In 2017, the Korean economy grew at a pace of above 3 percent for the first time in three years as domestic demand rebounded amid reduced uncertainties surrounding the global economy. Along with the economic growth, consumer prices increased by 1.9 percent, the fastest rise in five years mostly due to upward pressure on the supply side including higher oil prices.

The Bank of Korea raised its key interest rate to 1.5 percent last November for the first time in six years and five months on the back of improved economic indicators. The yield on three-year Korea treasury bonds also went up to 2.135 percent at year-end, representing a year-on-year jump of 50 bps. The Korea Composite Stock Price Index or KOSPI gained year on year by 21.8 percent as of the end of the year thanks to increased corporate profits and capital inflows from foreign investors.

Against this background, we focused on strengthening the profitability of our invested assets, while maintaining a conservative approach to investing, one of our key investment principles.

Our invested assets increased by 5.9 percent to KRW 5,626.3 billion as of year-end thanks to a growth in both investment and underwriting income. Fixed income securities including government bonds and others with high credit ratings continued to dominate our investment portfolio, taking up 36.2 percent of the total invested assets.

We increased portions of foreign and alternative investments (including loans) to boost our investment results and portfolio diversification. Foreign investments, which account for 28.7 percent of the total invested assets, consist mostly of Korean Papers and bonds with global credit ratings of A- or higher. The majority of our alternative investments (including loans), which make up 16.4 percent of the total invested assets, involve senior secured real estate loans and acquisition finance.

We generated KRW 132.9 billion in investment income for the year, excluding foreign exchange gains/losses. Over 41 percent of the investment income came from our bond holdings, which amounted to KRW 54.8 billion. Income from foreign investments was KRW 50.8 billion or 38.2 percent of the total investment income. 

In 2018 we expect to see a continued recovery of the global economy, but there are also uncertainties surrounding the global investment environment such as interest rate hikes by the U.S. Federal Reserve and other major central banks. However, we will continue to maintain our investment strategy that focuses on the stability of investment operations. We will also keep increasing our holdings of foreign investments and alternative investments to generate stable investment returns in the long run.