After a contraction in 2019, we reported a 10% increase in our marine and aviation business, writing KRW 418.6 billion in gross premiums in 2020. The growth was mainly derived from two new satellite launch insurance programs. Market-wide rate hardening also supported overall premium growth.
Hull and energy premiums recovered in 2020, growing by 1.7% to KRW 247.9 billion. That was the outcome of our profit-oriented underwriting approaches, such as adequate pricing and an increase in retention for profit-making accounts. We saw our cargo insurance premiums fall by 7.2% to KRW 84.3 billion due to a drop in the war premium rate in the Strait of Hormuz. Meanwhile, aviation insurance premiums surged by 88.7% to KRW 86.4 billion as two new satellites were launched amid hardening of the broader aviation and space insurance market, generating a large bulk of premium income.
Our strategy to become more selective and focus on quality risks over the past several years has turned out to increase our profitability. The combined ratio before management expenses for our marine and aviation business significantly improved to 93.1% in 2020. We have substantially restructured our portfolio and retention scheme in tandem with our profit-oriented underwriting discipline. According to our conservative underwriting guidelines, we have focused not only on ensuring price adequacy and commission readjustments but also on improving the terms and conditions of the coverage provided.
The marine insurance market is expected to grow moderately in 2021 thanks to market hardening and the following rises in premium rates. Accordingly, the reinsurance market for this segment is also anticipated to grow with improved profitability driven by tighter terms and conditions and declining commissions.
These positive market movements will give Korean Re further momentum to optimize its marine and aviation business portfolio and make it more profitable. Our disciplined underwriting and strong capacity mean that we are well placed to take advantage of favorable market conditions and take new business opportunities as they arise. We will continue our efforts to find new sources of growth such as offshore windfarm insurance, while ensuring that stable growth is achieved through marine liability insurance and coverage for builders’ risks of naval vessels.
Gross Written Premiums: Marine and Aviation
(Units: KRW billion, USD million)
|FY 2020 (KRW)||FY 2020 (USD)||FY 2019 (KRW)||FY 2019 (USD)|