Good afternoon. Thank you for joining us today for Samsung Life's earnings presentation for first half of 2023. Today's call is scheduled for 1 hour and 30 minutes, starting with the earnings presentation delivered by our CFO, Mr. Sun Kim, and followed by your questions, which will be addressed by the members of our management team present here today. For those who want to ask questions, please press star and one. Now, let's begin the presentation.
Good afternoon, everyone. This is Min young Kim, Head of Investor Relations. Thank you for joining us today for Samsung Life's earnings presentation for first half of 2023. Today's call is scheduled for 1 hour and 30 minutes, starting with the earnings presentation delivered by our CFO, Mr. Sun Kim, and followed by your questions, which will be addressed by the members of our management team present here today.
Please note that the figures in this presentation may be revised during the auditing process, and any forward-looking statements, including the earnings outlook contained in today's conference call, are subject to change depending on both domestic and overseas market conditions and operating environments. Let me now hand over the presentation to our CFO, Mr. Sun Kim.
Good afternoon, this is CFO, Sun Kim. I'd like to thank you our investors and analysts for taking time out of their busy schedules to attend today's earnings call. Let me start with our key business results for the first half of 2023. First is the earnings highlights.
In the first half of the year, our new business CSM exceeded KRW 1.8 trillion, and we secured KRW 11.9 trillion worth of CSM, which is a source of future insurance service profit. We generated stable profit based on high-quality CSM and growth in ordinary investment income, by which net profit for the first half of the year increased by 44.5% year-on-year to KRW 974 billion. We are demonstrating stable solvency at the highest level in the industry, such that K-ICS ratio at the end of June is expected to exceed 220%. In diversifying the asset management business to secure mid- to long-term growth engines, we are generating tangible results, such as equity investment in global operators, enhancing synergies with operating affiliates.
In the first half of the year, we joined additional global ESG initiatives related to the environment and strengthened our ESG management framework by operating a subsidiary ESG council. As such, we are committed to establishing a framework for sustainable growth as a leading company in the industry. Here are some key financial highlights for the first half of the year. At the end of June, consolidated total assets are KRW 300.6 trillion, and invested assets are KRW 209.3 trillion, up 3.3% and 0.9% year-on-year, respectively. Consolidated shareholders equity increased by 14.6% to reach KRW 41.7 trillion.
Net income amounts to KRW 974.2 billion, including insurance service profit of KRW 818.3 billion, added by non-operating income, including dividend income from financial affiliates and consolidation adjustments. I will continue to explain on further details of the statement of financial position and income statement. Let's start by explaining our statement of financial position. As shown in the slide, our consolidated total assets of KRW 301 trillion at the end of June 2023, are comprised of KRW 209 trillion in general account, invested assets, KRW 27 trillion in variable account, KRW 28 trillion in corporate pension account, and KRW 37 trillion in Samsung Card and other consolidated subsidiaries and assets.
Liabilities of KRW 257 trillion include insurance contract liabilities of KRW 181 trillion, consisting of BEL KRW 166 trillion, RA KRW 3 trillion, and CSM KRW 12 trillion. Shareholders' equity is KRW 44 trillion, including KRW 27 trillion in accumulated other comprehensive income and KRW 17 trillion in retained earnings. Here's a little more detail on the changes of, in shareholders' equity. Although market interest rate declined slightly over the year, the increase in financial asset valuation gains of KRW 5.7 trillion due to higher SEC stock prices and lower bond valuation losses, offset a decrease in equity of KRW -0.7 trillion due to lower liabilities count rates. As a result, our equity at the end of June increased by KRW 5.4 trillion, to reach KRW 47.6 trillion. Next is the CSM movement.
As mentioned earlier, KRW 1.8 trillion in new business CSM, due to the strong sales in first half of the year, together with the minimized CSM adjustments, led to CSM balance of KRW 11.9 trillion, which is up by KRW 1.2 trillion year-to-date. Next, I will explain the details on our profit. Consolidated net income for the first half of the year was KRW 974 billion, comprised of KRW 818 billion in insurance service profit, KRW 191 billion in total investment profit, which is investment service plus profit, plus dividend income from Samsung Card and Securities, and KRW 305 billion in consolidation and equity method effects. Next is quarterly breakdown of our insurance service profit.
Despite a slight decrease in CSM amortization rate, second quarter insurance service profit recorded KRW 400 billion level, up from the previous quarter, thanks to new business CSM expansion and stabilized efficiency indicators. We will do our best to realize stable and predictable insurance service profits through thorough management of efficiency indicators and minimization of difference between the assumed and the actual. The following is a breakdown of investment profit. As you can see in the graph on the left, investment profit for the second quarter saw a significant decrease from the first quarter, but after excluding the base effect of first quarter and special factors, such as losses on the exchange from low to high coupon bonds in second quarter, the decrease comes mostly from seasonal effects because dividend income from financial affiliates, such as Samsung Fire and Marine, Card, and Securities, comes only at first quarter.
Considering all this, ordinary investment profit remains stable. The loss on the exchange of low to high coupon bonds was a strategic choice by the company to capitalize on rising market rates. By replacing low coupon bonds in mid-1% range with high coupon bonds within mid-to-high 3% range, we expect this to contribute to stable investment profit in the medium to long term. We expect our investment income to remain robust in the future, driven by lower negative margin pressure by 2017, and stable affiliate dividend income, and finally, reduced volatility in variable account to P&L. In the following sections, I will discuss our key operating results, including new business and asset management. First, new business performance. In the first half of the year, on the life industry as a whole, markets for whole life with short-term payment expanded significantly.
By our active response to the market change, we saw a significant increase in whole life sales. As you can see from the graph, our new business APE in the second quarter was up quarter on quarter as a result of the strong growth in protection sales. Due to the expanded sales of protection, second quarter new business CSM grew 14.6% quarter on quarter to KRW 970 billion. The CSM rate, which represents the percentage of CSM over the first month premium, recorded 1,245% in the second quarter, which is a decrease quarter on quarter due to a decrease in death product CSM rate following increased sales of short-term payment for life in second quarter.
In the second quarter of the year, in the second half of the year, we plan to focus on selling health-oriented, high-margin products to enhance overall profitability. For reference, we launched a new health product in June, and in July, we expanded the proportion of health within protection to 40%, which we expect to contribute to margin improvement. For reference, our CSM has grown from KRW 5.4 trillion at the end of fiscal year 2020, to KRW 11.9 trillion at the end of June, with more than KRW 3 trillion of new business CSM added in amortizes annually. These new business CSM is immediately recognized as profit from the current year and recognized in installments over the future policy period, such that our profit from CSM amortization is expected to increase steadily. The following are sales efficiency metrics.
Our protection persistency rate, the most important indicator of stable insurance service profitability, is solid at 88% in the 13th round and 71% in the 25th round. Our persistence rate is relatively high in the industry, which is driven by our core competency, our exclusive channel. Our exclusive sales organization has more than 23,700 exclusive FCs at the end of June, and approximately 30,000 in total, including subsidiaries and exclusive GA agents. They play a key role in securing quality, profit-driven CSM. We'll continue to review various strategies such as GA alliances, acquisition of blue-chip GAs, and equity investments to further strengthen our industry-leading channel competitiveness. Next, let's talk about the trend in loss ratio.
As you can see in the graph on the left, net increase of risk premium of over KRW 1 trillion per quarter continued through improved persistency rate and expanded sales of protection. The loss ratio recorded 78% in second quarter, following the improvement in loss ratio of living benefits. Going forward, we'll continue to stabilize our loss ratio in low 80s by controlling excessive medical expenses and responding to unfair claims. Next is on our asset management performance. As of the end of June, our invested assets record KRW 209 trillion, in which interest-bearing assets, such as bonds and loans, account for 68%.
We are implementing an asset diversification strategy to improve investment yield under the ALM framework, and by focusing on high-quality alternative assets through thorough risk monitoring, we plan to increase the proportion of diversified assets to 30% by the end of this year. Next is asset quality. Since the second half of last year, we have been conservatively managing our loan assets against the risk of increased market interest rate volatility and economic slowdown. As such, as of the end of June, our loan asset balance stood at KRW 37.9 trillion, down from the end of the previous quarter. Amid rising delinquency rates across the financial sector, we also experienced a slight increase in our delinquency rate, but remain among the lowest in the industry and below the long-term average.
As such, we believe the likelihood of sharp deterioration in our loan portfolio is very limited, focus on the K-ICS ratio, which is an indicator of our capital strength. At the end of March, the K-ICS ratio increased by 10 percentage points year-to-date to 219.5%, and we expect the K-ICS ratio at the end of June, which will be published in September, to be well above 220%, due to the new business expansion and the rise of SEC share price and interest rate. For more information about our asset management, diversification, and ESG performance, please refer to the attached slide. We look forward to generating solid profits in the remainder of the year and continue to do our best to enhance shareholder value based on our strong capital position.
This concludes our commentary in the first half of 2023. Thank you again for attending today's earnings call, and thank you for your continued interest and support for Samsung Life. Thank you!
Q&A session will begin. Please press star one, star and one if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two, that is star and two on your phone. The first question will be presented by Yong Ook Kim from JP Morgan. Please go ahead with your question.
Yeah, annyeonghasimnikka. [Foreign language]
Yes, thank you for giving me the opportunity to ask some questions. First of all, in your prior IFRS 17 info session, I think you explained how comprehensive equity, which is a combination of shareholder equity plus CSM would now be a main pillar in your corporate value. And you cited that as the grounds were no longer disclosing the EV figures. But, however, between the market cap and the comprehensive equity number, I think there is quite a significant disparity, which is why I ask, what kind of additional thinking have you done, perhaps on the asset side, or regarding full-year dividend payments for 2023? At this time, what is your thinking, how much are you ready to comment regarding your shareholder value return policy?
The second question is also related. Now that, for practical, in practical terms, you are no longer disclosing your EV numbers. So, it's quite questionable whether the current level of underwriting will equal to a certain level of free surplus. It's hard to be quite convinced. So, would you be prepared to disclose other figures such as free surplus for our better understanding? We would have to have a better idea of the cash generative capacity of your business to be able to better asses dividends. I understand that we're observing an increase in new business CSM, but it's hard to calculate, you know, how much, in terms of margin profile, the current level of underwriting would translate into, because the current level of disclosure is actually a little bit on the short side. So could you comment?
[Foreign language]
Thank you for the question. Let me first take your question regarding dividends.
... 기존에 이제 뭐 저희 배당 성향을 어떤 범위 내에서 유지를 하고, 배당금을 지속적으로 상향하겠다는 기존에, 제가, 저희가 수차, 수차례에 걸쳐서 말씀드렸던 내용에 변화는 현재는 없습니다.
Yes. I don't know if anything in my answer will necessarily be new or different from the past. I'm not quite sure that my question- my answer will necessarily satisfy your question. Our stance actually remains unchanged, that we will maintain our dividend payout within a certain range and continue to provide continuous increase in the payout. That in itself remains intact at this time.
뭐, 금년에 이제 어느 정도에 대한 가이드를 줄 수 없느냐라는 질문들이 사실 많이 있으신데, 이거는 이제 연간 손익이라도 좀, 좀 어느 정도 예측이 좀 구체화되는 그런 시기가 돼야 좀 말씀을 좀 조금 더 구체적으로 드릴 수 있을 것 같지 않을까라는 생각이 들고요. 지금 아시는 바와 같이, 뭐, 가이드라인 이슈라든가, 이런 부분들이 조금 남아있는 변수들이 상당히 꽤 있기 때문에, 손익 측면에서는 연간 손익은 조금 더 그런 상황을 좀 지켜보면서 추후 좀 소통을 드릴 수 있도록 하고요. 자사주나 이런 부분도 추가적인 이슈 하는 정책에 대해서도, 그거는 이제 이, 그, 금년에 손익을 사실은 전체적으로 한번 쭉 살펴보고, 단계적으로 좀 말씀을 드려야 되지 않을까 이렇게 생각을 하고 있습니다. 이상입니다. 감사합니다.
I think we have received quite a, a lot of questions up to now regarding our guidance for full year 2023, regarding our dividends. I think, I suppose I would we would have to approach a later timing when we are able to have a better idea of how full year earnings will shape up. I think at that time, perhaps I will be more ready to prepare, to share more details with you. There are many pending outstanding issues, as you know, the FSS guideline issues, and so I think we'll have to observe how these issues play out and how, again, our full year earnings shape up, before we will be able to later confirm our stance to you again at a later time.
Also our shareholder value return policies, including share buybacks. Again, we will have to again, see until we have a better idea, a firmer stance regarding full year earnings to be able to prepare to share more with you on a gradual basis.
Yes, RM 팀장입니다. 두 번째 질문 주신 free surplus하고 cash generation 전망과 관련해서는 제가 말씀드리도록 하겠습니다.
Yes, I'm head of RM. Let me take your second question regarding our free surplus and also cash generation outlook.
네, 기본적으로 저희가 계획하고 있는 신계약 확보를 하고, 그다음에 투자 다변화 등을 고려했을 때, 저희 그게 K-ICS 비율로 표현을 드리면 약 10 percentage points 이상 지속 증가할 것으로 전망이 되고 있습니다.
Based on our plans, assumption that we will be acquiring additional new business and also considering our ongoing plans to further diversify our investment assets, I, we are assuming that we will be able to see about a 10 percentage point increase or continued upside in terms of our K-ICS ratio.
물론 최근에 FSS에서 CSM과 K-ICS 관련해가지고 제도 개선을 계속 지속하고 있는데요.
Of course, the FSS recently has continued to make or take initiative for institutional reform and improvement regarding CSM and K-ICS.
그러한 제도를 저희가 반영해서, 안정화된 어떤 K-ICS ratio와 가용 자본의 흐름을 말씀드리기까지는 조금 시간이 좀 더 걸리겠지만요.
It will take more time for us to provide more a stable state number in terms of what kind of K-ICS figure we expect, also our available capital trends as we have to reflect those kinds of institutional change.
이러한 제도 개선을 다 고려하더라도 저희 K-ICS는 한 200%-220% 정도는 갈 것으로 예상을 하고 있고요.
Our expectation is that, even considering the institutional change, our K-ICS will range between 200% and 220%.
가용 자본으로 가용 자본도 지속 증가할 것으로 그렇게 기대를 하고 있습니다.
We also expect ongoing improvement and increase in our available capital as well.
저 말씀드린 그 EV 대신에는 가용 자본을 앞으로 참고하시면 되지 않을까, 그렇게 생각을 하고 있습니다.
With regard to your question in terms of the EV metric, I think you can actually refer to our available capital as reference.
다음으로 질문해 주실 분은 KB증권의 강승건님입니다. The following question will be presented by Seung gun Kang from KB Securities. Please go ahead with your question.
예, 질문해 주셔서 감사합니다. 우선 첫 번째로는 이번 이제 신계약에 대한 어떤 마진에 대한 가정에 대한 질문인데요.
저희가 이번에 단기납 중심이 굉장히 많이 판매가 되면서 전체 신계약 CSM이나 APE의 기여를 많이 한 것으로 판단이 됩니다. 단기납 중심이라는 게 아무래도 유지율이나 이런 부분들이 기존의 중심 상품과는 좀 많이 다를 수 있다라는 생각을 가지고 있는데, 이번에 CSM을 산출함에 있어서 기존 일반 중심과 단기납 중심의 계리적 과정, 특히 유지율 관련돼서 어떤 차이점들이 좀 반영을 시키셨는지가 첫 번째로 궁금하고요? 두 번째로 저희가 일분기, 이분기 이익을 놓고 보면 투자 쪽에서의 변동이 전체 이익의 변동성을 크게 만들고 있는 것 같습니다. 지금 이분기에 진행하고, 진행하셨던 이 저위험 채권 처분하시는 부분들이 어느 정도 마무리가 되신 건지, 삼분기, 사분기에도 추가적인 비용에 대해서 저희가 좀 예상을 해야 될 건지가 궁금하고요?
어, 또 VF 방식으로 저희 변액 어, 보장성 보험도 조정이 이제 이루어질 것으로 어, 생각을 하고 있는데, 이게 혹시 이번 분기에 진행이 된 것인지, 아니면 혹시 어, 삼분기에 진행이 되신다면 그 영향은 이제 어느 정도 어, PL 단에 영향을 줄 수 있는지 같이 설명을 해주시면 감사하겠습니다.
Yes, this is Seunggun Kang from KB Securities. My first question has to do with your assumptions in terms of new business margins. I see that you have actually sold a lot of short-term payment whole life products, which have made a significant contribution to your new business CSM and also APE this quarter. However, compared to your existing whole life type policies, I imagine that the short-term payments type product actually will have a different profile in terms of persistency rates, et cetera. For your CSM calculations, what kind of different assumptions did you bake in when you tried to measure the CSM for these new SDP type whole life versus regular whole life, just in terms of your actuarial assumptions, including persistency?
My second question is that between the first and second quarter, it seems that in the second quarter, you've seen an increased volatility in terms of your investment profit, which was the biggest driver of volatility for your overall earnings in the first, in the second quarter. You have been selling off and disposing of low-yielding assets in the second quarter. Is that exercise pretty much winding down or and complete, or do you expect it to be ongoing into the third and fourth quarter as well, which may result in additional costs? I understand that there will be some adjustment of the scope of application for VFA. Was that also implemented as of the second quarter, or is it planned for the third quarter?
If so, what kind of impact do you expect in terms of P&L?
예, gaeri team jang입니다. 그 three 가지 질문 중에서 first 하고 third 답변을 먼저 드리도록 하겠습니다.
Yes, this is the head of the actuarial team. Let me cover questions number one and three.
예, 먼저 저희 이제 상반기 때 그 단기납 중심 판매 증가에 따른 이제 그 계리적 과정 중에 해지율에 대해서 질문하셨는데요. 먼저 이제 총체적으로 뭐 전반 그, 종합적으로 말씀을 드리면, 당사의 경우 이제 해지율은 그 납입하는 시점과 그다음에 완납 후 이렇게 이제 구분을 해서 지금 적용을 하고 있습니다.
Regarding the first question, you asked about some of our actuarial assumptions for the short-term payment whole life products that were sold in the first half. You asked about lapse rates, I believe, and persistency. Just to explain, at a high level first, we actually do distinguish in terms of our lapse assumptions applied at the time of payment versus the first payment, versus at the time of final full payment.
기본적으로 보험 상품이 완납하기 직전 일 년에는 해지율이 상, 해지가 많이 없습니다. 왜냐하면 완납한 시점에 적립액이 뜨는 부분이 있기 때문에, 그래서 그런 부분이 반영되어 있고요. 또 그러다 보면 완납 이후에 적립액 수익률이 최고점을 했었을 때 일부 해약이 많이 되는 부분이 있습니다. 그래서 그런 부분들을 다 반영을 해서 지금 신계약 CSM을 개선했다고 보시면 될 것 같습니다.
In terms of the lapse rate, there is a bit of a difference in terms of when you are talking about. If it is immediately before final payment period, for example, in the last 1 year before a final payment, usually there is almost no lapse because you are near almost approaching the peak in terms of the accumulated reserves or the highest yield. Whereas after a final payment is fulfilled, then as the yield actually hits the highest level possible, at that time, we do tend to see more lapses of those contracts. We have actually reflected that kind of difference in calculating the CSM for our whole life products.
정리해서 다시 말씀드리면, 향후 이제 단기납 중심 완납 이제 도래하는 시점 때 오면서 기본적으로 해지율 실적이 좀 움직일 건데요. 저희가 기본적으로 이제 직전 오년 통계를 사용하고 있기 때문에, 이러한 부분들이 이제 기초 통계에 반영이 되면서 아마 소프트하게 그런 부분들이 그, 설명이 되지 않을까 싶습니다.
We actually use past historical 5-year statistics to as the baseline for our assumptions in calculating the CSM. We do think that there may be this kind of variation in lapse rates as different contracts approach the final payment period, also for these short-term payment whole life products. Because the historical statistics are baked in, we expect a soft landing, if you will, in terms of the, the assumptions that are applied.
Regarding changes to the accounting treatment for variable products.
For Samsung Life, we had actually been managing against earnings volatility by applying the regular P&L method and 100% hedging for our variable whole life and variable annuity products.
Pursuant to the guideline by the FSS, we have actually extended the scope of VFA application to now include all variable accounts. Between the existing P&L and 100% hedge method versus the newly extended VFA method, there really is not any difference in terms of volatility to our earnings.
Of course, last year and into the first quarter this year, there was certain volatility in terms of the market interest rates, so this was a source of a slight bit of volatility to our variable P&L. However, as the market interest rates stabilized in the second quarter, I think you will find that the earnings volatility for our variable products actually is now more stable than prior to IFRS 17.
I think this will support greater predictability for the market.
Yeah, let me address your second question real quick. I'm head of the asset management team.
Yeah, as our CFO has previously explained, yes, in the first half, we did engage in switch trades, switching from lower yield assets to higher yielding assets in the interest of boosting our investment yield into the mid to long term. However, we do not have further plans for additional disposal of low yielding assets in the second half.
The following question will be presented by Doha Kim from Hanwha Investment and Securities. Please go ahead with your question.
I have a question regarding one part of the FSS proposed guideline regarding the RA reversal. I understand that, between the different methods that can be applied, you currently are applying the method that is used by a minority of the insurance companies. If you do change and apply the standard method, what kind of impact will that have on your RA reversal? You can explain it in absolute value terms or percentage.
Yes, let me answer that question. I'm Head of the Actuarial Team.
Yes, the potential RA adjustment is actually planned to be adjusted or applied starting the third quarter this year. Right now we have started work to calculate the expected impact from that kind of change.
We are now defining the logic and sorting out the system to try to calculate the expected diffusion effect that may have based or on a case-by-case basis depending on risk type.
현재 그 정확한 금액이나 대략적인 추정은 제가 이제 좀 알고는 있는데요. 아직 좀 정확하지 않은 부분이 있어서 그 정확한 수치는 Q3 때 말씀드리는 게 맞는 것 같고요. 기본적으로 이제 그 기말 RA 예상 금액이 그 변화하게 되면, 이제 단기에 이제 RA에서 환입되는 금액 규모는 축소가 되지만, 그 분기말에 그 환입분에 따른 CSM 조정 금액이 또 상대적으로 줄지 않는 부분이 있어서 정리해서 말씀드리면, 회사 가치 측면에서는 큰 변화는 없지만, RA 환입액에 따른 P&L에 약간의 이제 수용 효과는 좀 있을 걸로 지금 그렇게 영향을 생각하고 있습니다. 이상입니다.
We are currently working on the impact calculation, just in terms of running the estimations to come up with a rough figure. I, I don't think that they are accurate at this point, and perhaps we should wait until the third quarter to share more accurate numbers with you. In terms of our estimation for the RA reversal, that would be recognized at the end of this year, certainly, there, there might be a reduction in the RA reversal for the current period. However, at the end of each quarter, there is the CSM adjustment that can play an offsetting effect. On balance, in terms of the total value of Samsung Life as a company, we do not expect a big difference.
Again, a reduced RA reversal can have the effect of deferring or postponing earnings.
The following question will be presented by Byung Gun Lee from DB Financial Investment. Please go ahead with your question.
Yeah. Yes, this is Byung Gun Lee from DB Financial Investment. I think this question actually has come up several times before, but let me ask again, as I'm interested in hearing more detailed numbers. It seems that certainly in the current quarter, you did sell a lot of the short-term payment, SDP-type whole life products. That was one reason why your CSM versus APE actually has gone down. Wondering, relative to regular whole life products, is there a possibility that relative to the present value of future cash flow expected from those policies, the CSM margin also may have declined? I would like to clarify whether that is the case. Also, let me ask about some numbers, if you could go through them one by one.
As a percentage of total death cover type policies, what percentage did the 5-year payment term products and 7-year payment products account for in the first quarter and second quarter? Also, just in terms of the CSM margin as measured against the present value of future expected cash flow, how much lower of a CSM margin do you expect for these SDP whole life products versus regular whole life death products? I believe that was the question. Third question is, what is your outlook for APE and CSM after the third quarter and beyond? As the proportion of short-term payment products increases as a percentage of new business, I think it's will be quite natural to expect a decline in the APE, even if you maintain the current level of CSM.
Do you expect that CSM levels will continue to maintain second quarter levels? Because certainly it, it does appear to have been oversold to a certain extent in prior quarters. Fourth question is regarding ALM and liquidity management. Potentially, I think the SDP whole life products could weigh negatively. What is your stance in terms of managing duration or liquidity for these new types of whole life products?
I'm head of CPC planning.
let me answer what was a very long question in no certain, no set order. Actually, as in the first half of the year, we actually did KRW 19 billion in terms of first month, first month, monthly premium. Of that, short-term payments premium was about KRW 10 billion, so it was about 50% of the portfolio.
In fact, this is a very low percentage relative to the broad market because we continue to make consistent efforts to sell other regular type whole life and also health-related policies.
As you have seen in our disclosed numbers, we actually significantly overachieved against our monthly CSM target that was reflected in our business plan. The target was KRW 230 billion, but our monthly CSM was by far larger at KRW 400 billion. This was made possible not only because of a very big increase in the short-term payment whole life, but also driven significantly by our other products, including health and regular whole life policies.
Compared to other companies, I would say that as the market may already know, Samsung Life actually was not very aggressive in pushing the SDP whole life products.
In terms of the margin profile, actually, the margins are directly impacted depending on the promotional sales costs that are incurred at the time of sale. In terms of the CSM, usually it's about 1,200% relative to monthly premium. For regular whole life, for reference, it's between 2,500%-3,000%. For health, it's higher at 4,000%.
You can see that actually excluding the short term, short-term payment whole life, which actually have lower, has lower CSM rate at 800%, actually, the profitability is much higher for our other whole life type products.
I think the concern behind your question is that once the push or, or the sales of these short-term payment products dissipates, you are concerned that our new CSM inflow may lose momentum. Again, we have a very full, diversified portfolio of different products, and the percentage of SDP whole life as of July, August, was very low, at less than 50%. Internally, we're actually expecting to match first half results in terms of monthly CSM, somewhere around KRW 400 billion, again, driven by the strength of our health and other regular whole life products as well.
Yes, let me take your other question.
In terms of ALM management, actually, the short term payment whole life products in itself as a single product actually does not have an impact on our overall ALM strategy.
Because it is a component making up our total liability, we will continue to apply our consistent ALM strategy on this product as well.
In terms of liquidity management, we have already established a significant liquidity buffer, to fully back the claims payments, and also, to manage the lapse or surrender rates as well. For all insurance liability, including the short-term payment, whole life liability, depending on the different structure of the policies, there may be certain liquidity type events that may occur at a certain expected timing. We have already done preemptive scenario planning, to address those type of potential liquidity events well in advance.
The following question will be presented by Heew on Choi from Morgan Stanley Securities. Please go ahead with your question.
Yes. I have a question regarding the health related protection policies in the second quarter. I think you recorded mid-single digit growth, and that was a key part of the increase in the CSM rate, I believe. In terms of these health related products, was there any change to the product mix or the profitability profile of these types of health policies in the second quarter? I think you said in the second half of the year, you expect monthly CSM to achieve around KRW 300 billion. Sorry, the translator misspoke earlier when I said KRW 400 billion, but the company expected KRW 300 billion versus the originally planned KRW 230 billion.
There are concerns that for both life and non-life insurers alike, as we move into the second half and the effect of these SDP- type products dissipate, there likely may be more intense competition, centered around health type policies. Against that background, how do you intend to differentiate in terms of the product side?
Yes. I, I'm Head of the Product Team, so let me take your first question. You asked about, how the CSM rate actually improved in the second quarter versus Q1.
Yes, it is actually, it was boosted in large part by our health-related products. There were new product releases, of course, the new releases are planned for the second half, actually in the second quarter of H1, we also had some new product launches, for example, in March and also June. The percentage of health products in our overall protection portfolio increased, and the health-related products actually delivered solid performance. This had the effect of boosting our CSM rate slightly Q on Q. The second question regarding the expected intensifying competition in the health product space. You asked about how between life and non-life insurance companies that may be likely to happen.
Actually, in the second half, for whole life products, we intend to focus more on the higher yielding type, short-term payment type, whole life products. Let me explain our policy for health products.
Yes, in terms of how we intend to respond to the health insurance market, well, we had several new product releases already in June, and in fact, last week of August. We will continue to deliver increasing performance from the health policies because as we expand the health portfolio. Not only will we be coming up with new products, but also revamping existing products as well, which is expected to help deliver higher CSM rates and also increase our volume.
This concludes the Q&A session.
Yes, please contact us at the IR team if you have any additional questions. Thank you very much!