[Edaily Reporter kyoungeun kim ] Hana Securities announced on the 14th that it is maintaining its “Buy” rating on SamsungFire&MarineInsurance(000810)and raising its target price to 785,000 won, following the company’s strong second-quarter results, in which net income attributable to shareholders exceeded the consensus estimate by 12.7%. The analysis notes that expectations for increased dividends are likely to continue into the second half of the year, supported by factors driving earnings improvement.
Ko Yeon-soo, an analyst at Hana Securities, stated in a report released that day, “Consolidated net income attributable to shareholders for the second quarter was 737.7 billion won, exceeding the consensus estimate (654.6 billion won) by 12.7%,” adding “Insurance operating profit stood at 552.8 billion won, up 17.1% year-over-year and 3.3% quarter-over-quarter, while auto insurance operating profit reached 29.6 billion won—an improvement of 28.8 billion won year-over-year—and returned to profitability compared to the previous quarter.”
Regarding the target price upgrade, the firm explained, “While uncertainty remains regarding the method of shareholder returns for SamsungElectronics’ special dividend, we expect that if the funds for the special dividend are distributed over 3 to 5 years, this could result in an additional 3,700 won or more being reflected in the annual dividend per share (DPS).”
Profit from long-term insurance stood at 440.3 billion won, continuing its growth trend compared to both the same period last year and the previous quarter. Although the variances in insurance claims and operating expenses worsened by 13.8 billion won and 18.8 billion won, respectively, compared to the same period last year, this was due to a reversal of loss-bearing contract costs of approximately 54.4 billion won (43.5 billion won attributable to actuarial assumptions) resulting from the impact of actuarial assumptions in the second quarter. Profit from general insurance amounted to 82.8 billion won, an increase of 25.6 billion won year-over-year. The company posted solid results as the loss ratio improved by 6 percentage points year-over-year due to a decrease in major claims.
New business CSM (Contract Margin) stood at 615.6 billion won, down 1.8% year-over-year and 14.5% quarter-over-quarter, falling short of expectations. This was due to a decline in the new business CSM multiple from 14.1x to 13.6x, driven primarily by a decrease in protection-oriented life insurance products, despite a 2% quarter-over-quarter increase in new business on a monthly premium equivalent basis. To achieve the annual new business CSM target of 2.9 trillion won, preventing a further decline in the new business CSM multiple during the second half of the year is expected to be critical.
Investment income totaled 425.5 billion won, up 20.0% year-over-year and 17.4% quarter-over-quarter. The company posted solid results, driven by expanded valuation gains on securities due to a strong stock market and a one-time gain of approximately 38 billion won from equity method income related to Canopius.
The K-ICS ratio stood at 282.8%, up 12.7 percentage points from the previous quarter, while the Tier 1 capital ratio rose 35.3 percentage points to 219.9%, maintaining stable levels.
With the introduction of the managed care system in July, insurance payouts related to manual therapy may decrease by approximately 30 billion won in the second half of the year. Analyst Ko stated, “While it is regrettable that the CSM multiple for new business is likely to decline due to changes in actuarial assumptions, given that the profitability-focused sales strategy is continuing, achieving the annual new business CSM target of 2.9 trillion won will be possible if we can prevent a further decline in the margin multiple in the second half of the year.”