It was a year of unprecedented social challenge in 2020 as the COVID-19 pandemic wreaked havoc on livelihoods and economies at an unprecedented scope and scale. We at Korean Re have been taking every possible action to keep our employees and businesses safe from the current crisis. Our top priority now is the protection of our employees, our business partners and our neighboring communities.
Korea as a nation has been recognized in the global community for its fast and well-organized response to the pandemic and transparent disclosure of infection/death statistics. It has one of the most vigorous and meticulous contact tracing systems in the world. Public health officials collect every piece of personal data possible to question people about who they have been in contact with since their first symptoms and find any connecting link between COVID-19 patients in order to mitigate the spread of the pandemic.
Protecting the Health of Our Employees
Based in Seoul, Korean Re has been able to respond to the pandemic swiftly in accordance with its Business Continuity Plan (BCP), which was built upon its experience with the outbreaks of novel influenza A virus and MERS infections in the recent past. Under the BCP, employees divided into two groups came to the office alternately in three types of working-hour schemes when the number of new confirmed cases spiked.
All employees have been in full compliance with basic rules for personal hygiene and social distancing. In the office, everyone is required to wear protective masks. Business trips, meetings, and all other face-to-face contacts are restricted and replaced by calls or video conferences. Head office entry/exit point controls and self-quarantine measures have been strengthened to protect our workplaces and keep them safe from external dangers. Face masks were at times in short supply at an early stage of the outbreak, so we provided them to employees to ensure their safety, with hand sanitizers being put in place in every corner of our offices.
Our overseas branches and offices have taken all necessary actions following their local authority’s guidelines, and we at the head office have been constantly updated on any specific developments. Fortunately, until now, we have seen no infected cases among Korean Re employees. Still, we will not let our guard down under any circumstances. Rather, we will keep ourselves more vigilant under the leadership of our contingency management committee.
Providing Support to the Financially Distressed
As a responsible business, we strived to support our society and communities at a time of real need. To this end, we participated in a collective campaign to provide support to households suffering from financial distress in the aftermath of the pandemic outbreak. Under the campaign, relief funds were provided to college students from households struggling financially. This was one of the many social outreach programs led by the General Insurance Association of Korea, and we actively support its charity programs designed to help people in need and make a positive impact on society.
Ensuring Business Continuity
On the business front, multiple approaches have been deployed to make sure that our business is operated as stably as possible. In our view, there are no significant impacts on reinsurance operations both on domestic and overseas businesses, as communicable diseases or losses from pandemics are typically excluded from standard policies. Economic recession and inactive in-person sales of personal-line insurance products may lead to top-line growth being lowered than expected. However, underwriting results are likely to improve in some lines of business, given that auto and medical expense insurance claims have decreased due to fewer hospital visits and less driving.
Although the latest stress tests tell us that there would be no direct impact on the investment side, our Risk Management Team is taking proactive actions to protect against any market risk. More than half of our investment portfolio is composed of bonds with very limited stock exposure. Korean Re’s investment portfolio is sound and stable, and we will continue to monitor market movements and take timely actions when needed for any upcoming changes.
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Even if the COVID-19 situation is prolonged further, our investment yield may go down slightly, but not seriously. Korean Re has a sound bond portfolio, the fundamentals of which remain robust enough to sustain our risk appetite and tolerance. Even in a worse-case financial crisis, let alone the current COVID-19 impact, our capacity is sufficient to fully meet the required solvency level. Further to that, we are making progress in developing more sophisticated and upgraded models for pandemic risk at the moment.
We at Korean Re will ensure that our clients are to be served with confidence and stability. Our operational direction and shareholder-friendly policies will remain unchanged. Any potential changes related to COVID-19 circumstances will be communicated to all stakeholders as quickly as possible. Also, we will closely watch economic indicators linked with our business results, and any impact likely to arise from the deterioration of economic conditions will be reported to our clients and partners.
Ensuring Business Continuity
On the business front, multiple approaches have been deployed to make sure that our business is operated as stably as possible. In our view, there are no significant impacts on reinsurance operations both on domestic and overseas businesses, as communicable diseases or losses from pandemics are typically excluded from standard policies. Economic recession and inactive in-person sales of personal-line insurance products may lead to top-line growth being lowered than expected. However, underwriting results are likely to improve in some lines of business, given that auto and medical expense insurance claims have decreased due to fewer hospital visits and less driving.
Although the latest stress tests tell us that there would be no direct impact on the investment side, our Risk Management Team is taking proactive actions to protect against any market risk. More than half of our investment portfolio is composed of bonds with very limited stock exposure. Korean Re’s investment portfolio is sound and stable, and we will continue to monitor market movements and take timely actions when needed for any upcoming changes.
Even if the COVID-19 situation is prolonged further, our investment yield may go down slightly, but not seriously. Korean Re has a sound bond portfolio, the fundamentals of which remain robust enough to sustain our risk appetite and tolerance. Even in a worse-case financial crisis, let alone the current COVID-19 impact, our capacity is sufficient to fully meet the required solvency level. Further to that, we are making progress in developing more sophisticated and upgraded models for pandemic risk at the moment.
We at Korean Re will ensure that our clients are to be served with confidence and stability. Our operational direction and shareholder-friendly policies will remain unchanged. Any potential changes related to COVID-19 circumstances will be communicated to all stakeholders as quickly as possible. Also, we will closely watch economic indicators linked with our business results, and any impact likely to arise from the deterioration of economic conditions will be reported to our clients and partners.