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					                                     Hope! always with you   21




Financial Section 1

Management's Discussion & Analysis
                           Management's Discussion & Analysis
   22
Overview
In FY05, Korean non-life insurance industry faced another year of fierce competition, especially in auto insurance sector as
the full-scale introduction of low-priced online direct auto insurance policies triggered price competition among the non-
life insurers. Online auto insurance marketers aggressively joined the market in light of capturing a portion of this poten-
tially huge growth opportunity. Many existing auto insurers joined the price competition as they attempted to protect their
market share against new comers. While intense competition made it demanding enough for non-life insurers to maintain
their profitability, things became worse for the non-life insurers as auto loss ratio significantly deteriorated due to multi-
ple reasons such as increased number of auto accidents after the expansion of five working days across Korea and the
government's grant of special amnesty to millions of traffic violators in commemoration of the Independence Day. To cope
with worsened competitive dynamics, non-life insurers placed more emphasis on brand marketing and development of
differentiated services in auto insurance market. Most non-life insurers also shifted their attention to securing growth
from the fastest-growing long-term insurance as it provided higher profitability than auto insurance.


For the new future growth opportunities from environmental & regulatory standpoint, following the latest introduction of
new corporate pension reform in late 2005, Korean non-life insurance industry expects to see more of new future growth
opportunities coming from opening-up of private health insurance market and possibly others such as guarantee insur-
ance. What's more, the ongoing issues like allowing trust business to insurers and the introduction of new capital market
integration act are likely to accelerate business crossovers of financial institutions in Korea, thereby providing huge
growth opportunities to non-life insurers.


Amidst adverse and challenging business conditions in non-life insurance industry during FY05, LIG Insurance was able to
accomplish excellent operating results. A few examples of the major accomplishments include: (1) becoming the third
largest non-life insurer in Korea, up from fourth through market share gain up to 14.8% from 14.2% in FY04, (2) success-
fully maintaining market leader position in bancassurance segment with market share of 27.1%, and (3) achieving the
highest gross investment yield at 6.9% among its peers.


In FY05, as an on-going effort to generate steady growth in the non-life insurance market, LIG Insurance committed itself
to diversifying distribution channels which will help the Company maximize and exploit the future growth potential. Not
only did the Company reinforce its core channels of traditional off-line sales forces, but it also sought to expand new chan-
nels like bancassurance, home shopping channels, etc.

Condensed Income Statements                                                                                    (KRW in billions)
                                                           FY02                 FY03                FY04                FY05
 Direct premiums written                                 2,577.4             2,706.7              3,044.4            3,484.9
 Net premiums earned                                     2,105.4             2,275.0              2,556.0            2,937.8
 Losses                                                  1,592.3              1,792.8             2,047.9            2,359.0
     Loss ratio                                           75.6%               78.8%                80.1%              80.3%
 Net expenses                                              555.5               588.2                621.2              713.9
     Expense ratio                                        26.4%               25.9%                24.3%              24.3%
 Underwriting income                                      (42.3)              (106.0)              (113.1)           (135.2)
     Combined ratio                                      102.0%               104.7%              104.4%             104.6%
 Investment income                                         153.7               189.4               202.9               228.0
 Net increase in catastrophe reserves                       18.4                 19.6                22.8               30.6
 Net income                                                 64.6                 41.4                45.1               35.5
 Adjusted net income                                        82.9                 61.0                67.8               66.1
                                                                                                                 Hope! always with you                23




   Underwriting Income                          Investment Income                                    Net Income
   (KRW in billions)                            (KRW in billions)                                    (KRW in billions)
   FY02        FY03       FY04       FY05




                                                                                228.0




                                                                                                        82.9*
                                                                       202.9
                                                           189.4
      (42.3)




                                                                                                                                  67.8*
                                                                                                      64.6




                                                                                                                                              66.1*
                                                                                                                       61.0*
                                                  153.7




                                                                                                                                45.1
                                                                                                                     41.4




                                                                                                                                            35.5
                (106.0)


                           (113.1)


                                      (135.2)




                                                FY02      FY03        FY04     FY05                  FY02          FY03        FY04       FY05


                                                                                                  * Adjusted net income (Net income +
                                                                                                    Net increase in catastrophe reserve)

Condensed Balance Sheets                                                                                                       (KRW in billions)
                                                          Mar.03                        Mar.04                  Mar.05                    Mar.06
 Invested assets                                          3,162.4                       3,375.9                 3,783.9                   4,343.6
 Insurance accounts receivable                               118.8                        133.5                   113.6                      99.3
 Other assets                                               465.6                        537.5                   742.0                     926.2
 Total assets                                             3,746.8                       4,046.9                 4,639.5                   5,369.1
 Policy reserves                                          2,749.4                       2,961.3                 3,429.8                   3,947.3
 Catastrophe reserves                                       260.9                        280.5                   303.3                     333.9
 Insurance account playable                                 193.8                         194.5                   182.0                     191.6
 Other liabilities                                          304.9                        303.3                   360.7                     495.7
 Total liabilities                                        3,509.0                       3,739.6                 4,275.8                   4,968.5
 Common stock                                                  30.0                       30.0                    30.0                       30.0
 Capital surplus                                               49.8                       49.9                    50.0                       50.7
 Retained earnings                                          165.6                         196.2                  229.6                     226.9
 Capital adjustments                                          (7.6)                        31.1                    54.1                      93.0
 Total shareholders’ equity                                 237.8                        307.3                   363.7                     400.6
 Total liabilities & shareholders’ equity                 3,746.8                       4,046.9                 4,639.5                   5,369.1


Korean non-life insurance industry posted KRW 23,620 billion of direct premiums written during FY05, up 9.9% from FY04.
LIG Insurance reported KRW 3,484.9 billion of direct premiums written during the same period, outgrowing the industry
average growth rate by 4.6%p. The Company also increased its market share to 14.8% in FY05, up from 14.2% in FY04. Net
premiums earned also rose by 14.9% to KRW 2,937.8 billion in FY05.


However, LIG's underwriting profitability materially deteriorated to post underwriting losses of KRW -135.2 billion in FY05
from KRW -113.1 billion in FY04. The deterioration in underwriting profitability was mainly attributable to the increase in
auto loss ratio. Although loss ratios of the other segments (commercial and long-term) improved, sharp rise in auto loss
ratio more than offset the improved loss ratios from the other segments, thereby raising up the company-wide combined
ratio to 104.6% in FY05, up 0.2%p from a year ago.


On the other hand, LIG Insurance generated superb investment income of KRW 228.0 billion in FY05, up 12.4% from KRW
202.9 billion in FY04. The Company once again posted the highest gross investment yields of 6.9% among its peers.
In spite of excellent investment returns generated in FY05, LIG's net income decreased to KRW 35.5 billion in FY05, down
21.3% from a year ago on the back of magnified underwriting losses. However, adjusted net income was largely flattish
year over year at KRW 66.1 billion in FY05 vs. KRW 67.8 billion in FY04 thanks to the increased catastrophe reserving.


In FY05, total assets grew 15.7% to KRW 5,369.1 billion from a year ago on the back of solid sales growth and market share
gain. Meanwhile, total shareholders' equities also increased by 10.1% to 734.5billion from a year ago.



LIG Market Share Trend by Lines (%)



                                                                     14.8
                                                       14.2
    Total                                   13.7
                 13.3         13.5
                                                       18.2          18.0
                              17.4          17.7
    Commercial
                 16.8                                                15.7
                                                       15.0

    Long Term                               13.9
                              13.8
                 13.6
                                                                     12.5
                 12.1                       12.1
    Auto                      11.9                     11.9



                 FY01         FY02         FY03         FY04        FY05




Underwriting Performance
Fiscal year 2005 was another year of intensifying competition for non-life insurers, especially in auto segment. New
entrants like direct auto insurers gained market shares through their low-price strategies, and as a result of this rising
competition, many non-life insurers saw deterioration of the profitability in their auto lines.


Non-life insurance can largely be classified into three categories: commercial, auto, and long-term lines. In terms of the
sales mix, commercial line makes up about 12.5%, auto line 37.2%, and the rest 50.3% belongs to long-term line. Over the
past years, long-term line has shown the highest growth rate, and is becoming an increasingly important segment to non-
life insurers.


Total direct premiums written by non-life insurers in Korea increased 9.9% to KRW 23,620.4 billion in FY05 from KRW
21,493.4 billion in FY04. The solid growth rate was achieved on the back of robust growth in underwriting performances of
long-term lines, which grew 15.7% over the previous year.


Even under more competitive market conditions, LIG Insurance continued to gain market share up to 14.8% in FY05, up 0.6
%p from 14.2% in FY04. LIG recorded KRW 3,484.9 billion of direct premiums written in FY05, up 14.5% from KRW 3,044.4
billion in FY04. Total net premiums earned by the Company also went up by 14.9% to KRW 2,937.8 billion in FY05 from KRW
2,556.0 billion in FY04. The strong growth in underwriting performances was mostly attributable to the growth in long-
term lines, which saw growth rate of 20.8% in FY05 compared to industry average growth rate of 15.7%.
                                                                                                                                Hope! always with you                 25




  Direct Premiums Written                                   Combined Ratio
  (KRW in billions)
                                                                             104.7%
                                                            102.0%                           104.4%        104.6%




                                       3,484.9




                                                                               25.9%




                                                                                                   24.3%




                                                                                                             24.3%
                                                             26.4%
                            3.044.4




                                                                                                             80.3%
                                                                                                   80.1%
                                                                               78.8%
                                                             75.6%
                2,706.7
     2,577.4




                                                                                                                                             Loss Ratio
                                                                                                                                             Expense Ratio
                                                                                                                                             Combined Ratio
    FY02       FY03        FY04       FY05                  FY02             FY03              FY04        FY05


In FY05, LIG Insurance's combined ratio slightly went up to 104.6%, up 0.2%p from 104.4% in FY04. The main culprit in
deterioration of the combined ratio was attributable to sharp rise in auto loss ratio during the year. Auto loss ratio signi-
ficantly rose by 5.4%p to 79.2%, while loss ratios in commercial and long-term lines declined by 6.3 and 2.2 percentage
points respectively. Significant deterioration in auto loss ratio resulted in overall loss ratio to rise by 0.2 percentage points
in FY05. Expense ratio remained flattish at 24.3% in FY05. In detail, expense ratios in auto and long-term lines remained
relatively flattish, but that in commercial line showed notable improvements to 24.4%, which is down by 6.6%p from
31.0% in FY04, thanks to the robust growth in net premiums earned in FY05.

Direct premiums by lines


    Commercial Lines                               Auto Lines                                                        Long-term Lines
    (KRW in billions)                              (KRW in billions)                                                 (KRW in billions)




                                                                                                                                                            1,862.3
                                                                                         1,095.1
                                       527.5




                                                                                                                                                 1,542.0
                                                                              1,009.3
                            493.1




                                                                                                                                   1,288.9
                                                                                                                      1,198.8
                                                                     964.3
                 453.5




                                                    941.2
      437.4



                 (106.0)




    FY02       FY03        FY04       FY05        FY02        FY03           FY04       FY05                         FY02         FY03         FY04        FY05



Commercial Lines
The commercial insurance segment consists of fire, cargo, hull, package, engineering, liability, casualty, etc. The com-
mercial insurance industry recorded total direct premiums written of KRW 2,947.6 billion in FY05, up 8.7% from KRW
2,712.0 billion in FY04.


That said, LIG Insurance reported KRW 527.5 billion of direct premiums written in the commercial line, up 7.0 % year over
year, despite fierce price competition among peers and consistent downward pressures from the policyholders on lower-
ing premium rates. FY05, the Company was able to post 47.4% of retention ratio thanks to the increased net premiums
written from the implementation of Gross Xol Treaty for property insurance.
In FY05, the loss ratio from commercial line declined by 6.3%p to 40.7% from 47.0% in FY04. Material improvements in
the loss ratio were partly attributable to the absence of major accidents during the year, and also to the enhancement in
underwriting policies that enabled the Company to structure high portion of its coverage with high quality assets. The
commercial line expense ratio dropped by 6.6%p to 24.4% in FY05 from 31.0% in FY06. Thus, the combined ratio also
improved to 65.1%, down 12.9%p from 78.0% in FY04.


In FY06, LIG Insurance will seek to secure its growth in commercial lines by developing innovative and specialized products
that suit well with customers' requests and needs, and by engaging more aggressively in sales promotion of those products.
The Company will try to ensure its profitability through efficient management of premium rates, optimization of
retention/reinsurance scheme, and improvements in underwriting strategies. The Company targets to generate approxi-
mately KRW 585 billion of direct premiums written in the commercial line in FY06, an increase of 10.8% from FY05. That
said, the Company expects to gain market share of 18.6% in FY06.

Commercial lines

                                                          FY02                 FY03                FY04              FY05
 Loss Ratio                                              50.8%               45.6%               47.0%              40.7%
 Expense Ratio                                           27.5%                23.1%               31.0%             24.4%
 Combined Ratio                                          78.3%               68.7%               78.0%              65.1%


Auto Lines
FY05 was another challenging year for auto insurers in Korea. The auto insurance market recorded total direct premiums
written of KRW 8,781 billion in FY05, up 3.1% year over year. The main culprits of the slow growth in the auto insurance
sector were declining growth rate in the number of newly registered vehicles (3.4% year over year) and fierce price com-
petition triggered by introduction of low-price auto insurance products from online direct auto insurance marketers.


In order to maintain its leadership within such adverse business conditions, LIG Insurance focused on enhancing the com-
petitiveness of its auto insurance brand 'Magic Car'. The Company also developed and launched differentiated products,
which allowed customization of policies based on subscribers' requests and needs. As a result of such efforts, the
Company's direct premiums written on auto line outgrew its peers and recorded KRW 1,095.1 billion, up 8.5% from a year
ago. Its market share within the sector obviously went up by 0.6%p to 12.5%, outgrowing its peers.

During FY05, profitability of the auto insurance segment in Korea materially deteriorated as auto loss ratio surged signi-
ficantly across the industry. The surge in auto loss ratio resulted from the increase in auto repair costs as commodity
prices had considerably risen, increased number of traffic accidents during weekends from expansion of five working
days across Korea, grant of special amnesty to millions of traffic violators in commemoration of the Independence Day,
and dismantling of dummy speed cameras. Against this backdrop, LIG Insurance's auto loss ratio severely deteriorated to
79.2% in FY05, a sharp increase of 5.4%p from 73.8% a year ago. The expense ratio also went up by 0.9%p to 34.5% as
the Company struggled to protect its market share amidst rising competition from online direct marketers as well as existing
auto insurers. As a result, the Company's combined ratio for auto line went up by 6.3%p to 113.7% from 107.4% in FY04.


Although adverse domestic economic conditions and sluggish consumer demands is likely to be prolonged in Korea for
the coming year, LIG Insurance expects that the auto insurance industry will be able to regain its traction on growth
momentum on the back of increased premium rates and enhancements in auto insurance regulations. The Company
expects the total market size of auto insurance industry would reach KRW 9.4 trillion, up approximately 7% year over
year. However, despite positive growth prospects, improvement in profitability of the industry is likely to be limited due
to continued price competitions and heightened auto loss ratio.
In FY06, the Company expects to post KRW 1,140 billion of direct premiums written in auto line. The Company will ensure
its profitability by introducing products with reasonable price based on subscribers' risk profiles, reinforcing systemati-
cal underwriting processes, providing quality customer services, and marketing for strong awareness of LIG brand.
                                                                                                   Hope! always with you   27




Auto Lines
                                                           FY02                 FY03                FY04               FY05
 Loss Ratio                                               67.0%               76.8%                73.8%             79.2%
 Expense Ratio                                            32.8%               34.0%                33.6%             34.5%
 Combined Ratio                                           99.7%               110.8%              107.4%             113.7%



Long-Term Lines
Direct premiums written on long-term lines in the non-life insurance industry reported growth of 15.7% year over year to
KRW 11,892.2 in FY05. Of 15.7% growth, initial premium written grew 24.0% and the in-force premium also grew 15.8%
thanks to the diversified distribution channels and widespread long-term insurance expansion strategy employed by non-
life insurers.


LIG Insurance's direct premiums written on long-term lines grew 20.8% to KRW 1,862.3 billion in FY05, demonstrating the
highest growth among its product lines. LIG Insurance once again posted the highest growth rate in the long-term lines
among its peers, and consequently, gained additional market share of 0.7%p to 15.7%. Although in-force premiums grew
22.5% year over year in FY05 thanks to high level of initial premiums growth posted for the past three years by the
Company, initial premiums written on long-term lines reported a growth rate of 12.8% year over year, which is significant-
ly below the sector average of 24.0%. The disappointing results in initial premiums written were mainly due to tightened
regulation on bancassurance sales and increased competition due to emergence of new channels like telemarketing and
home shopping channels where late comers participated more aggressively. The government tightened its regulation on
bancassurance sales by placing 25% sales limit rule where banks were restricted from selling more than 25% of their
insurance policy sales from any one single insurer (vs. 49% originally).


The long-term line loss ratio improved to a fairly stable level of 86.7% in FY05, down 2.2%p from 88.9% in FY04. The
improvement in loss ratio was attributable to continued sales of risk premium based protection-type policies, on-going
efforts in training underwriting specialists, advancement of the underwriting techniques, and systematic loss ratio control.


In FY06, the long-term insurance sector in Korea is expected to see increasing competitions due to the expansion of vari-
ous new products, such as convergence insurance products, from many non-life insurers to gain market shares in the fast
growing long-term insurance sector. Amidst the challenging business conditions ahead, LIG Insurance will strive to gain
more market share in long-term insurance sector, thereby boosting its sales, and maximize its profitability by diversifying
its distribution channels, introducing a variety of innovative products like policies with financial functions, expanding por-
tion of protection-type products, and improving retention ratios for existing subscribers.

Long-term Lines
                                                           FY02                 FY03                FY04               FY05
 Loss Ratio                                               85.1%               84.9%                88.9%             86.7%
 Expense Ratio                                            21.5%               20.3%                17.5%             18.6%
 Combined Ratio                                          106.6%              105.2%               106.4%            105.2%


Investment Performance
As of March 31, 2006, LIG Insurance had total assets of KRW 5,369.1 billion, up 15.7% from KRW 4,639.5 billion a year ago,
and this increase in total assets is largely in line with solid top line growth trend. Having that said, the majority of the
assets consisted of investment assets, accounting for 80.9% of the total assets. Investment assets of the Company
amounted to KRW 4,343.6 billion, a 14.8% increase year over year.
LIG Insurance's investment assets consist of interest-bearing assets, such as deposits, bonds, and loans, and non-inter-
est-bearing assets, which include equities, and real estates. The principal investment portfolio strategy of the Company is
to focus on controlling market risks by constructing its portfolios with high credit-rated debt securities and collateralized
loans. While complying with its strategy, in FY05 the Company has strategically increased its exposure to loans by 5.7%p
to 37.9% total invested assets while reducing exposure to cash, deposits, and bonds. Household mortgage loans and cor-
porate credit loans were the two notable areas where the Company materially increased its exposures.


    Invested Assets                                   *Gross Investment Yield                           Investment Portfolio
    (KRW in billions)




                                                                                                                                      13.0%


                                                                                                                                                       12.9%


                                                                                                                                                                       12.4%
                                                                                                                     11.9%
                                                                                                             7.3%


                                                                                                                             7.4%


                                                                                                                                               7.7%


                                                                                                                                                               9.8%
                                         4,343.6




                                                                       7.0% 7.0%   6.9%




                                                                                                                                               40.8%


                                                                                                                                                               36.0%
                                                                                                                             41.8%
                                                                                                             50.5%
                               3,783.9
                     3,375.9




                                                        6.2%
      3,162.4




                                                                                                                                               32.2%


                                                                                                                                                               37.9%
                                                                                                                             29.8%
                (106.0)




                                                                                                             23.4%




                                                                                                                                                       6.4%


                                                                                                                                                                       4.0%
                                                                                                                     6.8%


                                                                                                                                     8.0%
   Mar.03 Mar.04 Mar.05 Mar.06                         FY02      FY03      FY04    FY05                Mar.03 Mar.04 Mar.05 Mar.06


                                                   * Before subtracting investment-related               Cash & Deposits Loans
                                                     expenses.                                           Bonds Equities Real estates

In FY05, LIG Insurance's net investment income amounted to KRW 228.0 billion, up 12.4% from KRW 202.9 billion in FY04.
Although total gross investment yield declined to 6.9%, down 1.0%p year over year, the Company once again ranked no.
1 in achieving the highest investment yields among its peers. The interest-bearing assets accounted for 77.9% of total
investment assets with a 6.8% yield, down 1.0 percentage point from previous year's yield of 7.8%. However, non-inter-
est-bearing assets, which accounted for 22.1% of total investment assets, reported a yield of 7.1%, a sharp rise of 3.4%p
from the previous year's yield of 3.7%. The dramatic improvement in non-interest-bearing investment yield was mainly
due to the strong equity market performance in FY05 driven by global liquidity inflows and the Korean equity market re-
rating.


In order to prepare for potential increase in volatility of global financial markets during FY06, LIG Insurance plans to rein-
force its risk management program developed in FY05, which will enable the Company to systematically respond to abrupt
changes in global investment conditions. Furthermore, the Company will focus on improving the quality of its investment
assets.

Investment income by source                                                                                                                   (KRW in billions)
                                                                FY03                          FY04                                            FY05
                                                     Income              Yield       Income          Yield                    Income                            Yield
 Deposits                                               10.2             4.3%               9.7      3.9%                                9.3                    4.2%
 Loans                                                  81.9             9.8%             93.5       8.8%                            114.3                      8.3%
 Bonds                                                  88.9             6.1%             111.5      7.8%                             86.2                      5.8%
 Fixed-income assets                                   181.0             7.2%             214.8      7.8%                            209.8                      6.8%
 Equities                                               34.4            19.0%              19.4      8.6%                             39.6                     13.9%
 Equity-type                                             6.9            17.8%               5.8      17.2%                               8.2                   16.8%
 Real estates                                           (0.9)           (0.2%)              1.8      0.4%                              12.1                     2.4%
 Non fixed-income assets                                40.4             6.4%             27.0       3.7%                             59.9                      7.1%
 Total                                                 221.4             7.0%             241.8      7.0%                            269.7                      6.9%
                                                                                                        Hope! always with you         29




Capital Adequacy
As of March 31, 2006 LIG Insurance's total shareholders' equities, excluding catastrophe reserves, stood at KRW 400.6 bil-
lion, up 10.1% from KRW 363.7 billion a year ago. The catastrophe reserves also rose by 10.1% to KRW 333.9 billion. As a
result, adjusted shareholders' equities, which include the catastrophe reserves, of the Company increased by 10.1% from
KRW 667.0 billion to KRW 734.5 billion as of March 31, 2006.


The solvency ratio of the Company stood at 205.3% in FY05, down 4.2%p from 209.5% in FY04. Solvency margin rose by
10.2% to KRW 754.0 billion in FY05, compared to KRW 684.5 billion in FY04, thanks to combination of increase in the
shareholders' equities and catastrophe reserves. In the mean time, solvency margin requirement increased by 12.4% from
KRW 326.8 billion in FY04 to KRW 367.3 billion in FY05. The minimum solvency ratio required by Korea's Financial
Supervisory Service (FSS) is set at 100% for insurance companies. Consequently LIG Insurance had more than 200% of
additionally available capital to cover unexpected claims and protect its policyholders.


                                                                                                                     (KRW in billions)

                                                           Mar.03                      Mar.04          Mar.05                Mar.06
 Shareholder’s equity                                       237.8                       307.3           363.7                 400.6
 Catastrophe reserves                                       260.9                       280.5           303.3                 333.9
 Adjusted equities                                          498.7                       587.8           667.0                 734.5




    Solvency Margin                            Solvency Margin Requirement                      Solvency Ratio
    (KRW in billions)                          (KRW in billions)
                                                                                                                    209.5%
                                  754.0




                                                                               367.3




                                                                                                           205.0%            205.3%
                                                                      326.8
                         684.5




                                                           294.1




                                                                                                182.5%
              602.8




                                                  278.6
              (106.0)




                                                           (106.0)
     508.4




    FY02     FY03       FY04     FY05           FY02      FY03       FY04     FY05              FY02      FY03      FY04     FY05




Asset Quality
As part of its investment strategy, LIG Insurance has continued to increase its loan asset exposure over the past several
years. Of the total loan assets, household loans accounted for 61.0% and corporate loans 39.0%. Nevertheless overall
asset quality of the investment portfolio has actually improved during FY05 thanks to stricter credit policies. The
Company's NPL ratio improved to 1.4% in FY05, down 1.0%p from 2.4% a year ago. NPL coverage ratio also escalated to
100.6% in FY05, up 21.6%p from 79.0% in FY04.


As for bond investments, LIG Insurance restricted itself from investing into bonds with credit ratings below (BBB-). Of note,
bonds with credit ratings below (BBB-) had accounted for 2.1% of the Company's bond portfolio in FY04. The Company
broadened the portion of bonds with rating of (BBB-) or above by 0.1%p to 7.0% in FY05. Accordingly, the portion of bonds
with credit rating of (A-) or higher increased to 93.0% from 91.0% from a year ago.
Loan Portfolio

                                                            FY03                                      FY04                                                   FY05
                                                    Bal.       Wght.        Yield         Bal.          Wght.            Yield                   Bal.         Wght.      Yield

  Credit                                            21.4            2.1         11.6     28.2                2.3             9.2                19.0             1.1          8.2
  Collateralized                                   297.9           29.0         9.6     443.5               35.7             8.2             628.7             37.6           7.9
  Loans to Policyholders                           261.4           25.4         10.6    298.6               24.0             9.5             326.9             19.6           8.9
  *Loans to Employees                               46.5            4.5         8.0      46.4                3.7             6.0               44.0             2.6           5.9
  Household Loans                                  627.2           61.0         9.9     816.7               65.7             8.6            1,018.7            61.0           8.1
  Credit (Syndicated)                              290.0           28.2         9.4     337.7               27.2             8.3             585.6             35.1           8.5
  Collateralized                                   111.2           10.8         8.6      88.5                7.1             9.5               66.2             4.0           6.5
  Corporate Loans                                  401.1           39.0         9.2     426.1               34.3             8.6             651.8             39.0           8.2
  (Allowance)                                      (22.1)                               (23.6)                                               (24.2)
  Total                                     1,006.3                             9.8    1,219.3                               8.8            1,646.3                           8.3

* Collateralized with their serverance pay




    Loans & NPL Ratio                                                                     Portfolio of Bonds Rating
    (KRW in billions, %)
                                         1,669.4




                                                                                                                                                      0.0%
                                                                                                     1.6%             2.5%           2.1%
                                                                                                                                                      7.0%
                                                                                                                      9.2%           6.9%

                                                                                                     16.4%
                              1,276.8
                   1,090.5




                                                                                                              88.2%
                                                                                             82.0%




      2.6%
                                                                                                                                              93.0%
                                                                                                                             91.0%




                             2.4%
          821.4




                                                                    Loans                                                                                      A-or above
                   2.2%                 1.4%
                                                                                                                                                               BBB-or above
                                                                    NPL ratio
                                                                                                                                                               Below BBB

     FY02         FY03       FY04       FY05                                              Mar.03            Mar.04       Mar.05         Mar.06

				
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