Samsung Life Insurance Co Ltd

KRX:032830

Earnings Call Analysis

Samsung Life Reports Strong Growth in Health Products and CSM

In the third quarter, Samsung Life's net profit reached KRW 673.6 billion, driving year-to-date profits to over KRW 2 trillion, up KRW 592.4 billion year-on-year. Their focus on health products has paid off, accounting for 62% of new business CSM, which totaled KRW 2.5 trillion. The company aims for a mid- to long-term shareholder return of 50%. However, challenges persist due to market volatility and changing regulations. For the upcoming year, they expect new business CSM of KRW 3.2 trillion, increasing their K-ICS ratio by 11 to 12 percentage points, with anticipated returns from alternative investments boosting it further by 5 to 6 percentage points.

Solid Third Quarter Performance Highlights Growth and Stability

Samsung Life's earnings call for the third quarter of fiscal year 2024 showcased robust performance, marked by a quarterly increase of KRW 834.6 billion in new business CSM (Contractual Service Margin), driven primarily by health product sales. As a result, the year-to-date net profit attributable to controlling shareholders reached KRW 2.042 trillion, reflecting a year-on-year increase of KRW 592.4 billion. The third-quarter net profit amounted to KRW 673.6 billion, bolstering the company's financial health with a consolidated net profit exceeding the KRW 2 trillion benchmark.

Health Products Shine Amidst Competitive Landscape

Health products established a strong foothold, contributing to 62% of new business CSM as of the third quarter. The launch of improved health offerings, including the Da-mo-eun product targeting dementia and nursing care, significantly enhanced competitiveness. This growth translated to a year-to-date new business CSM of KRW 2.5 trillion. However, increased market competition and a focus shift toward pure health products, rather than those offering surrender value, are influencing margins.

Navigating Market Challenges and Regulatory Changes

The company highlighted ongoing challenges including market volatility, regulatory pressures, and interest rate variability, which impacted their K-ICS (Korea Insurance Capital Standard) ratio. The K-ICS ratio is projected to be between 190% and 200%, down from a high of 219% at the end of the previous year. Tightened discount rates and implications from a decline in share prices, particularly Samsung Electronics, played pivotal roles in these fluctuations.

Future Strategic Directions and Growth Initiatives

In response to shifting market needs, Samsung Life is exploring new business ventures such as senior care and other healthcare-related areas. A dedicated task force has been established to analyze market conditions and profitability to position for future growth. The company aims to bolster its long-term shareholder return target to 50% through careful strategic planning.

Continuous Focus on Enhancing Shareholder Value

Samsung Life remains committed to enhancing corporate value by executing its value-up program. The management emphasized a goal of exceeding double-digit growth in earnings for the upcoming year, with dividend policies currently under review. Guidance suggests that continued growth in new business, estimated at KRW 3.2 trillion for the full year, may significantly bolster the company's K-ICS ratio by an estimated 11 to 12 percentage points.

Current Challenges and Outlooks Being Assessed

Despite some volatility expected due to external market factors—such as possible valuation losses on alternative investments—the company does not foresee major issues with capital adequacy. Management reiterated confidence in navigating the regulatory landscape and maintaining a solid framework for managing solvency ratios. The anticipated amendments in actuarial guidelines could further impact CSM and overall profitability.

Earnings Call Transcript 2024-Q3

[Operator]

[Interpreted] Good morning, and good evening. Thank you all for joining the conference call for the Samsung Life Earnings Results. This conference will start with the presentation followed by a Q&A session. [Operator Instructions]

Now we will begin the presentation on Samsung Life's Third Quarter of Fiscal Year 2024 Earnings Results.

[Unknown Executive]

[Interpreted] Good morning. This is [indiscernible] Head of IR and Accounting at Samsung Life. I would like to thank everyone for joining us at the Third Quarter earnings conference call for Samsung Life despite your busy schedules.

As explained before, we have a Q&A session with members of management for today's quarterly call. But before we begin, I'll quickly highlight key results from the third quarter based on the materials that we have provided to you in advance.

First, our key third quarter highlights driven by increased sales of health products, new business CSM increased by KRW 834.6 billion Q-on-Q in the third quarter.

Thanks to solid new business performance and tight management of key efficiency metrics, including persistency and loss rates, our CSM balance, which is the source of future earnings, increased by KRW 0.7 trillion from the start of the year, recording KRW 13 trillion. Building on the strong profitability driven performance in the first half, third quarter net profit attributable to controlling shareholders totaled KRW 673.6 billion on a consolidated basis, demonstrating upgraded earnings fundamentals with consolidated net profit exceeding the KRW 2 trillion mark on a YTD basis.

Next on to our key financial results. Again, YTD consolidated profit attributable to controlling shareholders totaled KRW 2.0421 trillion, up KRW 592.4 billion Y-o-Y, which is made up of KRW 1.187 trillion in insurance service results and KRW 1.53 trillion in investment profit.

And moving on to business highlights. This year, we enhanced the competitiveness of our flagship health product, Da-mo-eun, together with the timely launch of new health offerings, addressing the underlying market needs for dementia and nursing care, while also offering coverage for persons with mild medical pre-conditions. We've also been improving our underwriting process and distribution infrastructure in order to upgrade the sales competitiveness of our health products even further.

These efforts have translated into strong new business growth for health products with health now accounting for 62% of new business CSM as of the third quarter as we expanded our leadership in the health protection space, which is shared by life and non-life players. As a result, we achieved solid YTD new business CSM of KRW 2.5 trillion.

Building on these improved fundamentals under the new accounting scheme, we seek to expand our total shareholder return to 50% in the mid- to long term, and we are currently in the process of examining value-up measures in greater detail including our mid- to long-term growth strategy. Even as challenging business conditions continue, including growing volatility across the domestic and global financial markets as well as regulatory issues, we will continue to maintain differentiated earnings strength and competitive advantage as the industry leader.

We remain committed to doing our best to enhance our corporate value as a company by executing our value-up program once it is formulated and shared through regulatory filing going forward. Please refer to the materials that were made available to you in advance for further details on our performance. And please be advised that the forecast mentioned in today's call are subject to change in the future depending on changing economic and business environment conditions in and outside of Korea.

Now then we'll begin our Q&A with our management team.

[Operator]

[Interpreted] [Operator Instructions] The first question will be provided by Myung Wook Kim from JPMorgan.

[M.W. Kim, analyst]

[Interpreted] This is Myung Kim from JPMorgan. First, it seems that your solvency ratio compared to the prior quarter and several previous quarters as well appears to be slightly lower. In one of your slides, you mentioned that you are seeking to achieve an appropriate level of solvency capital on par with the level of advanced players. And before there was reference to somewhere between 200% to 220% as reference.

So in your view, what is that appropriate level in line with that of the advanced insurance companies? And also, of course, your solvency capital will be subject to change depending on macro conditions and also depending on share price movement, especially for your Samsung Electronics shares. So what kind of efforts are you thinking at the company level in order to narrow that kind of volatility in your solvency capital?

Second question, it seems that you have achieved very significant profits this year, and this is [indiscernible] expectations of year-end dividends. So how much dividends do you have in mind, although you may not be able to specify a certain value level, we would appreciate some indication as it would be very helpful.

[Unknown Executive]

[Interpreted] Yes. Let me take your first question. I'm Head of RM. My name is [indiscernible].

So as you have mentioned, yes, in our prior communications, we have said that we intend to manage our solvency capital at within 200% to 220% in the ultra long-term, mindful of European insurance companies that currently apply Solvency II.

So at the time, the advanced leading insurance companies were -- had solvency capital of between 180% to 200%. If you compare the discount rates that were applicable under the K-ICS scheme, there was certain relaxation of the discount rate, which is why we felt it was appropriate to add on an additional 20% buffer, which resulted in the band between 200% to 220%.

But most recently, there has been regulatory tightening in Korea with a decrease in the discount rate. And the last liquid point actually has been extended from 20 years to 30 years, which means that relative to Solvency II, in some sense, K-ICS is actually now even more conservative. Which is why we believe that we should review the criteria that we manage against in light of these developments.

So although the review is currently underway, we are estimating perhaps a slight buffer -- a conservative buffer above the level of the European insurance companies, perhaps somewhere around 180% to 190%. But even when factoring in the regulatory tightening, we believe that in the long term, somewhere in the mid-190% range will be manageable.

And you mentioned share price movement for Samsung Electronic shares. So let me explain comparing the numbers between June and September this year relative to the end of last year.

So if you look at our K-ICS ratio as of the end of last year, it was 219%. But then in June, it declined quite substantially to 202%. The main reason is due to the tightening of the discount rate and also lowering of the liquidity premium. And then most recently as of September, of course, while we are still in the process of calculating the final figure, as per our communication today, we believe it is somewhere between 190% to 200%.

Main reason for the movement being the drop in the interest rates and also the fall in share price valuations. They made the KRW 20,000 decrease per share for Samsung Electronics. But even when factoring in these drivers, we still believe it is around the mid-190% as of September.

And I believe that you are asking because most recently, Samsung Electronic shares have fallen to about KRW 50,000 or so. But even when reflecting that decline, we believe we should be able to achieve somewhere at the 190% level. We are in the process of examining various counter-measures as we anticipate further tightening of the liability discount rate up to 2027, and as we anticipate further changes in terms of share price and the interest rate environment.

So basic ALM policies, for example, purchase of ultra long-dated bonds, for example, or the usage of forward bonds.

And over the last 3 years, we have been using coinsurance as a hedging measure against regulatory tightening. For example, the recent tightening of the discount rates, which has the effect of increasing our liability, and we are considering continual -- or continuing to use co-insurance. And we will enlarge the scope of different types of fixed income instruments that are subject to ALM management, and we'll seek better, more efficient ALM strategies using derivative products.

And if required, although we have not adopted this measure yet, we may consider the use of reinsurance, feeding in the case that we need to further lower our required capital.

On balance, considering the different measures that we have in place and are considering, we do not anticipate any major issue in terms of our capital from changes to share prices or from regulatory changes.

And we have not applied for use of transitional measures either and have not issued and are not reviewing the issuance of equity securities either. So I think that should be considered as well.

[Kyung-Bok Lee, executive]

[Interpreted] Yes, this is the CFO, Lee Kyung. Let me address your second question regarding our guidance for profit and dividends.

So up to the third quarter, our earnings actually have seen a higher year-on-year growth relative to our expectations. However, going forward, there are certain factors that may lead to some change in terms of our insurance profit, namely, the results from the insurance reform meetings, also changes to the actuarial assumptions at the end of the year.

In terms of investment returns, we also are outperforming against our plans so far. However, there is still -- there are still sources of volatility in terms of interest rates and share prices going forward. And potentially, we expect there may be some valuation loss on some of our alternative investments. But as we reiterated in our first half call, we will continue to work to deliver more than double-digit growth in terms of our earnings next year.

And in terms of our dividends. So as we mentioned, we are still very much committed to achieving our mid- to long-term goal of 50% shareholder return. And we will, of course, leverage our improved earnings achieved this year to enhance our dividends as we seek to improve the attractiveness of Samsung Life as an investment, and we are currently reviewing our dividend policy, mindful of our mid- to long-term shareholder return targets.

[Operator]

[Interpreted] The following question will be presented by Jun-Sup Jung from NH Investment Securities.

[Jun-Sup Jung, analyst]

[Interpreted] So yes, thank you for the opportunity to ask 2 questions as well. This is Jun-Sup Jung from NH Investment Securities. My first question has to do with dividends and also shareholder return. I think your date of record for dividends is actually different versus other companies. As of last year, I think it was end of December or so. Do you have any plans to change that for this year? And you mentioned how you will announce your value up program once it is finalized through regulatory filing. So can we get a sense of the timeline?

Second, you have -- there are certain actuarial assumptions that will be applied for instance, on your whole life, short-term payment type products at the end of the year, what kind of impact do you anticipate from those changes in terms of BEL, CSM and your K-ICS ratio.

[Unknown Executive]

[Interpreted] Yes. I'm Head of IR and Accounting. Yes, as of last year, in order to mitigate or prevent confusion among the individual retail investors, dividends were based on the settlement date. However, this year, we are reviewing the possibility of changing that upon recommendations from the government and also reflecting the methodology used by more advanced insurance companies in other countries. So it is under review, and we will share the results with you when it's finalized.

[Kyung-Bok Lee, executive]

[Interpreted] Yes. This is the CFO. Let me take your question regarding our value-up program, the timeline.

First, I would like to express my apologies for the delay where the announcement of the program is later than expected. We feel that in order to finalize our value-up program and make it available through filing, we need to formulate and present our company's mid- to long-term strategy and vision also flesh out our various KPIs and our shareholder return targets.

So building on the performance of this year, we are in the process of establishing our next year business plan as well as an actionable growth strategy for the company also in the mid- to longer term. So once we are able to fully reflect all of those findings in our value up program, we will make it available through disclosure.

[Unknown Executive]

[Interpreted] Yes. This is [indiscernible]. I'm Head of the Actuarial team. Let me take your third question.

First of all, let me share with you some thoughts at our company level in terms of the results announced recently by the authorities following their insurance reform meetings.

First of all, we intend to apply the guidelines announced by the authorities without exception as originally presented. So based on our calculation in terms of the expected impact, when considering all 3 scenarios or 3 cases, we expect the total impact somewhere around KRW 200 billion or so and the impact to our K-ICS ratio about 5%.

So the KRW 200 billion is -- will mostly be in the form of a decline in our CSM. And again, the impact to K-ICS would be around 5 percentage points. So the impact there will not so much be from any change to our available capital, but it will be pursuant to the increase in required capital upon applying the guideline. And we are in the process of reviewing the set of actuarial guidelines that we will apply for fiscal year 2024, but we have not come up with a specific figures in terms of the expected impact yet. But once we formulate our view, we will communicate it with you through the IR team.

Was that a sufficient answer?

[Jun-Sup Jung, analyst]

[Interpreted] Yes, thank you.

[Operator]

[Interpreted] The following question will be presented by Seung-Gun Kang from KB Securities.

[Seung-Gun Kang, analyst]

[Interpreted] Thank you all for the opportunity to ask. This is Kang Seung-Gun from KB Investment Securities. My first question has to do with your surrender value reserves. So after conversion to IFRS 17, I believe the reserve balance actually is negative at the moment. So this does not impact your profit available for dividends. So as of the third quarter, how much of a negative balance do you carry at the moment? But as you have seen robust new business and new sales, I expect that the negative balance will be drawn down quite quickly. So when do you anticipate that it will turn around to positive territory?

The second question is, earlier, you said that you expect about a KRW 200 billion impact to your CSM from changes to the actuarial assumptions. So for the loss ratio assumptions that apply to your short-term payment whole life policies, were you assuming a 30% increase in the loss ratio to reflect the lapse shock? Other companies understand are applying a more conservative 50% -- not lapse shock, sorry. So is it 30% or 50%? What exact loss ratio have you -- lost rate -- excuse me, lapse rate, excuse me, have you assumed in relation to your short-term payment type products?

[Unknown Executive]

[Interpreted] Yes. This is Head of the Actuarial team. Let me take your questions.

First of all, as of the third quarter, our surrender value reserve balance stands at minus KRW 3 trillion. In terms of when it is likely to turn positive, it will vary depending on the volume of new business sales. But if we assume that there will be a similar level of upside to our new business relative to this year or to previous levels, we expect sometime late 2026 or end of 2027 for the turnaround.

And then regarding your second question, let me explain further the exact guidance regarding lapse shock from the authorities. So the guidance from the authorities is to apply reverse calculation using the company's own empirical statistics or experienced data on standard type products, and where those kind of statistics are not available to apply at least 30% or higher lapse assumptions. The KRW 200 billion impact was based on 30% assumptions.

When we do reverse calculation based on our experience data based on standard products, we did observe it somewhere around the 30% level or so. So where we do have available statistical data, to apply a more conservative lapse ratio of 40% or even 50%, we felt would be inconsistent with the guidelines.

[Operator]

[Interpreted] The following question will be presented by Byung Gun Lee from DB Financial Investment. Please go ahead with your question.

[Byung Gun Lee, analyst]

[Interpreted] Yes. This is Lee Byung Gun from DB Financial Investment. Thank you for the opportunity.

I have 2 questions as well. First, it seems that relative to prior quarters, you have seen a bit of a reversal from your onerous contracts. So in another -- at another life insurance company's IR session when asked about the increase in cost, they answered that there were some losses incurred from changes to the cash flow related to participating type annuity products. So what is the case for Samsung Life? What are the reasons behind the reversal with regards to your onerous policies? And what are your expectations going forward for the onerous contracts?

And the second question has to do with supplementary capital. Mindful of the cost considerations, I believe that you may have scope to consider raising supplementary capital? Or what are your views about supplementary capital?

[Unknown Executive]

[Interpreted] Let me take your first question. So let me explain the KRW 43 billion in reversal in the third quarter on low profit-making policies. So yes, as you know, it was mostly associated with certain low premium type of policies sold. So there were about KRW 60 billion in reversal from the loss-making block of our in-force book. And as a result, we saw a KRW 43 billion in reversal related costs.

Previously, because of lack of available statistics, we have not considered lapse -- development or lapse upon the annuitization of the annuity products. What -- after annuitization or payout of the annuities, there are 2 different types, the fixed type and the inheritance type. So while we believe that there were insufficient statistics, however, the FSS found in the review done in the first half that they felt that we did have sufficient statistics. And so as a follow-on to the findings from the FSS audit, this resulted in a reversal of about KRW 60 billion.

So we do anticipate that as people are living longer, there could be certain volatility to our earnings from participating type annuities going forward. And we anticipate that perhaps, we may start seeing some longevity related losses starting from the fourth quarter. But we will have to see and we'll only have to -- we will have to wait to confirm which assumptions are applied and settle the accounts before we're able to communicate the results with you.

[Unknown Executive]

[Interpreted] Yes. I'm head of RM. Let me take your question on the K-ICS ratio. So in terms of reinsurance, I guess you could divide it into 2 types. One would be in the form of co-insurance and then the other would be a slight variance on standard reinsurance, which just lowers the required capital portion only. So in terms of coinsurance over the last 3 years, we have executed somewhere around KRW 2.2 trillion in co-insurance. And as you mentioned, of course, these are contracts where we have to pay the associated costs. So internally, we are examining always the adequacy of the pricing.

So in assessing the adequacy of the price, we look at the yield or expected returns relative to long-dated bonds, for example. And we check for any difference in terms of interest rate sensitivity comparing cases where we do use reinsurance versus cases where we do not. And so we have a certain price level in mind as we compare different offers received, not from a single provider, but usually multiple 3 companies or so, and we would review their price terms and also the terms of their offering.

For certain reinsurance type schemes that only lower the required capital amount, there are not that many reinsurers that have this type of product. And we do not -- we, in the past, have not used this kind of product either.

But as I mentioned before, we are considering it within our scope, if required. But even then, we do not anticipate any major burden because on the cost side, the costs are much lower versus co-insurance. And regarding possible issuance of subordinate loans for supplementary capital, we are not at present reviewing that. While we cannot completely rule that out, at the moment, any ways, we are not considering it.

[Operator]

[Interpreted] The following question will be presented by Do Ha Kim from Hanwha Investment Securities.

[Do Ha Kim, analyst]

[Interpreted] I also have 2 questions. First, it seems that your new business CSM margin, the multiple appears to be trending downward across the mix and also, in particular, for your health-related products as well. So not so much on the cause of the decline, but what is your outlook? What kind of drivers do you think exists to provide -- to improve the margin going forward, what will lead to further deterioration? If you could divide it into those drivers, I would appreciate it.

And it seems that your reserve interest burden actually is a little bit lower. And can you explain why it is going down?

[Unknown Executive]

[Interpreted] Yes. I'm [indiscernible] Head of CPC Planning. Yes. Let me talk about the new business CSM margins. So it is true that across the industry overall, there has been a decline in the new business CSM margins.

For life insurance companies, generally, there are 2 types of health-related policies. One would be more pure health. Other product would be more the refund type. So in terms of the reason for the decline in the multiple, it is partially due to the portfolio effect, the product mix, also due to more intense competition in the market.

So between the 2 types of health-related products, we are more focused on the pure health-type products rather than the products with strength in surrender value in order to boost our new business CSM. So amid intense or intensifying market competition, as you can see on a monthly average, we are doing new business CSM of KRW 270 billion for full year, somewhere KRW 3.2 trillion.

For the pure health-type products, the CSM, the new business CSM multiple is holding up at around 1,600%, not going down. But as we work to increase the aggregate new business CSM, we have been selling the strength and surrender value type of products as well, which is -- has -- is the main cost behind the drop in the multiple. So that is the status for this year.

Next year, we think that there may be 2 factors. This does not apply to just us, but overall in the industry, but we anticipate a decline in new business CSM for both types of both pure health and strength in surrender value type products.

So mainly, it will be the impact of movement in the interest rates that will impact the strong surrender value type products. And for the pure health type products, we also believe that a drop in the CSM may be inevitable, reflecting the results of the insurance reform meetings, also more intense competition also the impact from adjustments in the expense ratio, et cetera.

Well, we cannot provide the specific number to you today because it's not yet available. I can assure you that we are still working to defend and improve our multiple, the margin, by focusing on building up the portfolio of Pure Health-related products.

[Unknown Executive]

Yes. I'm head of the actuarial team. Let me take your second question. There are 2 drivers behind the changes to our reserve interest. So the biggest factor that we are looking at is changes to the market interest rate, which obviously has gone down significantly year-on-year. And so this has had a big impact on the valuation amount, reflecting the discount rate on new business.

Then for our in-force book, we have a high portion of in-force policies that are linked to crediting rates. And our crediting rate related costs have gone down, reflecting the decline in market interest rates. So this is also another reason for the decline in the reserve interest liability. So on a company-wide basis, the reserve interest rate, which was somewhere around 3.4% as of the end of last year is now around 3.17% as of third quarter end.

So in terms of our outlook for the reserve interest going forward, the impact of the changes to the discount rate assumptions has already been fully factored in. Going forward, I think the reserve interest will likely track changes within the broad market.

[Operator]

[Interpreted] The following question will be presented by Yong Jin Seol from SK Securities.

[Yong Jin Seol, analyst]

[Interpreted] This is Seol Yong Jin from SK Securities. So I would just like to ask about the K-ICS sensitivity. If you can, as of the end of September, what is the expected impact on K-ICS from changes to the interest rates and also changes to the Samsung Electronic share prices? And what would be the expected impact of the extension of the last [ LLP ], the observable period? And could you explain more about the CSM adjustment of KRW 300 billion?

[Unknown Executive]

[Interpreted] Yes. This is the head of the actuarial team again. Let me take your second question first. So in terms of quarterly CSM adjustments, it's mostly due to variances from investment elements, also variances in terms of our in-force contracts. So generally speaking, our expectation in terms of quarterly CSM adjustment is somewhere between KRW 200 billion to KRW 250 billion, but we saw a slight increase above that level in the third quarter, reflecting more intense competition in the market over new business and a slight -- which led to a slight increase in lapse.

[Unknown Executive]

[Interpreted] Yes, I'm Head of RM. Let me take your question on K-ICS. So in terms of interest rate sensitivity, we believe there's a 6 to 8 percentage point impact to K-ICS, reflecting a 50 basis point movement in the interest rate, but we are trying to minimize the sensitivity through various ALM measures. And then for share price sensitivity, as of the end of June, K-ICS will be impacted by 2 to 3 percentage points, reflecting a KRW 10,000 movement in share price. As of the end of September, we anticipate share prices to fall further, so the sensitivity, the impact may rise slightly above that 2% to 3% point level. The LLP will be extended over the next 3 years. And we expect for next year, the impact to K-ICS will be around 2 to 3 percentage points.

[Operator]

[Interpreted] The following question will be presented by [ Yong Jun An ] from [indiscernible] Securities. Please go ahead with your questions.

[Unknown Analyst]

[Interpreted] I would just like to ask a real quick question about your overall strategy. With the change to the new accounting scheme starting last year, you started focusing strategically more on health-related products and have delivered strong results as a -- or strong performance as a result. I don't think this kind of stance can go on indefinitely though. So do you have other new business drivers for example, senior care or other long-term business plans in the pipeline? So if you could share what you have in mind internally?

[Unknown Executive]

[Interpreted] Yes, I'm in charge of midterm strategy. This is [indiscernible]. So apart from our overseas business plans, as you mentioned, we are very interested in other new business areas, including senior business and other healthcare-related business and we are examining there quite closely. Primary focus in the mid- to long term is the senior business. So we have actually formed a task force dedicated to senior living, and we have been analyzing, researching the market, analyzing possible profitability as well. Starting next year, we will examine the business prospects on a more full-fledged basis.

[Operator]

[Interpreted] The following question will be presented by Heewon Choi from Morgan Stanley.

[Heewon Choi, analyst]

[Interpreted] It's been more than an hour, but thank you for the opportunity to ask a quick question. You already explained the K-ICS sensitivity from regulatory changes and market trends. So given your guidance for new business of KRW 3.2 trillion, what kind of -- how much recurring base fundamental upside do you anticipate for the full year, how much of further upside do you anticipate in terms of your K-ICS ratio as well?

[Unknown Executive]

[Interpreted] Yes, I'll take that. So assuming a new business assumption of KRW 3.2 trillion, that will have the effect of boosting our K-ICS ratio by 11 to 12 percentage points. And we are actually looking to increase our net allocation to alternative investments to boost our investment yield and returns. So this will also have the additive effect of boosting our K-ICS by 5 to 6 percentage points on a full year basis.

[Operator]

[Interpreted] With no further questions, we will now conclude the Third Quarter conference call for Samsung Life. Please contact us at the IR team for any further inquiries. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]