Good afternoon, everyone. This is Myung-Soo Kim, Head of Investor Relations. Thank you for joining us today for Samsung Life's 2022 earnings presentation. 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 environment. Let me now hand over the presentation to our CFO, Mr. Sun Kim.
Good afternoon, everyone. This is CFO, Mr. Sun Kim. Thank you all investors and analysts for joining us today for our annual earnings presentation.
As all of you are well aware of, the year 2023 marks a very important year in that the years' efforts of the company to focus on long-term value will manifest in numbers with the introduction of IFRS 17 accounting system. Before presenting the 2022 financial results, we prepare some time to introduce the company's vision and core value, which has set the foundation to our long-term growth and strategic goal, which ensure its value creation results. Amid rapid changes in insurance environment in 2020, the company established its new vision: Beyond insurance, we secure your future, to keep growing as a trusted company by customers and varied stakeholders. To accomplish the vision, we set our long-term strategies and put our best efforts to realize our five core values, such as win-win growth, communication, value, integrity, and new challenges.
To take this opportunity, we share our gratitude for our customers and varied stakeholders. We firmly promise that we continue to do our best to go beyond conventional business boundaries to achieve growth and development of life insurance industry as a life financial partner of our customers. In force contracts, the company holds amounts to 19,050,000, each month, 690,000 insurance claims are paid. The company is well aware of its pivotal role in supporting Korean people's health and senior life. It will continue to work hard to make one solid pillar sustaining our society. Also, the company goes beyond the largest insurer by mere numbers to achieve its vision of becoming a responsible company by securing customers' health as well as financial assets with superior capital adequacy. Next is on the company's value creation for varied stakeholders.
Under the unprecedented change, including COVID pandemic, extreme polarization of wealth, climate crisis, the company pursued not just its profit maximization, but also sustainable growth that creates value for varied stakeholders from employees, customers, shareholders to the society. It provides stable and healthy work environment to its employees and financial consultants, totaling more than 36,000, shares economic outcomes with the government, shareholders, and customers, protects socially underprivileged by our co-prosperity mission, and expands its role globally as a leading company in the industry. The company set the year 2021 as the beginning year of our ESG management and established 2030 vision with three core directives such as green finance, win-win finance, and transparent finance. Since the beginning, the company obtained noticeable outcomes by expanding ESG investment and participating in global ESG initiatives.
The company will continue to strengthen its ESG management policy and listen closely to valuable suggestions by investors. Next is the company's 2022 business results and strategies. In the year 2022, although a very difficult business environment persisted with huge market volatilities, the company attained meaningful outcomes across all areas, including insurance, asset management, and new business and digitalization. The company achieved solid new business sales of protection products amid fierce competition in sales channels and secured future profit base against self-destructive competition with high rate products by peers. The company waged the health asset campaign to create new demand in matured insurance market to expand the boundaries of insurance into health and asset management. Taking advantage of interest rate hike, the company improved asset liability matching and enhanced yield on interest-earning assets.
While improving investment yield by timely disposal of invested assets, the company also diversified its asset management business across sectors and regions by entering into REIT market and equity investing in global ETF operator. Amid the deteriorating credit risk amid around real estate project financing in Korean capital market, the company sustained a superior capital adequacy. The company advanced Information project, along with expansion of mobile contactless channel, including Monimo and The Health to secure MZ customer base. Let me explain the company's 2022 results more concretely with numbers. On new business and efficiency measures. The company maintained its profitability-focused sales strategy and achieved high KRW 2 trillion worth of new business sales every year, despite uncertainties from prolonged COVID crisis, backed by its strong channel competitiveness.
In particular, the health proportion within protection is maintained high at around 50%, Efficiency measures, including persistency rate, has been improving over time. Based on such achievement, the company expects stable CSM profit after IFRS 17. Next is net profit. As we already announced our annual net profit figures through disclosure made on January 31st, the 2022 net profit attributable to shareholders is KRW 1 trillion 583 billion. After excluding one-off non-cash items from a reversal of deferred tax liability following revisions in corporate tax law, its recurring profit recorded KRW 1 trillion 155 billion. As shown on the right graph, the solid insurance profit due to the improvement in loss ratio mainly contributed to the sound result. Let me explain in more details on the loss ratio.
Together with the increasingly large collection of risk premium every year, a large drop in real indemnity loss ratio following the regulator's crackdown on insurance fraud, mainly contributed a 4 percentage point drop in loss ratio over a year ago to record 82% of overall loss ratio despite an increase in loss ratio of death benefit due to COVID. The loss ratio of company's strategic product, Health Type, is well-maintained at low to mid-80%. The company will do its best efforts to secure stable CSM profits by tight control of its future loss ratio. Next is on investment margin. Despite large losses from its negative margin and volatility over variable guarantee option profit and losses, the company has been stably managing its investment margin by timely sales of its invested assets.
In year 2022, the company's investment yields surpassed 3% due to an increase in interest income and timely disposal of its real estate assets. Let me explain in more details on the company's asset management. The new investment yield has sharply increased following market interest rate hike. Accordingly, the yield on interest-earning assets improved by 10 basis points over a year ago to reach 3.15%. Despite worries about deteriorating asset quality due to impending economic recession and recent crisis around real estate project financing in the industry, the company has been well managing its asset quality at the industry's top level, as shown in its stably low delinquency rate and NPL ratio. Next is the company's 2023 business strategy.
The year 2023 marks an important turning point in the company's 2030 vision for its sustainable growth backed by its past three years' efforts. The company will seamlessly prepare a solid strategic ground for the coming future. In our main insurance business, we target top three players in health product market, life and non-life combined, by proactive launching of new products to expand our market presence. We aim to keep growing our asset management business to make it our new profit engine by creating synergy between asset management subsidiaries and equity investing in overseas asset management operators. We will actively explore new business, including nursing and healthcare business, while leading the industry in digitalizing insurance value chain. Next is on the new regulatory systems such as IFRS 17, 9, and KICS, together with the company's midterm dividend target.
As we explained briefly in the last year's Investor Day, the company's pre-tax profit is expected to shift upwards with a jump in our investment margin after adoption of IFRS 17. The company plans to secure new business CSM amounting KRW 2.5 trillion-KRW 3 trillion annually to keep focusing on sales of high-margin products. At the same time, we will keep strengthening management of our efficiency measures, such as loss ratio and persistency rate, to well manage in-force contract CSM. Investment profit will increase with the growth of our asset management business. Its stability will be improved by reducing its sensitivity to capital market movements.
A new capital regulatory system named KICS is introduced together with IFRS 17 in 2023. Test run September of last year under the new system, the company surpassed 200% and is expected to show the industry top level capital adequacy going forward. By reducing volatility in its capital through ALM improvements and co-insurance, the company targets to maintain in the range of 200%-240% in the base case and at least 180% in the worst possible scenario. On the company's profit and capital sensitivity to interest rate movement. For years, the company has reduced its sensitivity to financial market movement by expanding ultra long term bonds and selling floating rate products.
As a result, the company's interest income spread is expected to decrease by roughly KRW 15 billion on average over the 33 years when interest rate drops by 100 basis points under the new system. Please note that such projection is based on a rather extreme assumption that the interest rate remains - 100 basis points for 3 years. Hence, even considering a recent market yield decrease, we expect our investment profit will stably increase after the adoption of IFRS 17. The impact of interest rate to our available capital, KICS and CSM is also very limited. Main financial indices under IFRS 17 are expected to produce stable numbers despite market volatility. Last is on the company's midterm dividend target.
The company targets to increase its DPS every year with payout ratio similar to the past year's level, which is around 35%-45% on the recurring profit under IFRS 17. Contrary to the previous accounting system, in which profit volatility is very large and hard to predict, the IFRS 17 profit is expected to be stably increasing over the next three years. Although much uncertainties still remain in the market, we plan to expand shareholder returns gradually, backed by solid KICS ratio above 200%, which is industry top level, together with tight management of in-force contracts and asset quality. As soon as the new system settles stably, we will examine repurchase and cancellation of treasury stocks using our excess capital under the standpoint of total shareholder return. This concludes our 2022 annual earnings presentation.
Please refer to the accompanying materials for the fourth quarter results. Thank you again all for participating in our earnings presentation. We politely ask for your continued attention for Samsung Life. Thank you.
The first question will be presented by Hu-Sul Lee from Hyundai Motor Securities.
Yes. Thank you for the detailed presentation. I have two questions. You said that you intend to consider additional co-insurance policies. Compared to the co-insurance that you took out last year, is there any particular block or type of product within your portfolio that you want to see in particular? For example, the interest linked type whole life portfolio or what a particular block, if any. What kind of effect has the co-insurance from last year had on your CSM and the KICS ratio as well? Second question regarding the dividend policies. I'm wondering which would be the higher priority, increasing DPS or boosting the payout ratio itself.
When you mention, recurring profit or ordinary profit, what is the exact meaning from the company's point of view? Is it the amortization, the release, of CSM, and what criteria will apply?
Yes, thank you for the detailed presentation. I have two questions. You said that you intend to consider additional co-insurance policies. Compared to the co-insurance that you took out last year, is there any particular block or type of product within your portfolio that you want to see in particular? For example, the interest linked type whole life portfolio or what a particular block, if any. What kind of effect has the co-insurance from last year had on your CSM and the KICS ratio as well? Second question regarding the dividend policies. I'm wondering which would be the higher priority, increasing DPS or boosting the payout ratio itself. When you mention recurring profit or ordinary profit, what is the exact meaning from the company's point of view?
Is it the amortization, the release, of CSM, and what criteria will apply?
Yes, this is Lee Si-cheon from the RM team. Let me take your first question regarding the co-insurance. As a matter of fact, last year, November, we did enter into co-insurance contract for KRW 500 billion reserves for our interest links whole life products through a asset transfer type policy. We are looking to do additional co-insurance contracts on other blocks of reserves. Last year, we focused mostly on the asset transfer type, but we want to diversify into different type of schemes as well. For example, the asset withholding type of co-insurance will also be considered for added diversification. Also, we want to expand the type of reserves that are seeded to go beyond just the whole life products. It may also include annuity products or other Health Type policies as well.
We think that the effect of the co-insurance policies will be quite positive. It will provide protection against the risk of increase in liability in the event of a drop in interest rates. It will also allow us to hedge against liquidity risk in the event that there is a rise in surrender or termination of contracts. Because of the amount of co-insurance taken out last year was not sizable relative to our original plans, any impact to CSM thus far has been quite minimal.
Yes, this is the CFO. Let me take your second question regarding our payout policy. Regarding your first question, where you asked whether dividend per share versus dividend payout, the ratio, which were of the higher priority?
Of course, both are very important metrics that have to be taken into account. If pressed to answer, which or where we place slightly more weight between the two, I would say slightly more towards the DPS side. Of course, with implementation of IFRS 17, it has become easier to understand our PNL with greater predictability and greater stability in terms of our earnings. That being said, there are still many pending factors at play. External factors, conditions in terms of the global economy and financial environment as well, difference between assumed versus actual numbers as well.
That being said, in order to reduce any volatility, in the interest of our investors, we do think that between the two, we should place more greater priority on providing consistent increase or advancement of the dividend amount itself. Your next question I think was asking about the scope of what we consider to be included within recurring profits. In general terms, of course, all earnings that are produced in the course of our ordinary business management activities are included in the scope. Of course, we intend to include CSM, also any gain or loss from disposal of assets will be included in the scope.
There are certain factors that we saw in 2022, for example, regarding the deferral of the corporate income tax liability or things having to do with our consolidated subsidiaries that really does not have relevance or that can be interpreted as being a result of our business activities. For those certain cases where we believe it is not appropriate to include within the scope, to use as a resource for our dividends, we will fully communicate those types of exceptions with the market.
The next question will be presented by Young-Chae Jeong from NH Investment and Securities.
Yes. Thank you for giving me the opportunity to ask two questions, and I appreciated your guidance on the shareholder return policy in the mid or mid to longer term.
You mentioned a target range somewhere between payout of 35%-45%. I'm curious as to how that range was determined and under what scenario conditions will you go with 35% versus different conditions for 45%. Second, I think somewhere in your presentation you mentioned that you may use some of your capital surplus to cancel some treasury shares. I think this of course will have a bearing on your KICS ratio. In the company's view, what is the optimal level of the KICS ratio? Mindful of the macro environment, also the market dominance or objectives, et cetera. On page 19, I think you suggest 240%, that does appear a little bit high.
What again is the company's view on the adequate level of KICS? What are your underlying grounds?
Let me answer your questions. First, regarding how we arrived at our payout target range or boundary of 35%-45%, what number in particular would be applied under what conditions. I think I did partially answer your question a while ago, but from the perspective that we as a priority have to provide steady advancement of our DPS, we felt that we had to establish some boundaries, which is how we determined that range. If you look historically at our payout ratio, prior to 2019, it was below 30%, whereas after 2019, it was mostly over 35%.
We felt that it would be appropriate to apply 35% as our lower band. Mindful of the externalities that I mentioned before, which could lead to volatility in our earning performance, we felt that perhaps a 10% buffer or so for that kind of volatility would be required, which is how we came up with that 35%-45% range. You asked about the total shareholder return ratio itself. I think, still we are in the process of studying it further, and we cannot provide too much detail at this point. After doing more study, we will communicate with you again on the overall directionality.
이제 그 정할 때 사실은 말씀드린 바, 말씀해 주신 바와 같이 이제, 타겟하는 이제 건전성 수준이 어느 정도냐가 굉장히 중요한 역할을 하는데요. 해외 선진사를 보고 그다음에 해외 선진 보험사가 이제 한, AA+ 이상의 등급을 갖고 있는 뭐 회사들, AXA나 Allianz 이런 데들을 보면은, 보통 타겟 그 KICS 비율, 우리로 치면 KICS 비율, 솔투 비율 이런 것들이 한 240에서 한 220 이 정도 되는 것으로 알고 있습니다.
You asked, what is our target in terms of the KICS ratio, as a measure of our solvency. Well, if you look at the global leading insurance companies like AXA or Allianz, these are AA+ rated or above type companies. Their Solvency II ratio is usually between 220%-240%.
그래서 저희도 이제 말씀을 드린 건 200에서 한 240 정도를 말씀을 드린 건데, 사실은 이 절대적인 타겟 수치라고 하는 것보다도, 초반에 말씀드린 저희 이제 금융 보시다시피 이제 금융 금리라든가 이런 외부 환경이 상당히 변동폭이 큰데 저희가 다시 떨어졌을 때 환경의 변화로 인해서 자본이 더 감소돼서 저희가 최소로 지켜야 하는 건전성의 비율이 얼마냐, 최소 KICS 비율이 어느 정도 수준이냐가 조금 더 중요할 수 있을 것 같다는 생각이 들고요. 저희는 그걸 한 180% 수준을 계획을 하고 있는데 그 정도 하려면 평상시 수준은 지금 200% 이상은 가져가 줘야 그리고 자본 정책을 조금 더 강화된 자본 정책을 통해서 변동성을 보강하는 정책을 취해야 이게 아마 가능하지 않을까. 그게 되면, 한 200% 수준에서도 조금 더 적극적인 아마 주주환원 정책을 취할 수 있지 않을까 이런 생각이 듭니다. 이상입니다.
That was the reference for our range of 200%-240%. This is not necessarily an absolute target per se. As I explained before, there are many sources of uncertainty, including interest rate movements and also other moving parts in the external environment. Given changing conditions, if in the event we are pressed to a certain situation where our capital is squeezed and we have to defend at least a minimum threshold, I think that minimum amount or that KICS ratio, I think is an even more important indicator. We think that the minimum threshold in terms of our capital adequacy is about 180%.
To achieve that in those pressing conditions, that would mean that during our ordinary times, we would have to maintain KICS at above 200% and also strengthen our capital management policy to supplement against what could be an increase in external volatility going forward. With that being said, if we're able to do that, even at KICS of 200%, I think it would put us in a position where we could consider more proactive shareholder return policies.
다음으로 질문해 주실 분은 JP Morgan의 김명욱 님입니다.
The next question will be presented by Myung Wook Kim from JP Morgan.
예. 질문의 기회를 주셔서 감사드립니다. 두 가지 질문을 드리고 싶습니다. 먼저 좀 여쭤보고 싶은 부분은 이제 그 management KPI에 대해서 좀 여쭤보고 싶습니다. 이제 저희가 그 accounting이 바뀌어서 이제 회사의 이제 그, 이제 실체가 좋아지고 이런 부분들은 아무래도 이제 과거의 계약이라고 한다 그러면 그것에 대한 반영이라고 한다 그러면, 실질적으로 이제 그 management의 compensation은 어떠한 metric을 기준으로 해가지고, 좀 정해지는지. 2023년에 아무래도 지표들이 많이 바뀌어서 그 부분을 좀, 공유해 주시면 감사를 드리겠습니다. 그리고 이제 보면은 사실 그, 이제 그 보험에 대한 부분도 있고, 이제 자산운용에 대한 부분도 있고, 또 이제 그 디지털에 대한 부분도 있고 그래서, 이제 그, 이제 management가 실질적으로 올해 그 이제 capit allocation이나 아니면은 그 이제 계획을 짜실 때 어떤 부분이 가장 중요하고 또 그런 부분 어떻게 이제 meet 했을 때 더 성과보상이 이루어지는지 알고 싶습니다. 두 번째 여쭤보고 싶은 부분은, 이 신계약에 대한 부분입니다.
이제 아무래도 이제 보유계약 가치가 이제, 아, 보유계약 자체가 좀 이렇게 감소하는 아니면은 정체되고 있는 이 그 산업의 국면에서 좀 궁금한 부분이 이 이점오에서 삼조 정도 되는 이 신계약이, uh, 이 지속될 수 있는 그 기간이 어느 정도로 지금 현재 management는 예상을 하고 계시는지 그 부분 말씀해 주시면 감사드리겠습니다.
Yes. Thank you. I would also like to ask two questions. First, regarding management's KPI. With the change to the accounting scheme, the actual fundamentals of the company can be more well represented, which of course is based on past contracts written. In terms of management compensation, given how recently the metrics have largely changed, what set of metrics will your compensation be measured against? If you could share the KPIs, I would appreciate it. It looks like you have different parts of your business that you are working on, insurance, asset management, digital. In terms of this year's capital allocation plans, which are the more important parts, and how does that link to your management performance compensation?
What kind of targets have to be met for what kind of compensation? Second question regarding new business. With the industry, the total, you know, in-force contracts either flat or declining, you said you expected about KRW 2.5 trillion-KRW 3 trillion in new business every year. How long do you think that you could expect that kind of volume of new business going forward? What is the management's expectation in terms of the sustainability, the timeline?
Yeah. Yes, this is the head of the support team. Let me take your question. Even with adoption of IFRS 17, the management stance centered around greater operational productivity and efficiency remains unchanged.
Going forward in the insurance space, we will continue to work to strengthen our market dominance and also better manage our earnings centered around profitability. Under the new regulatory or accounting scheme, the biggest factor that will have the largest impact on our bottom line will be the size of our CSM balance. Of course, the underlying assumptions in terms of our efficiency metrics like persistency, the expense ratio, loss ratio, et cetera, will have a large bearing on the CSM. So for the company and also management KPI, not only the existing revenue and also insurance business-related metrics, not only will they continue to be important, but we will place added focus on those efficiency measures as well. Yes.
This is Kim Jong Min, head of the CPC planning team. Let me take your question regarding for how long we think we can manage that certain scale of new business CSM. As an insurance company, obviously, we need to continue to generate CSM in order to enjoy and run a profitable business. Over the last several years, the protection market overall has been maintaining a size of about KRW 100 billion. Of that pie, we have been achieving about KRW 12 billion in sales. Assuming that this size of the addressable market is maintained going forward, we believe and intend to add on about KRW 3 trillion in additional CSM every year.
In terms of our strategy to make sure that that piece does not decline, well, over the years, we have been focusing on reducing the share of whole life or savings type products in our product portfolio. We've also been moving more aggressively toward the health-related policies, and that is where we are in competition with the other P&C providers. We want to be more aggressive and also flexible, introducing new type of health-related products so that we can grow that part of the market to ultimately increase our CSM.
This is the CFO. Let me just add two more comments. From three years ago, we actually have been making continuous investments, for example, the twenty thirty strategy, digitalization, other investments into health management type schemes as part of that larger vision.
Still we are in the very early stages, and it has not yet been firmly established as one large pillar within our business per se. We're still in the early phase where we're testing the possibilities and trying to establish scale. I think we're not yet at the phase where we can talk about capital allocation across the different business areas to assess the performance and to share the, or to talk about the compensation reflecting the performance yet. I think now at this stage, it's up to the top management to take the initiative and really start and also scale investments into future areas by different business lines and define KPIs, receive assessment on performance achieved. I think we're now at the stage of setting this up.
How long can we expect to secure that certain size of new business CSM? Certainly there are many reasons for concern. For example, the decrease in the population overall is largely expected and to be expected. There are, you know, these types of factors to the downside weighing on the markets. There are other reasons why we don't necessarily have to be too negative about the future prospects because we have actually done many analysis of the demographic change ourselves. Our finding is that we still have lots of time remaining until we start to see really very steep or very rapid steepening of the demographic decline. Even according to the government outlook, they're forecasting that it may start only 20 years from now.
until that time comes, I think again, we will be focusing on the very promising health policy market, which invariably can only grow. as long as we strengthen our presence in the health policy space, I think we can maintain our CSM. also we want to extend our business domain beyond just insurance. we think certainly health-related management or maintenance services will be very key. that's connected to the various platform initiatives that I explained before. if we make that kind of preparation quite steadfastly, we will be able to continue to accumulate our target CSM, if not more.
다음으로 질문해 주실 분은 DB금융투자의 이병건 님입니다.
The next question will be presented by Byung-gu n Lee from DB Financial Investment.
안녕하세요. 저 DB Financial Investment Byong-gun Lee입니다. 자세한 설명 감사드리고요. 두 가지만 좀 여쭙겠습니다. 하나는 계속된 질문 드려서 죄송하긴 한데요. 배당 관련돼서 워낙 관심이 많아서 간단하게 직접 말씀을 드리면, 올해의 배당은 작년 실적에 대해서, 별도 기준 실적이 안 나오면서 배당이 별로 늘지를 않았고, 그래서 이제 Sonbo에서 제일 큰 회사고 배당의 절대 금액도 뒤집힌 상황인데요. 저희가 말씀 주신 레인지에서 생각을 해보면 DPS가, 최소 20% 이상은 증가를 해야 되는 상황이라고 보고요. 일반적으로 감독당국이나 이런 데 압력 같은 걸 놓고 생각을 하면 한꺼번에 배당의 증가가 그렇게 많이 나올 수 있겠느냐, 뭐, 이런 우려들을 시장에서 하시는 것 같습니다. 그런 데 대해서, 최소한 이 레인지는 지킨다라는 얘기라든가, 또는 그런 식의 의지를 한 번 더 말씀을 해주셨으면 합니다. 두 번째는 신규학과 관련해서 가장 큰 거는 역시 채널이라는 생각이 드는데요.
어, 여전히 강력한 설계사 채널을 가지고 계시지만, 사실 고령화되면서 그 채널의 노화 현상이라는 건 우리가 고민을 안 할 수 없는 게 사실이고요. 그렇다면 GA 쪽에 대해서 강화가 필요한데 사실 GA 시장을 최근 보게 되면, 어, 경쟁 선보사들이나 이런 쪽은 자본을 집어넣는다든가 하는 식으로 굉장히 시장에 적극적으로 개입되고 있는 것으로 보입니다. 어, 사실 삼성생명이 뛰어드신다면 물론 충분히 영향력을 행사하실 수 있겠습니다만, 어, 시간상 보면, 어, 자본제휴라든가 또는 GA 시장 재편에 적극적으로 우리가 개입할 수 있는 기회가 과연 뭐 사, 오년까지 열려 있겠느냐라는 우려도 저희는 할 수밖에 없는 게 사실입니다. 그래서 기본적으로 GA 시장에 대해서, 어, 보다 inorganic하게 접근하실 수 있는 가능성은 없다고 보시는지 말씀해 주셨으면 합니다.
Yes. Thank you for the opportunity. I will ask two questions. First of all, I'm sorry that I keep on asking a similar question to others, but dividends are certainly a big source of interest for us all. It does seem that last year's results on a separate basis actually were not high, and therefore there was not a very sizable increase in dividends. Compared to the largest P&C player, actually there's been sort of a reversal, and your dividends are now below. In terms of the DPS, I think the market view may be that at the very least, it should grow again by at least 20% or more from current levels.
Given the pressure from the regulatory authorities, I think the market is questioning whether that kind of increase could be viable just in one go. Could you just remind us again about the minimum range that you are firmly committed to defending in all cases? Second, regarding new business, I think a big part of your new business plans will be the channel side. You still have a very strong FC exclusive channel, but it is certainly experiencing aging, which is a concern. That will mean that you may have to strengthen your GA channel or your presence on the GA market. If you look at the P&C players, they are actually more proactive, making greater investments, per se.
If Samsung Life does decide to move in, I think that you could wield significant influence. Given the different conditions that are at play, there are concerns again that in the next four or five years at least, you know, there are questions whether you could grab a big opportunity on the GA market or not. What are your plans regarding GA market? Could potential, you know, M&A opportunities be included in your plans?
네, 경영진 실장입니다. 배당 관련된 질문 답변을 드리겠습니다. 지금 상태에서 사실 뭐 말씀주신 기대치나, 투자자들의 기대 부분은 충분히 알고는 있습니다마는 지금 상태에서 확정적으로 어떤 minimum line라든가 이런 부분을 말씀드리기는 조금 빠르지 않나라는 생각이 듭니다.
Yes, this is a CFO. Let me comment on your question regarding dividends. I do know what the investors' expectations are regarding where we stand now, but I would still say it's too early for me at this stage to say in definitive terms what our, you know, absolute minimum line may be.
2022년 배당, 그러니까 2022년, FY 2022에 대한 배당은 사실은 아까 정상 이익 기준으로는 배당 성향을 상당히 높인 수준으로 사실은 저희가 의사결정을 한 거고요. 그래서 그 부분도 이제 여러 분야, 부분에서 우려를 나타낸 부분도 있었지만, 사실은 이제 이런 기조를 이어가야 한다는 그런 정책하에서 의사결정이 내려진 부분이고요. 내년 배당 것도 이제 이익이 증가되는 만큼 안정적으로 증가될 것이지만, 좀 아직은 변수가 많기 때문에, 일단 1Q 손익 이런 부분을 지켜보면서 추가적으로 소통을 드리도록 하겠습니다.
Regarding our dividends for full year 2022, relative to the actual performance achieved, our decision was to maintain the increasing trend, and we applied a high payout ratio. There were some concerns about the ratio, but again, we decided to go ahead because we wanted to maintain that kind of steady, consistent upside. Into next year, as our profit grows, we believe that the dividend, the payout will also increase in a stable manner. Right now, because there are so many outstanding factors that are not determined yet, I think we would still have to observe, watch and see how our P&L comes out in the first quarter, and then we would be able to communicate further with you.
Yeah.
Yes. This is the head of the CPC Planning Team. Let me take your question regarding the channels. As you mentioned, in terms of managing our business as an insurance company, the two most important parts are, of course, the products and the channel side. We have really observed rapid change in terms of the channel space, which we are taking very seriously. We are giving a great deal of thought to the increasing trends where the channels are becoming increasingly non-exclusive. We began our discussions on how to react to these changing trends several years back. More recently, we have been really shaping our direction going forward. We have been engaging in consultation with McKinsey and Boston Consulting.
Based on our discussions and what we have heard from them, we believe that as the number one player, how we address the rapidly changing GA market should be different versus the other competitors. Also, because we have a very strong, very highly competitive exclusive channel, we are seeking to reinforce that competitive advantage and also adopt a hybrid method in response to the non-exclusive channel developments. If you look at our FC exclusive channel headcount, it's about 21,000 persons. Although this is not widely known outside of the company, we also have additional 7,000 or so of non-exclusive planners, the AFCs and other financial service providers that we work with. It's a mixed hybrid pool of somewhere between 28,000 and 29,000.
For the exclusive FC channel, they are mostly focused on selling the high value add type products. Whereas the non-exclusive channel, they're mostly handling the lower margin profile type products given saturation of the market and intensifying of competition with different companies increasing their promotional budgets to be more competitive. Overall, our policy is to maintain the strength of our exclusive channel while also addressing the non-exclusive channel and market. We are in fact reviewing many means, including inorganic and many opportunities as well. Although this has not been, you know, disclosed to the market, we already in fact are engaged in this type of activity to strategically advance into the inorganic, or excuse me, the non-exclusive space.
We intend to make capital investments to use the non-exclusive channel to offer more financial services.
The next question will be presented by Dong-Kwan Kim from Hanwha Investment & Securities.
Yes. Thank you for the opportunity to ask. First, I would like to ask about the new scheme. I apologize for continuing to ask questions along similar lines, but I think it's mostly because you have been very forthcoming with your data and communications, which is why we keep on asking. I'm interested in the components of CSM.
Other than the new business CSM that are newly accumulated, and then the CSM that is amortized and released, other than those two components, are you seeing any great movement or swings in terms of volatility from other factors like accretion of interest or any adjustments to the capital account? If you could provide some pointers in terms of the overall movement trends, I would appreciate it. Second question regarding new business, particularly for the annuity type products. It seems that in the fourth quarter you registered a loss in terms of the loading margin. Was that because of an increase in, you know, refund payouts made in the fourth quarter, or could you explain?
Yes, this is Head of the Actuarial Team, Jae .
Let me take your question regarding the first, the new regulatory scheme. Assuming that it is adopted in 2021, what kind of movement or changes have we seen in 2022? Before I present more detailed numbers, I would like to first begin by saying that because we had been preparing ahead of IFRS 17 adoption for the last two, three years now, as of 2022, there weren't any big swings from adjustments in other factors as may have been part of the market's concerns.
Although the numbers are not final, closing numbers, I would say that in 2022 over the course of the immediate prior year, we accumulated a total of KRW 3 trillion in new business CSM, which is of course was added on to the in-force CSM that we had to make up the total balance. In terms of interest accrual, we applied accretion rate of 3.1%, that is at the end of 2021. Because the change to the discount rate, in line with changing market rates was reflected under OCI. There was no change or impact on our PNL from the changing market rates. Yes. I think over today's presentation, we have often mentioned the importance of efficiency metrics.
I think under IFRS 17, in terms of managing our earnings, the most important things that we have to manage very well are first, our assumptions, and then second, the difference between our assumed and actual numbers. In terms of the number for 2022, our adjustment from the difference in assumption versus actual was managed under KRW 50 billion, which is not big in comparison to the size of our company. We intend to manage our company again with a focus on the efficiency measures. Although we are aiming for zero difference between assumption versus actual, you know, reducing it to 0 of course is impossible. Nonetheless, we think that we'll be able to manage current levels, hold current levels quite steady for the next two, three years out.
Yes, this is Oh Sung yong from the support team. Let me take your question regarding our loading loss in the fourth quarter. I will try to explain in detail, but if you need additional information, please do contact our IR team later on. There are differences between IFRS 4 versus IFRS 17, so I'd like to make that kind of distinguish ment as I explain. In the fourth quarter, we did see our loading margin decrease versus the prior year by - KRW 90 billion. In terms of the reasons for the drop, well, our assumed expense, loading expense actually increased by KRW 230 billion. Our actual loading expense increased by KRW 63 billion.
What happened was last year in November through December, we had a single payment type hybrid product that we released onto the market. It's hybrid applying a crediting rate after year five. We sold KRW 1.7 trillion worth of this new product through our exclusive channel, KRW 200 billion worth through our banca channel. Combined, we did KRW 2 trillion in sales of this particular product. For this hybrid annuity product that I was explaining, according to the plan, at year five, we pay out a bonus for long-term persistency, but that actually was deducted as a one-time expense at the time of sale as part of the assumed loading expense.
This was the primary reason behind the one-off change that we observed and recorded in our expense or loading margin in the fourth quarter. Other than the hybrid annuity type product, in the fourth quarter, our Health Type products did particularly well. These tend to have higher persistency and more favorable margin profiles. Both plus and minus effect in terms of the assumed expenses. Again, it was mostly the increase in sale of this hybrid annuity product that led to an increase that I mentioned in actual expense, the loading expense. In the fourth quarter, there were also additional cost items, payments or contributions towards the depository service, for example.
Through the sale of this hybrid product, we were able to secure KRW 100 billion in CSM, which will start to be released into profit over the course of 2023.
The next question will be presented by Jung-Hoon Kim from NH-Amundi Asset Management.
Yes. I would like to just ask a question, just to clarify, although I think you may have explained it in previous occasions, what is the classification applied to PEA, the Policyholder Equity Adjustment, under IFRS 17? Could you provide more of a breakdown in terms of the supplementary Tier 2 capital to KRW 25 trillion? Yes, I'm Head of the Actuarial Team. Let me take your question regarding the participating type product or contracts.
Regarding PEA, you know, the entry of PEA in our accounts. Pursuant to an interpretation from the FSS received at the end of last year, the entry was changed from the capital account to the liability account. Regarding the regulatory authorities plan to improve the policyholder share scheme. Although it has not been publicly announced, I understand that the authorities are planning to introduce this kind of improved scheme within 2023.
Yes. I'm head of risk management. Let me take your question regarding the supplementary capital and also the transitional measures. In terms of the breakdown of our Tier 2, we have a surplus in excess of our surrender value reserves, which amounts to KRW 20 trillion.
There is a portion of valuation gain or loss that are allocated for policyholders, which amounts to about KRW 4 trillion. Regarding the transitional measures that are approved by the FSS, at this time we have no plans to apply