[Edaily Reporter Kim Hyung-il ] Korea Investment & Securities maintained its target price of 700,000 won for SamsungFire&MarineInsurance(000810)and upgraded its investment recommendation from “Hold” to “Buy.” The firm noted that while third-quarter net income fell short of market expectations, it met analyst estimates, and the company demonstrated relatively stable earnings resilience within the insurance industry despite the sluggish asset market.

On the 13th, Kim Do-ha, an analyst at Korea Investment & Securities, stated that SamsungFire&MarineInsurance’s third-quarter consolidated net income attributable to controlling shareholders was 493.2 billion won, an 8% decrease year-over-year. He noted that while this figure fell short of market expectations (consensus), it was in line with Korea Investment & Securities’ estimates. He explained that both underwriting and investment income remained within the expected range.

Third-quarter insurance profit totaled 395.8 billion won, a 7% increase year-over-year. While earnings from long-term insurance fell short of expectations as indirect operating expenses doubled compared to normal levels, this was offset by better-than-expected profitability in auto insurance. In particular, the difference between projected and actual insurance claims (the variance between estimates and actual results) was favorable compared to both the same period last year and the company’s own estimates. As the cause of the increase in indirect operating expenses could not be identified, it was deemed a one-time factor and was not reflected in earnings estimates.

Investment gains and losses totaled 255.5 billion won, a 23% decrease compared to the same period last year. While the core spread—interest and dividend income minus interest expense—exceeded expectations, this was offset by gains and losses on the trading and valuation of assets, which were 25 billion won lower than expected, as well as a 30 billion won loss on trust operations.

In terms of new business metrics, life insurance revenue increased by 6% compared to the previous quarter, but the margin multiple declined. The new business contract margin (CSM) decreased by 3% quarter-over-quarter due to the impact of reflecting actuarial supervision guidelines in the previous quarter. However, as the negative impact of mid-period adjustments diminished compared to the past, the outstanding CSM balance increased by 2%.

Korea Investment & Securities noted that, despite trading and valuation losses stemming from the slump in asset markets, SamsungFire&MarineInsurance exhibited the lowest earnings volatility among insurance companies. It also viewed the trend of improved profitability in long-term insurance and auto insurance—which exceeded expectations—as a positive development.

Analyst Kim noted, “Since expectations for shareholder returns based on substantial dividend income are a key investment factor, the delay in presenting a concrete shareholder return policy is a disappointing factor.” He added, “Although we maintained our target price as earnings estimates have not changed significantly, we upgraded our investment rating, judging that the recent decline in the stock price has created upside potential.”