5,780 5,780 5,271Samsung Fire & Marine Insurance of Europe Limited 100.00 19,064 18,612 18,612 16,974KRII 14.00 3,570 - - -KOCREPVII 4.83 2,900 - - -Samsung Vina Insurance 50.00 10,155 10,398 10,398 9,483Samsung Fire & Marine Insurance of China Limited 100.00 32,594 93,478 93,478 85,251Samsung Fire & Marine Consultoria em Seguros Ltda. 100.00 509 423 423 387

￦ 80,525 ￦ 139,984 ￦ 139,984 $ 127,665

Equity in Translation Ownership Acquisition net asset Book into U.S.Investees ratio (%) cost value value dollars (Note 3)

2011

7. held-tO-mAturity securities

(1) Held-to-maturity securities as of March 31, 2011 and 2010 are as follows (Unit: In KRW millions):

(2) Maturities of held-to maturity securities as of March 31, 2011 are as follows (Unit: In KRW millions):

(3) The Company recognized interest incomes on held-to-maturity securities amounting to ￦8,082 million ($7,371 thousand) and ￦8,891 million ($8,109 thousand) for the years ended March 31, 2011 and 2010, respectively.

8. eQuity-methOd investment securities

(1) Details of equity-method investment securities as of March 31, 2011 and 2010 are as follows:(Unit: In KRW millions, in USD thousands):

Special bonds ￦ - ￦ 80,115 ￦ 30,000 ￦ 110,115

Translation into U.S. dollars (in thousands) (Note 3) $ - $ 73,064 $ 27,360 $ 100,424

Within Within More than Description 1 year 1 - 5 years 5 years Total



2011 2010

Special bonds ￦ 110,000 ￦ 110,115 ￦ 110,115 ￦ 110,131Others - - - 20,000

￦ 110,000 ￦ 110,115 ￦ 110,115 ￦ 130,131

Translation into U.S. dollars (in thousands) (Note 3) $ 100,319 $ 100,424 $ 100,424 $ 118,678

Description Face value Amortized Cost Book value Book value


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(3) The summarized financial information of investees of which securities are accounted for using the equity method as of and for the year ended March 31, 2011 is as follows:

The Company used the recent audited or reviewed financial statements of the investees in the application of the equity method. However, provisional financial statements of Samsung Fire & Marine Insurance Claim Adjustment Service, Macquarie Central, Samsung Fire & Marine Insurance of Europe Limited, Samsung Fire & Marine Consultoria em Seguros Ltda. as of March 31, 2011 were used for applying the equity method. The Company performed additional review procedures for such financial statements and there was no material exception as a result of the review.

(4) The market price of listed equity securities as of March 31, 2011 is as follows:

9. discretiOnAry Asset mAnAgement cOntrActs And Others

(1) Discretionary asset management contracts

The Company has entered into discretionary asset management contracts with investment trust management company (Samsung Asset Management Co., Ltd.), in order to manage trading securities and available-for-sale securities amounting to ￦141,080 million ($128,664 thousand) and ￦6,653,489 million ($6,067,933 thousand), respectively, as of March 31, 2011.The Company entrusts PIMCO(2011) and Prudential Financial, Inc.(2010) with the management of foreign investment securities among trading securities according to the discretionary asset management contracts. All foreign investment securities are foreign bonds of which book value is ￦108,548 million ($98,995 thousand) and ￦109,914 million ($100,241 thousand) as of March 31, 2011 and 2010.

In KRW millions

P.T Asuransi Samsung Tugu ￦ 20,163 ￦ 7,011 ￦ 27,495 ￦ 1,728Samsung Fire & Marine Insurance Claim Adjustment Service 5,889 4,700 92,515 (783)Anycar Claim Adjustment Service 6,346 5,565 64,949 91Macquarie Central 3,112 23 - 22Samsung Fire & Marine Insurance of Europe Limited 30,241 11,629 5,591 (249)New Airport Hiway 1,055,110 637,416 218,041 45,591Samsung Vina Insurance 37,194 16,398 47,495 2,760Samsung Fire & Marine Insurance of China Limited 170,317 76,839 103,716 10,739Samsung Fire & Marine Consultoria em Seguros Ltda. 441 18 634 (10)

￦ 1,328,813 ￦ 759,599 ￦ 560,436 ￦ 59,889

Translation into U.S. dollars (in thousands) (Note 3) ￦ 1,211,868 ￦ 692,749 ￦ 511,114 ￦ 54,618

Investees Total assets Total liabilities Sales Net income (loss)

( * ) Other increase (decrease) are consist of dividends received amounting to ￦558 million ($509 thousand) and decrease of other comprehensive income amounting to ￦629 million ($574 thousand).

For the year ended March 31, 2011, the Company recognized gain on disposal of equity-method investment securities amounting to ￦857 million ($782 thousand) related to disposition of KRII and KOCREPVII.

2011

P.T Asuransi Samsung Tugu ￦ 7,793 ￦ - ￦ 1,210 ￦ 204 ￦ 9,207Samsung Fire & Marine Insurance

Claim Adjustment Service 1,908 - (757) - 1,151Anycar Claim Adjustment Service 690 - 91 - 781Macquarie Central 493 - 51 (390) 154New Airport Hiway 5,150 - 630 - 5,780Samsung Fire & Marine Insurance of Europe Limited - 19,064 (249) (203) 18,612KRII 3,465 (3,465) - - -KOCREPVII 2,817 (2,671) - (146) -Samsung Vina Insurance 10,316 - 1,380 (1,298) 10,398Samsung Fire & Marine Insurance of China Limited 82,123 - 10,739 616 93,478Samsung Fire & Marine Consultoria em Seguros Ltda. 402 - (9) 30 423

￦ 115,157 ￦ 12,928 ￦ 13,086 ￦ (1,187) ￦ 139,984

Translation into U.S. dollars (in thousands) (Note 3) $ 105,023 $ 11,790 $ 11,935 $ (1,083) $ 127,665

Beginning Acquisitions gain (loss) Other increase EndingInvestees book value (Disposals) on valuation (decrease)( * ) book value

( * ) Other increase(decrease) consists of dividends received amounting to ￦558 million ($509 thousand) and decrease of other comprehensive income amounting to ￦629 million ($574 thousand).

2010

P.T Asuransi Samsung Tugu ￦ 6,430 ￦ - ￦ 476 ￦ 887 ￦ 7,793Samsung Fire & Marine Insurance

Claim Adjustment Service 1,984 - (76) - 1,908Anycar Claim Adjustment Service 682 - 8 - 690Macquarie Central 2,905 - 5,838 (8,250) 493KOCREPVII 2,864 - 302 (349) 2,817New Airport Hiway 4,412 - 738 - 5,150KRII 3,340 - 684 (559) 3,465Samsung Vina Insurance 8,712 3,036 937 (2,369) 10,316Samsung Fire & Marine Insurance of China Limited 87,686 - 10,419 (15,982) 82,123Samsung Fire & Marine Consultoria em Seguros Ltda. - 509 (85) (22) 402

￦ 119,015 ￦ 3,545 ￦ 19,241 ￦ (26,644) ￦ 115,157

Translation into U.S. dollars (in thousands) (Note 3) $ 108,541 $ 3,233 $ 17,548 $ (24,299) $ 105,023

Beginning Acquisitions gain (loss) Other increase EndingInvestees book value (Disposals) on valuation (decrease)( * ) book value

(2) Changes in book value resulting from the equity method of accounting for the years ended March 31, 2011 and 2010 were as follows (Unit: In KRW millions):



KOCREPVII - - - -KRII - - - -

Investee Price per share Number of shares Market value Market value

In KRW millions In USD (except price per share and number of shares) thousands (note 3)


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(2) Private equity fund

The Company presents private equity fund as beneficiary certificates under trading securities and available-for-sale securities. Private equity fund as of March 31, 2011 and 2010 consists of the following:

The Company recognized gain on valuation of beneficiary certificates classified as trading securities in current operations amounting to ￦10,856 million ($9,901 thousand) and ￦1,122 million ($1,023 thousand) for the year ended March 31, 2011 and 2010, and gain on valuation of beneficiary certificates classified as available-for-sale securities as accumulated other comprehensive income amounting to ￦(13) million ($(12) thousand) and ￦11,672 million ($10,645 thousand) for the years ended March 31, 2011 and 2010,respectively.

Also, the Company follows the Capital Market and Financial Investment Business Act for its retained discretionary asset management contracts and the Company has decided not to be involved in collective investor’s asset management as well as in practice. Thus the Company recognize discretionary asset management contract as beneficiary certificate within available-for-sale securities.

The underlying assets in the private equity fund as of March 31, 2011 consist of the following:

Equity securities ￦ 10,872 $ 9,915Call loans 13,378 12,201Bank deposits 1,317 1,201Fixed deposits 16,941 15,450Bonds 321,519 293,223Derivatives - -Other assets and liabilities, net 7,815 7,127

￦ 371,842 $ 339,117

Description In KRW millions in USD thousands (note 3)

10. lOAns

(1) In accordance with the Insurance Business Act and the Regulation on Supervision of Insurance Business, the Company is permitted to provide various loans for policy holders or other customers as part its insurance operations. Loans as of March 31, 2011 bear an annual interest rate ranging from 4.125% to 15.50%.

(2) Loans as of March 31, 2011 and 2010 are summarized as follows:

(3) The maturities of loans as of March 31, 2011 and 2010 are as follows:



Policy loans ￦ 2,248,546 ￦ 1,910,859 $ 2,050,658 $ 1,742,689Loans secured by real estate 3,717,625 2,829,006 3,390,447 2,580,033Unsecured loans 68,471 217,985 62,445 198,801Loans secured by third party guarantees 748 1,362 682 1,242Other loans 977,374 697,201 891,358 635,842

7,012,764 5,656,413 6,395,590 5,158,607

Allowance for doubtful accounts (52,324) (42,934) (47,718) (39,155)Deferred loan origination costs (3,004) (3,113) (2,740) (2,839)

￦ 6,957,436 ￦ 5,610,366 ￦ 6,345,132 $ 5,116,613

2011 2010 2011 2010

In KRW millions in USD thousands (note 3)

2011 2010

Beneficiary certificates (In KRW millions) ￦ 361,000 ￦ 371,843 ￦ 350,539 ￦ 363,001Translation into U.S. dollars (in thousands) (Note 3) $ 329,229 $ 339,118 $ 319,689 $ 331,054

Acquisition cost Fair value Acquisition cost Fair value

In KRW millions

Policy loans ￦ 98,585 ￦ 114,488 ￦ 96,289 ￦ 247,639 ￦ 1,691,545 ￦ 2,248,546Loans secured by real estate 159,696 89,242 121,293 576,540 2,770,854 3,717,625Unsecured loans 48,448 16,092 3,562 281 88 68,471Loans secured by third party guarantees 415 294 39 - - 748Other loans 65,000 145,849 122,970 36,429 607,126 977,374

￦ 372,144 ￦ 365,965 ￦ 344,153 ￦ 860,889 ￦ 5,069,613 ￦ 7,012,764Translation into U.S. dollars

(In thousands) (Note 3) $ 339,393 $ 333,757 $ 313,865 $ 785,125 $ 4,623,450 $ 6,395,590

Within Within Within Within 1 1-2 2-3 3-5 More than year year year year 5 years TotalInvestees

2011


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(4) Loans to employees as of March 31, 2011 and 2010 are as follows:

(5) Loans, insurance receivables and other applicable asset under the asset quality classification as of March 31, 2011 and 2010 are as follows:

In KRW millions

Policy loans ￦ 2,248,546 ￦ - ￦ - ￦ - ￦ - ￦ 2,248,546Loans secured by real estate 3,704,721 2,532 9,077 793 502 3,717,625Unsecured loans 68,414 10 - 30 17 68,471Loans secured by third party guarantees 748 - - - - 748Other loans 977,374 - - - - 977,374

6,999,803 2,542 9,077 823 519 7,012,764

Insurance receivables ( * ) 163,532 12,190 2,193 6,866 3,831 188,612Other receivables 142,188 68 1,053 324 717 144,350Accrued income ( ** ) 24,884 57 - - - 24,941Notes receivable 1,278 - - - - 1,278Other assets ( * * * ) - - 140 - - 140

331,882 12,315 3,386 7,190 4,548 359,321

total 7,331,685 14,857 12,463 8,013 5,067 7,372,085Translation into U.S. dollars

(In thousands) (Note 3) $ 6,686,443 $ 13,549 $ 11,366 $ 7,309 $ 4,621 $ 6,723,288

Normal Precautionary Substandard Doubtful Estimated loss TotalInvestees

2011

( * ) Net of insurance payables( * * ) The Company reserves allowance for doubtful accounts for accrued income related loans.( *** ) The Company reserves allowance for doubtful accounts for credit provisional payment.



Loans secured by real estate ￦ 27,921 ￦ 27,910 $ 25,464 $ 25,454Unsecured loans 30,367 31,201 27,694 28,455Loans secured by third party guarantees 533 1,068 486 974Other loans - 29 - 26

￦ 58,821 ￦ 60,208 $ 53,644 $ 54,909

2011 2010 2011 2010

In KRW millions in USD thousands (note 3)

In KRW millions

Policy loans ￦ 85,501 ￦ 104,696 ￦ 109,630 ￦ 181,315 ￦ 1,429,717 ￦ 1,910,859Loans secured by real estate 137,233 110,068 88,365 248,813 2,244,527 2,829,006Unsecured loans 52,169 46,675 73,709 45,333 99 217,985Loans secured by third party guarantees 589 428 332 13 - 1,362Other loans 55,513 47,992 24,434 47,536 521,726 697,201

￦ 331,005 ￦ 309,859 ￦ 296,470 ￦ 523,010 ￦ 4,196,069 ￦ 5,656,413Translation into U.S. dollars

(In thousands) (Note 3) $ 301,874 $ 282,589 $ 270,379 $ 476,981 $ 3,826,784 $ 5,158,607

Investees

2010 Within Within Within Within 1 1-2 2-3 3-5 More than year year year year 5 years Total


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In KRW millions

Policy loans ￦ 1,910,859 ￦ - ￦ - ￦ - ￦ - ￦ 1,910,859Loans secured by real estate 2,817,431 3,647 6,838 403 687 2,829,006Unsecured loans 217,902 42 - 13 28 217,985Loans secured by third party guarantees 1,359 3 - - - 1,362Other loans 697,048 - - 153 - 697,201

5,644,599 3,692 6,838 569 715 5,656,413

Insurance receivables ( * ) 131,702 12,737 5,318 9,167 2,170 161,094Other receivables 143,157 107 110 2,514 281 146,169Accrued income ( ** ) 21,828 82 - - - 21,910Notes receivable 1,957 - - - - 1,957Other assets ( *** ) - - 114 - - 114

298,644 12,926 5,542 11,681 2,451 331,244

total 5,943,243 16,618 12,380 12,250 3,166 5,987,657Translation into U.S. dollars

(In thousands) (Note 3) $ 5,420,194 $ 15,155 $ 11,290 $ 11,173 $ 2,887 $ 5,460,699

Normal Precautionary Substandard Doubtful Estimated loss TotalInvestees

2010

( * ) Net of insurance payables( ** ) The Company reserves allowance for doubtful accounts for accrued income related loans.( *** ) The Company reserves allowance for doubtful accounts for credit provisional payment.

(6) Loans and receivables, which the Company classified as an estimated loss but the extinctive prescription of those assets has not past or the right of recourse is not lost as of March 31, 2011 and 2010, are as follows:

11. prOperty And eQuipment

(1) The details of property and equipment as of March 31, 2011 and 2010 are as follows:

As of March 31, 2011 and 2010, the published value of land is ￦523,414 million ($477,350 thousand) and ￦518,179 million ($472,575 thousand), respectively, based on the disclosed public land price announced by the government pursuant to the Laws on Disclosure of Land Price and Valuation of Land.

(2) The changes in property and equipment for the year ended March 31, 2011 was as follows (Unit: In KRW millions):

In addition, depreciation for the year amounting to ￦43,130 million ($39,334 thousand), ￦569 million ($519 thousand) and ￦9,104 million ($8,303 thousand) is charged to general and administrative expense, investment administrative expenses and depreciation expenses on investments, respectively.

(3) As of March 31, 2011, the Company’s land and buildings pledged as collateral for rental deposits received and collateralized amounts are ￦44,785 million ($40,844 thousand).

Land ￦ 412,703 ￦ 765 ￦ (2,996) ￦ - ￦ - ￦ 410,472Buildings 669,725 1,512 (447) (19,922) 6,958 657,826Structures 2,239 - (2) (101) - 2,136Furniture and other equipment 48,229 32,222 (33) (32,657) - 47,761Vehicles 168 81 (8) (123) - 118Construction in progress 8,495 27,793 - - (6,958) 29,330 ￦ 1,141,559 ￦ 62,373 ￦ (3,486) ￦ (52,803) ￦ - ￦ 1,147,643Translation into U.S. dollars

(In thousands) (Note 3) $ 1,041,093 $ 56,884 $ (3,179) $ (48,156) $ - $ 1,046,642

Transfer Beginning from other Ending book value Acquisition Disposal Depreciation accounts book value



( * ) Prior to deducting LOF (Loan Origination Fee)

Total loans ( * ) 7,372,085 5,987,657 5,025,468 6,723,288 5,460,699 4,583,190Provision 63,094 54,796 48,170 57,541 49,974 43,931Ratio 0.86% 0.92% 0.96% 0.86% 0.92% 0.96%

2011 2011 2010 2011 2011 2010


Land ￦ 410,472 ￦ 412,703 $ 374,347 $ 376,382Buildings 657,826 669,725 599,933 610,784Structures 2,136 2,239 1,948 2,042Furniture and other equipment 47,761 48,229 43,558 43,984Vehicles 118 168 108 154Construction in progress 29,330 8,495 26,748 7,747

￦ 1,147,643 ￦ 1,141,559 $ 1,046,642 $ 1,041,093

2011 2010 2011 2010


2011 2010

Loans ￦ 519 ￦ 519 ￦ 715 ￦ 715Insurance receivables 3,831 2,952 2,170 1,457Other receivables 717 708 281 281 ￦ 5,067 ￦ 4,179 ￦ 3,166 ￦ 2,453

Translation into U.S. dollars (in thousands) (Note 3) $ 4,621 $ 3,811 $ 2,887 $ 2,237

Loans Claim Loans Claim


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14. insurAnce receivAbles And insurAnce pAyAbles

Insurance receivables and insurance payables as of March 31, 2011 and 2010 are as follows:

15. cOmpensAtiOn receivAbles

Compensation receivables as of March 31, 2011 and 2010 are as follows:

Compensation income for the years ended March 31, 2010 and March 31, 2011 is amounted to ￦16,436 million($14,990 thousand) and ￦12,132 million($11,064 thousand), respectively.

12. insured Assets

Insured assets of the Company as of March 31, 2011 are as follows:

In addition, the Company is insured against various indemnity liabilities.

13. intAngible Assets

(1) The details of intangible assets as of March 31, 2011 and 2010 are as follows:

(2) The change in intangible assets for the year ended March 31, 2011 was as follows (Unit: In KRW millions):

Development cost ￦ 57,046 ￦ 21,170 ￦ (330) ￦ (24,545) ￦ 4,545 ￦ 57,886Software 17,556 4,837 - (8,378) - 14,015Others 69 50 (1) (36) - 82

￦ 74,671 ￦ 26,057 ￦ (331) ￦ (32,959) ￦ 4,545 ￦ 71,983Translation into

U.S. dollars (In thousands) (Note 3) $ 68,099 $ 23,764 $ (302) $ (30,058) $ 4,145 $ 65,648

Transfer Beginning from other Ending book value Acquisition Disposal Depreciation accounts book value



Package insurance Office buildings & structures ￦ 1,226,135 $ 1,118,226

Type Insured assets Insured amount Insured amount


goodwill ￦ - ￦ - $ - $ -Development cost 57,886 57,046 52,792 52,026Software 14,015 17,556 12,782 16,011Others 82 69 74 62

￦ 71,983 ￦ 74,671 $ 65,648 $ 68,099

2011 2010 2011 2010


Insurance receivables:Premium receivable ￦ 123,210 ￦ 125,984 $ 112,367 $ 114,896Due from agents 1,503 2,056 1,371 1,875Co-insurance receivable 9,917 1,209 9,044 1,103Receivables related to agency business 23,283 16,942 21,234 15,451Reinsurance receivables 105,611 71,892 96,316 65,565Overseas reinsurance receivables 77,563 50,645 70,737 46,188Deposits on assumed reinsurance treaty 7,065 5,949 6,443 5,425

￦ 348,152 ￦ 274,677 $ 317,512 $ 250,503

Insurance payables:Claims payables ￦ 56,567 ￦ 50,521 $ 51,589 $ 46,075Due to agents 59,990 49,401 54,710 45,053Premiums refund payable 11,141 13,494 10,161 12,306Payables related to agency business 37,394 33,448 34,103 30,504Reinsurance payables 130,531 119,785 119,043 109,243Overseas reinsurance premiums payables 53,029 45,559 48,362 41,549Deposits on assumed reinsurance treaty 13,779 17,388 12,566 15,859

￦ 362,431 ￦ 329,596 $ 330,534 $ 300,589

2011 2010 2011 2010


Fire insurance ￦ 691 ￦ 703 $ 630 $ 641Marine insurance 4,290 4,673 3,912 4,262Automobile insurance 122,618 105,486 111,827 96,202Special insurance 1,908 3,256 1,740 2,969guarantee insurance 205 832 187 759Overseas insurance 2,975 521 2,713 475Long-term insurance 1,487 2,266 1,356 2,067Pension insurance (6) (5) (5) (4)

￦ 134,168 ￦ 117,732 $ 122,360 $ 107,371

2011 2010 2011 2010



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16. deferred AcQuisitiOn cOsts

In accordance with insurance accounting standard, the Company amortizes acquisition cost (excluding the amount exceeding expected acquisition cost) over the contract period of long-term contracts and personal pension contracts. Significant changes in deferred acquisition costs for the year ended March 31, 2011.

(2) Policy reserves as of March 31, 2010 are summarized as follows:

17. pOlicy reserves

(1) Policy reserves as of March 31, 2011 are summarized as follows:

Long-term dividend ￦ 223 ￦ 59 ￦ 151 ￦ 131Long-term undistributed dividend 1,479,028 873,183 668,082 1,684,129Personal pension 159,355 162,047 74,405 246,997

￦ 1,638,606 ￦ 1,035,289 ￦ 742,638 ￦ 1,931,257Translation into

U.S. dollars (In thousands) (Note 3) $ 1,494,397 $ 944,175 $ 677,280 $ 1,761,292

Beginning Deferred Amortization Year-end

In KRW millions


18. cAtAstrOphe reserves

Catastrophe reserves as of March 31, 2011 and 2010 are summarized as follows:



Beginning balance ￦ 1,132,825 ￦ 1,059,285 $ 1,033,128 $ 966,060Net increase:

Fire insurance (795) (14) (725) (13)Marine insurance 2,002 1,822 1,826 1,662Automobile insurance 32,442 52,429 29,587 47,815Special insurance 19,818 17,865 18,074 16,293Overseas insurance 1,945 1,438 1,774 1,311

Sub total 55,412 73,540 50,536 67,068

Ending balance ￦ 1,188,237 ￦ 1,132,825 $ 1,083,664 $ 1,033,128


2011 2010 2011 2010

In KRW millions

Outstanding claims ￦ 620,682 ￦ 599,753 ￦ 486,845 ￦ 27,402 ￦ 1,734,682Long-term insurance - - 13,098,945 4,804,381 17,903,326Unearned premiums 670,570 1,639,082 79,260 7,202 2,396,114Participating policyholders’ dividends - - 4,911 219,969 224,880Excess participating policyholders’ dividends - - 1,343 47,847 49,190Reserves for reinsurance premiums (642,380) (116) (10,245) (207) (652,948)

￦ 648,872 ￦ 2,238,719 ￦ 13,661,059 ￦ 5,106,594 ￦21,655,244

general Automobile Long-term Pension Total

In KRW millions

Outstanding claims ￦ 521,161 ￦ 579,946 ￦ 423,523 ￦ 18,135 ￦ 1,542,765Long-term insurance - - 10,927,637 3,766,809 14,694,446Unearned premiums 665,898 1,508,353 109,356 7,214 2,290,821Participating policyholders’ dividends - - 4,923 184,397 189,320Excess participating policyholders’ dividends - - 1,470 34,611 36,081Reserves for reinsurance premiums (659,600) (130) (8,092) (148) (667,970)

￦ 527,459 ￦ 2,088,169 ￦ 11,458,817 ￦ 4,011,018 ￦ 18,085,463



Outstanding claims $ 475,295 $ 528,907 $ 386,250 $ 16,538 $ 1,406,990Long-term insuranc - - 9,965,925 3,435,303 13,401,228Unearned premiums 607,294 1,375,607 99,732 6,579 2,089,212Participating policyholders’ dividends - - 4,490 168,168 172,658Excess participating policyholders’ dividends - - 1,341 31,564 32,905Reserves for reinsurance premiums (601,550) (119) (7,380) (135) (609,184)

$ 481,039 $ 1,904,395 $ 10,450,358 $ 3,658,017 $ 16,493,809


Outstanding claims $ 566,057 $ 546,970 $ 443,999 $ 24,991 $ 1,582,017Long-term insurance - - 11,946,142 4,381,561 16,327,703Unearned premiums 611,555 1,494,831 72,285 6,567 2,185,238Participating policyholders’ dividends - - 4,479 200,610 205,089Excess participating policyholders’ dividends - - 1,225 43,635 44,860Reserves for reinsurance premiums (585,845) (106) (9,344) (188) (595,483)

$ 591,767 $ 2,041,695 $ 12,458,786 $ 4,657,176 $ 19,749,424



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19. Assets And liAbilities denOminAted in fOreign currency

Assets and liabilities denominated in foreign currency as of March 31, 2011 and 2010 are summarized as follows (Unit: In KRW millions, In USD thousands):

21. premium incOme

Premium income for the year ended March 31, 2011 and 2010 are as follows:

20. bOrrOwings

Borrowings as of March 31, 2011 and 2010 consist of the following:

Fire insurance ￦ 41,067 ￦ - ￦ (395) ￦ - ￦ 40,672Marine insurance 203,796 669 (2,355) - 202,110Automobile insurance 3,386,893 - (143,403) - 3,243,490Special insurance 1,000,328 4,206 (6,839) - 997,695guarantee insurance - 1 - - 1Overseas insurance 19,576 168,847 - (129) 188,294Long-term insurance 6,952,587 - - - 6,952,587Pension insurance 1,167,023 - - - 1,167,023Other businesses - 40,958 - - 40,958 ￦ 12,771,270 ￦ 214,681 ￦ (152,992) ￦ (129) ￦ 12,832,830Translation into U.S. dollars

(In thousands) (Note 3) $ 11,647,305 $ 195,788 $ (139,527) $ (118) $ 11,703,448

Assumed Direct premium Assumed reinsurance’s written by the reinsurance Cancellation cancellation Premium Company premium refund refund income

In KRW millions

2011

Fire insurance ￦ 44,423 ￦ - ￦ (397) ￦ - ￦ 44,026Marine insurance 222,027 709 (2,679) - 220,057Automobile insurance 3,148,219 - (140,754) - 3,007,465Special insurance 881,297 1,955 (4,359) - 878,893guarantee insurance - 4 - - 4Overseas insurance 18,391 141,750 - - 160,141Long-term insurance 5,765,479 - - - 5,765,479Pension insurance 815,293 - - - 815,293Other businesses - 32,114 - - 32,114 ￦ 10,895,129 ￦ 176,532 ￦ (148,189) ￦ - ￦ 10,923,472Translation into U.S. dollars

(In thousands) (Note 3) $ 9,936,278 $ 160,996 $ (135,148) $ - $ 9,962,126

Assumed Direct premium Assumed reinsurance’s written by the reinsurance Cancellation cancellation Premium Company premium refund refund income

In KRW millions

2010



Assets:Due from banks $ 13,323 ￦ 14,751 $ 10,772 ￦ 12,181Overseas securities 37,022 40,991 39,886 45,103Insurance receivables 74,123 82,068 38,691 43,752Accrued income 24,685 27,331 20,585 23,278

Liabilities:Insurance payables $ 43,881 ￦ 48,585 $ 47,314 ￦ 53,502

2011 2010

USD KRW USD KRW equivalent ( * ) equivalent ( * )

( * ) The Korean won equivalent of assets and liabilities denominated in foreign currency are translated in these financial statements based on the basic rate (￦1,096.50 and ￦1,130.80 to US$1.00 at March 31, 2011 and 2010, respectively) or cross rates for other currencies

announced by Seoul Money Brokerage Services Ltd. at the end of the reporting periods.

In KRW millions

Annual Type Lender interest rate 2011 2010

Call money Woori Asset Management Co., Ltd. 3.08% ￦ 1,000 ￦ -Call money golden Bridge Investment & Securities Co., Ltd. 3.10% 100 -Call money Hyundai Investment Co., Ltd. - 11,500Bonds sold under repurchase agreement KSFC 3.25% 25,200 25,200

￦ 26,300 ￦ 36,700Translation into U.S. dollars

(In thousands) (Note 3) $ 23,985 $ 33,470


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22. reinsurAnce

(1) Reinsurance income earned for the years ended March 31, 2011 and 2010 was as follows:

24. incOme tAx

(1) The components of income tax expense for the years ended March 31, 2011 and 2010 are summarized as follows:

23. retirement And severAnce benefits

Changes in retirement and severance benefits for the years ended March 31, 2011 and 2010 are as follows:

The Company records as pension plan assets in the statement of financial position amounting to ￦152,898 million ($139,441 thousand) that was placed to reserve in Samsung Life Insurance Co., Ltd. and Samsung Securities Co., Ltd. In addition, provision for the year amounted to ￦38,098 million ($34,745 thousand), net of defined contribution retirement pension plan amounting to ￦914 million ($834 thousand), and ￦1,530 million ($1,395 thousand) included in general and administrative expenses and investment administrative expenses, respectively.

(2) Reinsurance expenses incurred for the years ended March 31, 2011 and 2010 was as follows:

Retirement pension plan assets as of March 31, 2011 and 2010 are as follows:



Reinsurance claims ￦ 409,996 ￦ 324,073 $ 373,913 $ 295,552Refund of return claims (10,611) (7,964) (9,677) (7,263)

Reinsurance income ￦ 399,385 ￦ 316,109 $ 364,236 $ 288,289

2011 2010 2011 2010


Cash and due from bank ￦ 124,765 ￦ 60,833 $ 113,785 $ 55,479Investment securities 24,780 67,939 22,599 61,960Other assets 3,353 7,313 3,057 6,670

￦ 152,898 ￦ 136,085 $ 139,441 $ 124,109

Description 2011 2010 2011 2010


( * ) Tax effect on changes in cumulative temporary differences.

Income tax to be paid ￦ 220,192 ￦ 131,256 $ 200,813 $ 119,705Tax effect on changes in cumulative temporary differences ( * ) 3,868 33,001 3,528 30,097Income tax due to gains on disposal of treasury stock (570) (562) (520) (513)

Income tax ￦ 223,490￦ 163,695 $ 203,821 $ 149,289

2011 2010 2011 2010


Beginning balance ￦ (58,162) ￦ (25,079) $ (53,043) $ (22,872)Changes due to tax reconciliation 26,615 (82) 24,273 (74)Ending balance (35,415) (58,162) (32,298) (53,043)

Tax effect on changes in cumulative temporary differences ￦ 3,868 ￦ 33,001 $ 3,528 $ 30,097

2011 2010 2011 2010


Reinsurance claims recovered ￦ 835,012 ￦ 796,694 $ 761,525 $ 726,579Refund of reinsurance claims recovered (7,846) (4,815) (7,155) (4,390)

Reinsurance expenses ￦ 827,166 ￦ 791,879 $ 754,370 $ 722,189

2011 2010 2011 2010


Beginning balance ￦ 195,498 ￦ 174,898 $ 178,293 $ 159,506Provision for the year 39,628 36,095 36,140 32,918Transferred from affiliates 364 - 332 -Payment for the year (17,352) (15,495) (15,825) (14,131)Ending balance 218,138 195,498 198,940 178,293

Payments to National Pension Fund (1,106) (1,161) (1,009) (1,059)Retirement pension plan assets (152,898) (136,085) (139,441) (124,109)

￦ 64,134 ￦ 58,252 $ 58,490 $ 53,125

2011 2010 2011 2010



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(2) An explanation of the relationship between income tax expense and accounting income before income tax expense for the years ended December 31, 2011 and 2010 is as follows:

(4) Income tax and deferred income tax assets (liabilities) credited to equity as of March 31, 2011 are summarized as follows:

(3) Income tax and deferred income tax assets (liabilities) directly adjusted to capital as of March 31, 2011 are summarized as follows:

gain on valuation of available-for-sale securities 2,483,465 (547,913) 1,935,552Changes in equity-method investee

with accumulated comprehensive income 9,193 (2,022) 7,171Changes in equity-method investees

with accumulated comprehensive loss (6,149) 1,352 (4,797)gain on valuation of derivatives 27,985 (6,194) 21,791Accumulated other comprehensive income

of the separate account 6,025 - 6,025

￦ 2,520,519 ￦ (554,777) ￦ 1,965,742

Translation into U.S. dollars (in thousands) (Note 3) $ 2,298,695 $ (505,953) $ 1,792,742

Before adjustment Deferred income tax After adjustmentDescription assets (liabilities)

In KRW millions

Income tax due to gains on disposal of treasury stock ￦ 2,099 ￦ (508) ￦ 1,591Income tax due to forfeiture of stock option 258 (62) 196

￦ 2,357 ￦ (570) ￦ 1,787Translation into U.S. dollars

(In thousands) (Note 3) $ 2,150 $ (520) $ 1,630

Description Before adjustment Corporate taxes After adjustment

In KRW millions

(5) Changes in significant cumulative temporary differences and deferred income tax assets (liabilities) are as follows:

(6) Prepaid income tax (payables) before offset as of March 31, 2011 and 2010 are as follows:



Income before income tax ￦ 888,342 ￦ 688,205 $ 810,161 $ 627,638Tax effect at the rate of 24.2% 214,952 166,521 196,035 151,866Adjustment:Non-taxable income (12,043) (3,664) (10,983) (3,342)Non-deductible expenses 11,915 4,565 10,866 4,163Tax credit (1,673) (98) (1,526) (88)Other 10,339 (3,629) 9,429 (3,310)

Income tax expense ￦ 223,490 ￦ 163,695 $ 203,821 $ 149,289

Effective tax rate (income tax expense/pretax income) 25.16% 23.79% 25.16% 23.79%

2011 2010 2011 2010


Prepaid tax before offset ￦ 135,665 ￦ 101,030 $ 123,725 $ 92,139Income tax payable before offset 208,836 132,192 190,456 120,559Income tax payable ￦ 73,171 ￦ 31,162 $ 66,731 $ 28,420

2011 2010 2011 2010


( * ) Prior year’s tax adjustment is included for beginning retained amount.

Description

Cumulative temporary differences Deferred income tax assets (liabilities)

Temporary difference, net ￦ (170,803) ￦ (516,359) ￦ (687,162) ￦ (58,162) ￦ 22,704 ￦ (35,458)Capital adjustment (2,087,515) 61,189 (2,026,326) (460,399) (94,335) (554,734)

￦(2,258,318) ￦ (455,170) ￦(2,713,488) ￦ (518,561) ￦ (71,631) ￦ (590,192)Translation into U.S. dollars

(In thousands) (Note 3) $ (2,059,570) $ (415,111) $ (2,474,681) $ (472,924) $ (65,327) $ (538,251)

Increase Increase 2010 ( * ) (decrease) 2011 2010 (decrease) 2011

In KRW millions


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25. stOckhOlders’ eQuity

(1) Capital stock as of March 31, 2011 is as follows (Unit: KRW):

Number of the authorized shares 100,000,000Value per share ￦500Number of the issued stock

- Common shares 47,374,837- Preferred shares 3,192,000

Description

Preferred shareholders have no voting rights but may receive accumulative dividends and liquidation proceeds. Preferred shareholders normally receive additional cash dividends of 1% on par value. Upon liquidation, preferred shareholders are entitled to receive liquidation proceeds prior to the common shareholders. The Company allows the retirement of the stocks within the amount of dividend based on the decision of the board of directors in accordance with related law. Accordingly, the Company retired the treasury stock of the 730,000 shares of common stock and 50,000 shares of preferred stock on November 11, 2003 based on the decision of the board of directors on September 5, 2003. Also, the Company retired treasury stock of the 1,500,000 shares of common stock and 100,000 shares of preferred stock on May 28, 2007 based on the decision of the board of directors on April 18, 2007. As a result, the difference occurs between the amount of the value per share multiplied by the number of issued stocks and the capital stock as of March 31, 2011.

(2) Capital surplus

Capital surplus as of March 31, 2011 and 2010 is summarized as follows:

(3) Revaluation surplus

The Company revalued its property on January 1, 1999 in accordance with the Assets Revaluation Law. Details of the asset revaluation and revaluation surplus are summarized as follows (Unit: In KRW millions, In USD thousands):

The movements in the revaluation surplus for the period from January 1, 1999 to March 31, 2011 are summarized as follows:

(4) Legal reserve

Legal reserve as of March 31, 2011 is ￦13,236 million ($12,071 thousand). The Korean Commercial Code requires the Company to appropriate as legal reserve an amount equal to at least 10% of the cash dividends for each accounting period until the reserve equals 50% of stated capital. The legal reserve may be used to reduce a deficit or it may be transferred to stated capital by a shareholders’ resolution.

(5) Voluntary reserve

Voluntary reserve as of March 31, 2011 amounts to ￦2,487,159 million ($2,268,271 thousand), as approved at the general meeting of shareholders, and ￦1,852 million ($1,689 thousand) reclassified from reserve for business rationalization, as required previously in the Korean Corporate Tax Law.



Additional paid-in capital ￦ 593,429 ￦ 593,429 $ 541,203 $ 541,203Asset revaluation surplus 132,209 132,209 120,574 120,574Other capital surplus 12,774 10,988 11,650 10,021 ￦ 738,412 ￦ 736,626 $ 673,427 $ 671,798

2011 2010 2011 2010


Asset revaluation surplus carried forward before January 1, 1999 ￦ 1,506 $ 1,373

Asset revaluation surplus on January 1, 1999 134,048 122,251Revaluation taxes (3,345) (3,050)Revaluation surplus as of March 31, 2011 ￦ 132,209 $ 120,574


Net book value Revalued amount Revaluation surplus

Land ￦ 172,180 $ 157,027 ￦ 262,061 $ 238,998 ￦ 89,881 $ 81,971Buildings 289,443 263,970 333,410 304,067 43,967 40,098Structures 345 314 545 497 200 182 ￦ 461,968 $ 421,311 ￦ 596,016 $ 543,562 ￦ 134,048 $ 122,251

KRW USD KRW USD KRW USD


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26. cOmprehensive incOme

Comprehensive income and expense for the years ended March 31, 2011 and 2010 were as follows:

28. stOck OptiOns

The Company granted stock options to certain employees according to a resolution at the shareholders’ meeting and the board of directors’ meeting. Details of the stock options are summarized as follows (Unit: KRW)

The Company estimated compensation cost associated with the stock options using Black-Sholes Model. Details of assumptions used are summarized as follows:

Details on the compensation cost for stock options are summarized as follows:

27. treAsury stOck

Treasury stock as of March 31, 2011 and 2010 is summarized as follows:

( * ) For presentation in the accompanying non-consolidated financial statements, assets and liabilities in financial statements of the overseas branch are translated into Korean won at the current exchange rate, shareholders’ equity at historical exchange rate and income

and expense at the weighted average exchange rate for the year. Translation gains of ￦21 million ($19 thousand) resulting from the

translation of financial statements of the overseas branch are recorded in loss on overseas operation translation as accumulated other

comprehensive loss.

As of March 31, 2011 and 2010, acquisition cost of treasury stock is ￦94,656 million ($86,326 thousand) and ￦95,620 million ($87,205 thousand), respectively. The Company holds its treasury stock for price stabilization and for exercise of stock options. gains on reissue of treasury stock are recorded as other capital surplus. As of March 31, 2011, gains on reissue of treasury stock amount to ￦12,774 million ($11,650 thousand).

Number of shares granted - 45,212 3,238 12,962 10,077

Stock Common Common Common Common Common stock stock stock stock stock

Exercise price ￦ 23,800 ￦ 38,900 ￦ 82,500 ￦ 62,600 ￦ 74,900

Exercisable period May 31, 2003 Sep 7, 2003 May 31, 2004 Jun 12, 2005 May 29, 2006 ~May 30, 2010 ~Sep 6, 2011 ~May 30, 2012 ~Jun 11, 2013 ~May 28, 2014

Service period 3 years 2 years 2 years 2 years 2 years

May 30, 2000 Sep 6, 2001 May 30, 2002 Jun 11, 2003 May 28, 2004

Risk free rate 9.22% 5.39% 6.57% 4.14% 4.54%Expected excisable period 5 years 5 years 5 years 5 years 5 yearsExpected volatility of stock price 65.47% 66.24% 66.30% 59.78% 52.68%Expected dividend rate 1.05% 1.30% 1.22% 1.57% 1.35%Expected rate of rights expiration 0.00% 0.00% 0.00% 0.00% 0.00%


Valuation amount for stock options ￦ 4,536 ￦ 6,818 ￦ 741 ￦ 1,286 ￦ 1,342

Accumulated decrease of stock options for exercise, cancellation, change and others 4,536 5,863 591 880 1,004

Compensation costs for the year ended March 31, 2011 - - - - -

Residual of stock options - 955 150 406 338Additional compensation costs to be incurred - - - - -Translation into U.S. dollars

(In thousands) (Note 3) $ - $ - $ - $ - $ -


In millions



Net income ￦ 664,852 ￦ 524,510 $ 606,340 $ 478,349Other comprehensive income (loss):

gain on valuation of available-for-sale securities 283,211 556,334 258,287 507,373Changes in equity-method investee with

accumulated comprehensive income 489 (12,806) 446 (11,679)Changes in equity-method investees

with accumulated comprehensive loss (1,018) (838) (928) (765)gain (loss) on overseas operation translation ( * ) (400) (15,465) (365) (14,104)gain (loss) on valuation of cash flow

hedge derivatives 57,082 157,521 52,060 143,658Accumulated other comprehensive

income arising from separate account (1,332) 5,623 (1,215) 5,128

Comprehensive income ￦ 1,002,884 ￦ 1,214,879 $ 914,625 $ 1,107,960

2011 2010 2011 2010


April 1, 2010 3,710,198 300,780 ￦ 95,620 $ 87,205Exercise of stock option (38,987) - (9 64) (879)

March 31, 2011 3,671,301 300,780 ￦ 94,656 $ 86,326

Common stock Preferred stock Amount Amount

In USD thousands Number of shares In KRW millions (note 3)


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29. dividends

The Company has proposed to appropriate retained earnings for cash dividends and details are as follows:

30. trAnsActiOns And bAlAnces with relAted cOmpAnies

(1) The Company is the ultimate holding company and its subsidiaries as of March 31, 2011 are as follows(Unit: In KRW millions, In USD thousands):

(2) Major balances and significant transactions with consolidated subsidiaries as of and for the years ended March 31, 2011 and 2010 are as follows:

( * ) Shares are not presented since it is stock without par value.

Other related parties are Samsung Fire & Marine Insurance Claim Adjustment Service and others.

(3) Major balances and significant transactions with investees under the equity method as of and for the years ended March 31, 2011 and 2010 are as follows:

31. eArnings per cOmmOn shAre

(1) Earnings per common share for the years ended March 31, 2011 and 2010 is calculated as follows:

(4) The compensations paid to key management of the Company for the year ended March 31, 2011 were as follows:

P.T Asuransi Samsung Tugu 10,500 70.0 ￦ 5,373 ($4,900) Insurance IndonesiaSamsung Fire & Marine Insurance of

China Limited ( * ) - 100.0 41,865 ($38,181) Insurance ChinaSamsung Vina Insurance ( * ) - 50.0 21,720 ($19,808) Insurance VietnamSamsung Fire & Marine Insurance of

Europe Limited 10,600,000 100.0 19,064 ($17,386) Insurance England

Ownership Shareholders’ Subsidiaries Shares ratio (%) equity Business Location



Common stock ￦ 163,888 ￦ 130,994 $ 149,465 $ 119,466Preferred stock 10,857 8,688 9,901 7,923

￦ 174,745 ￦ 139,682 $ 159,366 $ 127,389

Net income ￦ 664,852 ￦ 524,510 $ 606,340 $ 478,349Dividends as a percentage of net income 26.28% 26.63% 26.28% 26.63%

2011 2010 2011 2010


Revenues and expenses:Premiums income ￦ 6,996 ￦ 5,338 $ 6,380 $ 4,868Claims paid 2,819 2,967 2,571 2,706

Receivables and payables:Insurance receivables 3,775 2,174 3,443 1,983Insurance payables 134 1,156 122 1,054

2011 2010 2011 2010


Revenues and expenses:general and administrative expense ￦ 154,042 ￦ 129,898 $ 140,485 $ 118,466

Receivables and payables:Loans 9,395 20,327 8,568 7,814

2011 2010 2011 2010


Short-term salaries ￦ 2,597 $ 2,368Long-term salaries 1,010 921Provision for retirement and severance benefits 651 594

Amount AmountDescription


Net income ￦ 664,852 ￦ 524,510 $ 606,340 $ 529,455Dividends on preferred stock (10,857) (8,688) (9,902) (7,683)Earnings available for common stock 653,995 515,822 596,438 521,772Weighted-average number of shares of common stock 43,673,399 43,629,597 43,673,399 43,629,597

Earnings per common share (KRW, USD) ￦ 14,975 ￦ 11,823 $ 13.66 $ 10.78

2011 2010 2011 2010



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(2) Diluted net income per common share for the years ended March 31, 2011 and 2010 is calculated as follows:

Diluted net income per common share is computed by dividing the diluted net income for the years ended March 31, 2011 and 2010 by the weighted-average number of diluted shares plus common shares, assuming all stock options are exercised at the beginning.

(6) Derivatives and hedge accounting

a) DETAILS Of DErIvATIvE INSTrUMENTS AS Of MArCh 31, 2011 AND 2010 ArE AS fOLLOwS (Unit: In KRW millions):

b) fAIr vALUE hEDGINGThe Company entered into agreement of foreign exchange forward contracts in order to hedge volatility of foreign currency for foreign bonds classified as available-for-sale securities. Therefore, among foreign bonds classified as available-for-sale securities, loss from foreign currency translation of ￦1,222 million is reflected in net income.

c) CASh fLOw hEDGINGAs of current year end, the maximum period of exposure in derivatives contract related to cash flow hedge is up to February 1st of 2027. The net amount to be recognized to net income due to maturity is ￦9,993 million in loss from derivatives valuation.

32. cOmmitments And cOntingencies

(1) Promissory Note

As of March 31, 2011, the Company has provided Korea Exchange Bank and others with 2 promissory notes with total face value amounting to ￦549 million ($501 thousand), as collateral for rental deposits.

(2) Reinsurance Agreements

The Company assumes and cedes certain portions of the total insurance premium to Korean Reinsurance Company with the remaining portion to be covered by foreign reinsures. The Company utilizes reinsurance arrangements to limit its maximum loss, provide greater diversification of risks and minimize exposures on large risks.

(3) Bank Overdraft Agreement

As of March 31, 2011, the Company has bank overdraft agreements with Standard Chartered First Bank Korea and other banks up to ￦485,000 million ($442,316 thousand), including agreements for separate account up to ￦20,000 million ($18,240 thousand).

(4) guarantee Insurance

As of March 31, 2011, the Company entered into guarantee agreements with Seoul guarantee Insurance Co., Ltd. for guarantee limits of ￦26,656 million ($24,310 thousand).

(5) Lawsuits

The Company is a defendant in 1,875 lawsuits for insurance claims aggregating ￦145,776 million ($132,947 thousand). The Company has reserved estimated losses amounting to ￦128,245 million ($116,959 thousand) in relation to the lawsuits as policy reserves. The Company’s management believes that although the outcome of these cases is uncertain, their ultimate resolution will not have material effect on the results of operations or financial position of the Company.

Interest rate swap ￦ 270,000 ￦ - ￦ - ￦ 270,000 ￦ 685 ￦ -Foreign currency forwards 13,888 46,053 - 59,941 1,839 30Foreign currency swap - - 1,893,127 1,893,127 78,269 106,783Stock warrant - - - - 32 -

￦ 283,888 ￦ 46,053 ￦ 1,893,127 ￦ 2,223,068 ￦ 80,825 ￦ 122,887Translation into U.S. dollars

(In thousands) (Note 3) $ 258,904 $ 42,000 $ 1,726,518 $ 2,027,422 $ 73,712 $ 112,072

Fair value Cash flowDerivative Instruments Trading hedging hedging Total Assets Liabilities

2010



Earnings available for common stock ￦ 653,995 ￦ 515,822 $ 596,439 $ 470,426Compensation cost, net of tax - - - -Diluted net income 653,995 515,822 596,439 470,426Weighted-average number of diluted share 43,758,892 43,755,390 43,758,892 43,755,390

Diluted net income per common share (KRW, USD) ￦ 14,945 ￦ 11,789 $ 13.63 $ 10.75

2011 2010 2011 2010


Interest rate swap ￦ 270,000 ￦ - ￦ - ￦ 270,000 ￦ 259 ￦ -Foreign currency forwards 18,550 40,134 - 58,684 1,336 30Foreign currency swap - - 2,634,752 2,634,752 132,584 106,783

￦ 288,550 ￦ 40,134 ￦ 2,634,752 ￦ 2,963,436 ￦ 134,179 ￦ 106,813Translation into U.S. dollars

(In thousands) (Note 3) $ 263,155 $ 36,602$ 2,402,875 $ 2,702,632 $ 122,370$ 97,413

Fair value Cash flowDerivative Instruments Trading hedging hedging Total Assets Liabilities

2011 Contract amount


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d) IN CONNECTION WITH THE DERIVATIVE INSTRUMENTS, THE COMPANY RECOgNIzED gAIN AND LOSS ON VALUATION FOR THE YEARS ENDED MARCH 31, 2011 AND 2010 :

The Company has credit-linked notes amounting to ￦121,792 million ($110,000 thousand) at face value. The Company takes the risk to undertake goods or pay cash equivalent to Reference Obligation on demand of a person related to the transaction in case credit event on Reference Obligation occurs.

(8) Other Compound Financial Instruments

The Company has interest rate-linked structured notes amounting to ￦220,000 million ($220,683 thousand) at face value. According to the fluctuation of market interest rate, the issuers of structured notes could repay early and the interest rate that the Company receives could change.

(7) Credit - Linked Notes

Credit - linked notes as of March 31, 2011 are as follows (Unit: In KRW millions, In USD thousands):

( * ) Before deducting deferred corporate tax effect ￦6,194 million.

ABN Amro Ftd CLN 6.12 $ 20,000 ￦ 22,513 2006-10-26 2016-12-20

JPMorgan Corsair CLN LIB03USD +0.88 20,000 22,386 2007-07-19 2014-06-09

Leveraged ROK CLN LIB03USD +0.67 20,000 17,732 2007-01-24 2017-03-20

Leveraged ROK CLN070913 LIB03USD +1.10 20,000 17,731 2007-09-13 2017-09-20

Merit Holdings Ltd. SCB CLN LIB03USD +0.88 10,000 10,481 2007-07-30 2014-09-20

WSCB Ftd CLN 5.55 20,000 22,654 2006-10-10 2011-12-20

$ 110,000 ￦ 113,497

Description Interest rate (%) Nominal price Book value Acquisition Maturity date date



Interest rate swap ￦ 259 ￦ - ￦ - ￦ -Foreign currency forwards 1,336 30 - -Foreign currency swap 140 2,407 143,453 115,468

￦ 1,735 ￦ 2,437 ￦ 143,453 ￦ 115,468Translation into U.S. dollars

(In thousands) (Note 3) $ 1,582 $ 2,223 $ 130,828 $ 105,306

gain on Loss on gain on Loss on valuation valuation valuation valuationDerivative Instruments

2011 Included in current operations Other comprehensive income ( * )

( * ) Before deducting deferred corporate tax effect ￦9,816 million.

Interest rate swap ￦ 685 ￦ - ￦ - ￦ -Foreign currency forwards 1,839 434 - -Foreign currency swap 108 874 86,625 131,732Stock warrant 26 333 - -

￦ 2,658 ￦ 1,641 ￦ 86,625 ￦ 131,732Translation into U.S. dollars

(In thousands) (Note 3) $ 2,424 $ 1,497 $ 79,001 $ 120,139

Included in current operations Other comprehensive income ( * )

gain on Loss on gain on Loss on valuation valuation valuation valuationDerivative Instruments

2010


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Separate account assets:Cash and deposits ￦ 161,294 ￦ 48,319 $ 147,099 $ 44,067Securities 797,262 472,034 727,097 430,492Loans 40,916 - 37,315 -Others 10,582 6,316 9,651 5,760Due from general account 20,734 27,310 18,909 24,907

￦ 1,030,788 ￦ 553,979 $ 940,071 $ 505,226Separate account liabilities:

Policy reserves ￦ 1,002,441 ￦ 527,857 $ 914,219 $ 481,402Others 22,379 18,069 20,409 16,479Accumulated other comprehensive income 5,968 7,163 5,443 6,533Due to general account - 890 - 812

￦ 1,030,788 ￦ 553,979 $ 940,071 $ 505,226

Statements of financial position

The financial statements of the separate account of corporate pension insurance as of and for the years ended March 31, 2011 and 2010 are as follows:

Also, participation dividends separate account’s (merit allocation type of retirement pension contract) revenue/expense is not presented in general account’s profit and loss statement. The above mentioned operating results shows current and prior year’s merit allocated separate account’s revenue and expense of ￦8,675 million and ￦2,994 million, respectively.

33. sepArAte AccOunt

The Company has recorded corporate retirement insurance and corporate pension insurance as a separate account independently from ordinary accounts in accordance with Regulation on Supervision of Insurance Business as established by the Financial Supervisory Commission of the Republic of Korea. Separate account is stated at fair value and the Company properly presents the financial status and operating results of the separate account.

The financial statements of the separate account of corporate retirement insurance as of and for the years ended March 31, 2011 and 2010 are as follows:

Statements of financial position

Separate account assets:Cash and deposits ￦ 99,025 ￦ 198,236 $ 90,310 $ 180,790Securities 272,101 387,978 248,154 353,833Others 4,143 5,696 3,778 5,195Due from general account 1,951 6,950 1,779 6,338

￦ 377,220 ￦ 598,860 $ 344,021 $ 546,156Separate account liabilities:

Policy reserves ￦ 367,181 ￦ 574,816 $ 334,866 $ 524,228Others 1,515 2,622 1,382 2,391Accumulated other comprehensive income 57 194 52 177Due to general account 8,467 21,228 7,721 19,360

￦ 377,220 ￦ 598,860 $ 344,021 $ 546,156



2011 2010 2011 2010

2011 2010 2011 2010



Separate account income:Premiums earned ￦ 923,133 ￦ 431,063 $ 841,891 $ 393,126Interest income 31,579 20,784 28,800 18,955Others 9,938 6,608 9,063 6,026

￦ 964,650 ￦ 458,455 $ 879,754 $ 418,107Separate account expenses:

Provision for policy reserves ￦ 474,584 ￦ 210,576 $ 432,817 $ 192,044Claims paid 480,109 238,696 437,856 217,689Others 9,957 9,183 9,081 8,374

￦ 964,650 ￦ 458,455 $ 879,754 $ 418,107

Statements of income 2011 2010 2011 2010


Separate account income:Premiums earned ￦ 131,520 ￦ 141,088 $ 119,945 $ 128,671Interest income 19,969 32,473 18,212 29,615Others 2,980 7,990 2,718 7,287

￦ 154,469 ￦ 181,551 $ 140,875 $ 165,573Separate account expenses:

Provision for policy reserves ￦ (207,635) ￦ (137,786) $ (189,362) $ (125,660)Claims paid 355,594 309,616 324,299 282,368Others 6,510 9,721 5,938 8,865

￦ 154,469 ￦ 181,551 $ 140,875 $ 165,573

Statements of income 2011 2010 2011 2010



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34. generAl And AdministrAtive expenses

general and administrative expenses for the years ended March 31, 2011 and 2010 are as follows:

36. emplOyee’s welfAre And dOnAtiOn

(1) Supporting educational expenses

In order to mitigate the burden of the educational expenses of employees’ children, the Company supports portion of tuition of pre-school, and entrance fee and tuition of middle school to college.

(2) Medical examination

The Company provides regular annual medical examination service for its employees.

(3) Others

The Company executes paid vacation, such as congratulations and condolences vacation, long service vacations and vacation for training.

(4) Donation to the public

The Company donated to college development funds and others amounting to ￦14,017 million ($12,783 thousand) and ￦15,760 million ($14,373 thousand) for the years ended March 31, 2011 and 2010, respectively.

35. Other Assets And Other liAbilities

a) Other assets as of March 31, 2011 and 2010 are as follows:

b) Other liabilities as of March 31, 2011 and 2010 are as follows:

( * ) According to the amended Insurance Supervisory Regulations, the Company has reclassified collection expense to general expenses

from the current year. Prior year’s collection expense, which is presented for comparative purpose, is also reclassified as general expense,

such reclassification does not affect prior year’s net income.



Salaries ￦ 435,201 ￦ 414,705 $ 396,900 $ 378,208Provision for retirement and severance benefits 55,052 44,586 50,207 40,662Other employee benefits 64,936 88,057 59,221 80,307Taxes and due 49,600 57,789 45,235 52,703Rent 74,108 67,234 67,586 61,317Depreciation 43,130 44,053 39,334 40,176Amortization 32,960 30,682 30,059 27,982Commissions 106,129 99,249 96,789 90,514Advertising 71,571 58,273 65,272 53,145Computer related expenses 50,388 44,765 45,953 40,825Deferred acquisition cost & collection cost( * ) 250,346 235,484 228,314 214,760Agency fee 292,035 287,775 266,334 262,449Investigation expense for claim paid 213,171 177,999 194,411 162,334Others 155,698 145,852 141,996 133,016

￦ 1,894,325 ￦ 1,796,503 $ 1,727,611 $ 1,638,398

2011 2010 2011 2010


Other account payables ￦ 33,228 ￦ 18,773 $ 30,304 $ 17,121Provision for retirement and severance benefits 64,134 58,252 58,490 53,125Premiums received in suspense 1,844 1,185 1,682 1,081Note payables 730 366 666 334Advanced receipts 21,115 24,247 19,257 22,113Withholdings 792 8,423 722 7,682Unearned income 1,370 503 1,249 459Accrued value added tax 1,274 1,211 1,162 1,104Derivative liabilities 106,813 122,887 97,413 112,072Other 27,225 21,735 24,829 19,822

￦ 258,525 ￦ 257,582 $ 235,774 $ 234,913

2011 2010 2011 2010


Development costs and other intangible assets ￦ 71,983 ￦ 74,671 $ 65,648 $ 68,099Other account receivables 144,350 146,169 131,646 133,305Prepaid expenses 9,854 10,456 8,987 9,536Advanced payments 17,969 8,232 16,388 7,508Note receivables 1,278 1,957 1,166 1,785Prepaid value added tax 925 687 844 627Securities deposit 1,423 2,856 1,298 2,605Derivative assets 134,179 80,825 122,370 73,712Others 3,193 1,136 2,911 1,035Allowance for doubtful accounts (1,836) (2,977) (1,674) (2,716)

￦ 383,318 ￦ 324,012 $ 349,584 $ 295,496

2011 2010 2011 2010



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37. vAlue Added infOrmAtiOn

Information needed for calculation of value-added for the years ended March 31, 2011 and 2010 are as follows:

40. disclOsure fOr the finAl interim periOd (unAudited finAnciAl infOrmAtiOn)

The major indicators of management performance for the final interim period (unaudited) are as follows (Unit: In KRW millions, in USD thousands, except net income per share):

41. reclAssificAtiOn Of priOr yeAr stAtement Of cAsh flOws

The Company has reclassified the component of the cash flows, increase/decrease of due from financial institutions that was presented under cash flows from investing activities are currently presented under cash flows from operating activities. The accompanying non-consolidated statement of cash flows for the year ended March 31, 2010, which is presented for comparative purpose, was restated.

Rate of changing on condition was reflected by 4 types of ratio and the rate of maintenance caused by reflection is as follows:

c) The calculation and accounting principle of reserve for claims by type of insurance contract, anticipated interest rate and premium surplus (premium deficiency) as of March 31, 2011 are summarized as follows:

38. stAtements Of cAsh flOws

Significant transactions with no effects to the cash flows for the years ended March 31, 2011 and 2010 were as follows:

39. premium deficiency

a) The objects of insurance contracts for calculating premium deficiencyBased on valid insurance contracts as of December 31, 2010, the Company included the individual pension insurance products and long-term insurance against loss products with fixed interest rate and floating interest rate in calculating premium deficiency. In addition, commercial insurance against loss and retirement insurance with less than one year insurance term were excluded.

b) The basis of calculating premium deficiency is as follows

i. Discount rate:The discount rate is 5.36% (Rate of return on assets management for recent 3 years)

ii. rate of operating expenses:The rate of operating expenses is 79.1% (Ratio of actual operating expenses to anticipated operating expenses for recent 1 year)

iii. rate of claim payment:The rate of claim payment is 74.5% (Ratio of claim payment to the anticipated risk of the insurer for recent 3 years)

iv. rate of maintenance:The rate of maintenance is as follows (Ratio of maintenance to the number of contracts for recent 3 years):

Long-term with dividend ￦ 325 2.5~6.5 ￦ (5)Long-term without dividend 109,683 3.25~8.0 (32,672)Individual pension 42,958 2.5~7.5 (7,640)

Total ￦ 152,966 ￦ (40,317)(Fixed interest rate) 41,682 (1,888)(Floating interest rate) 111,284 (38,429)

Reserve for Anticipated interest PremiumDescription claims rate (%) surplus (deficiency)

In KRW millions



Salaries ￦ 451,484 ￦ 430,243 $ 411,750 $ 392,378Provision for severance 57,010 46,475 51,993 42,385Employee benefits 66,671 90,578 60,803 82,606Taxes and dues 87,609 98,380 79,899 89,722Rental expenses 74,109 67,234 67,587 61,317Depreciation 52,803 53,338 48,156 48,644Amortization 32,959 30,682 30,058 27,982

Total ￦ 822,645 ￦ 816,930 $ 750,246 $ 745,034

2011 2010 2011 2010


Transfer from construction in-progress to land ￦ - ￦ 10 $ - $ 9Transfer from construction in-progress to buildings 6,958 15,614 6,346 14,240Transfer from construction in-progress to structures - 259 - 236Transfer from prepaid accounts to intangible assets 4,545 16,600 4,145 15,139

2011 2010 2011 2010


Operating revenues ￦ 3,929,466 ￦ 3,390,273 $ 3,583,644 $ 3,091,904Operating expenses 3,681,250 3,242,189 3,357,273 2,956,853Operating income 248,217 148,084 226,372 135,052Other income 8,826 9,474 8,049 8,640Other expenses 3,752 2,982 3,422 2,720Net income 193,481 121,588 176,453 110,887Net income per common share 4,313 2,736 4.3 2.5

2011. 4Q 2010. 4Q 2011. 4Q 2010. 4QDescription


Long-term with dividend 88.8% 77.8% 65.4% 54.5% 53.0%Long-term without dividend 79.1% 63.4% 54.1% 46.0% 42.0%Individual pension 84.6% 74.4% 68.0% 63.0% 58.2%

Total 78.8% 64.0% 54.7% 46.6% 42.7%

Description 13th 25th 37th 49th 61st


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42. AdOptiOn Of kOreAn internAtiOnAl finAncing repOrting stAndArds (the “k-ifrs”)

1) Preparation of K-IFRS adoption

In accordance with the “Roadmap toward IFRS Adoption in Korea” announced by the Korean Accounting Standards Board (the “KASB”) in March 2007, the Company is required to adopt K-IFRS from the year ending March 31, 2012. Thus, the Company formed a task force to prepare for K-IFRS adoption and initiated the transition process toward K-IFRS in November 2008, since then, the Company has turned to with the project with task force and external consultants. The K-IFRS transition process consist of three phases: the Company successfully completed Phase 1 and Phase 2 and is currently carrying out Phase 3. The Company periodically reports the results of its plan and preparation to the board of directors and management.

2) K-IFRS transition process

The details of the K-IFRS transition process at each phase are as follows:

Additionally, the exemptions from other K-IFRS, which the Company optionally elected in accordance with K-IFRS No. 1101, are use of fair value as deemed cost for property and equipment, decommissioning liabilities included in the cost of property and equipment, and others.

Above differences and exemptions may change in the future as a result of additional analysis and revised standards.

4) The Company did not prepare financial impacts from K-IFRS adoption as of April 1, 2010 (the transition date), and as of and for the year ended March 31, 2011. The Company will analyze the financial impact from K-IFRS during the fiscal year ending March 31, 2012.

3) Significant gAAP difference between K-IFRS and current accounting standards

The expected significant differences between the current accounting standards and the adoption of K-IFRS as of March 31, 2011 summarized below.

Phase 1(“analysis and planning stage”) A preliminary analysis and impact assessments over the Company’s current

accounting policies to identify key areas that would be impacted by the transition to K-IFRS, and establishment of implementation plan.

Phase 2(“policy setting, system design and Framing accounting policies, building infrastructures for K-IFRS adoption (establish development stage”) accounting policies, guidelines and manuals) and developing K-IFRS system (define

system requirement, analysis, designing, developing, and others).Phase 3(“implementation stage”) Preparing K-IFRS financial information for comparative purpose and performing

analysis on difference between financial information under K-IFRS and current accounting standards to resolve issues which could happen.

Details



Area K-IFRS Current Accounting Standards

Scope of Consolidation

Allowance for doubtfulaccounts

Employee benefits

Asset retirementobligation

Evaluation of policy reserves

Catastrophe reserves

Exceeding 50% of shares, decision makingcapability and holding benefits and risks are conditional on the alternatives if the consolidation scope.

The estimated incurred loss is adopted of which the reason is objectively supported.

Under concept of project unit credit method, the amount of actuarial present value of benefits for employees, incorporating discount rate and assumptions recorded.

Expected expense to restore leaseholdimprovements is recognized as assetrestoration liabilities, is added to the costof those assets and subject to depreciation and re-measurement at every year-end.

Liability adequacy test (“LAT”) is assessed on policy reserves at the end of each reporting period and more reserves are accumulated if loss occurs.

Catastrophe reserves may not be recognized as liability; but should be as a capital.

Over 30% of shares owned and the biggest shareholder decision making are subject to the alternation. Companies that have a special purpose, of which only some factors are satisfied, are excluded.

It provides an allowance for doubtful accounts to cover estimated losses on loans, insurance receivables and other applicable assets, based on the asset quality classification and the provision rate stipulated in Regulation onSupervision of Insurance Business.

The Company establishes an allowance for severance liability equal to the amount which would be payable if all employees left at the end of the reporting period.

Restoration for lease improvements is charged to expense as incurred.

The bigger amount between the amountcalculated by the reasonable actuarial method and the individually assessed mount is recognized as a liability (policy reserve).

Catastrophe reserves are recognized as liability.


136

Part 5INTEREST

136137

tO the representAtive directOr Of


We have reviewed the accompanying Report on the Operations of Internal Accounting Control System (“IACS”) of

Samsung Fire & Marine Insurance Co., Ltd. (the “Company”) as of March 31, 2011. The Company’s management is

responsible for designing and maintaining effective IACS and for its assessment of the effectiveness of IACS. Our

responsibility is to review management’s assessment and issue a report based on our review. In the accompanying

report of management’s assessment of IACS, the Company’s management stated: “Based on the assessment on

the operations of the IACS, the Company’s IACS has been effectively designed and is operating as of March 31,

2011, in all material respects, in accordance with the IACS Framework issued by the Internal Accounting Control

System Operation Committee.”

We conducted our review in accordance with IACS Review Standards, issued by the Korean Institute of Certified

Public Accountants. Those Standards require that we plan and perform the review to obtain assurance of a level less

than that of an audit as to whether Report on the Operations of Internal Accounting Control System is free of material

misstatement. Our review consists principally of obtaining an understanding of the Company’s IACS, inquiries of

company personnel about the details of the report, and tracing to related documents we considered necessary in

the circumstances. We have not performed an audit and, accordingly, we do not express an audit opinion.

A company's IACS is a process designed to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with generally accepted

accounting principles. Because of its inherent limitations, however, IACS may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may

become inadequate because of changes in conditions, or that the degree of compliance with the policies or

procedures may deteriorate.

INDEpENDENT ACCOUNTANTS’ rEvIEw rEpOrT ON INTErNAL ACCOUNTING CONTrOL SYSTEM

ENgLISH TRANSLATION OF A REPORT

ORIgINALLY ISSUED IN KOREAN

Based on our review, nothing has come to our attention that Report on the Operations of Internal Accounting

Control System as of March 31, 2011 is not prepared in all material respects, in accordance with IACS Framework

issued by the Internal Accounting Control System Operation Committee.

This report applies to the Company’s IACS in existence as of March 31, 2011. We did not review the Company’s

IACS subsequent to March 31, 2011. This report has been prepared for Korean regulatory purposes, pursuant to

the External Audit Law, and may not be appropriate for other purposes or for other users.

NOTICE TO rEADErS This report is annexed in relation to the audit of the financial statements as of March 31, 2011 and the review of internal accounting

control system pursuant to Article 2-3 of the Act on External Audit for Stock Companies of the Republic of Korea.

KPMg Samjong Accounting Corp.Seoul, KoreaMay 26, 2011


138

Part 5INTEREST

138139

tO the bOArd Of directOrs And AuditOr (Audit cOmmittee) Of


I, as the Internal Accounting Control Officer (“IACO”) of Samsung Fire & Marine Insurance Co., Ltd. (“the Company”),

assessed the status of the design and operation of the Company’s IACS for the year ended March 31, 2011.

The Company’s management, including IACO, is responsible for the design and operations of its IACS. I, as the

IACO, have assessed whether the IACS has been effectively designed and is operating to prevent and detect any

error or fraud which may cause any misstatement of the financial statements, for the purpose of establishing the

reliability of financial statement preparation and presentation for external uses. I, as the IACO, applied the IACS

Standards established by the IACS Operations Committee for the assessment of design and operations of the IACS.

Based on the assessment of the operations of the IACS, the Company’s IACS has been effectively designed and

is operating as of March 31, 2011, in all material respects, in accordance with the IACS Standards issued by the

IACS Operations Committee.

rEpOrT ON ThE ASSESSMENT Of INTErNAL ACCOUNTING CONTrOL SYSTEM

ENgLISH TRANSLATION OF A REPORT

ORIgINALLY ISSUED IN KOREAN

May 6, 2011

Lee Jong Seong, Internal Accounting Control Officer

Chi Dae Sub, Chief Executive Officer

investOr relAtiOns

Corporate planning Division, Samsung fire & Marine Insurance. Co., Ltd.Samsung Insurance Bldg. 87, Euljiro -1ga, Jung-gu, Seoul, Korea,100-782E-mail: [email protected]: 82-2-758-7535Facsimile: 82-2-758-7831

View our interactive on-line annual report atir.samsungfire.com

Documents

This report is printed on an Fsc certified paper in soyink. · ings of KRW 1.09 trillion at the end of December, 2010, becoming the first domes-tic non-life insurance company to join