[Asia Economy Reporter Oh Ju-yeon] Hana Financial Investment analyzed that Mirae Asset Life Insurance continues to maintain a comparative advantage among listed life insurance companies in terms of profitability and response to new regulations, based on a 'two-track' strategy focused on protection insurance and variable insurance. It also positively evaluated the company's mid- to long-term maximization of consolidated profits and losses through another 'two-track' strategy that separates manufacturing and sales first in the domestic insurance industry, maintaining a 'buy' investment rating and a target price of 5,700 KRW.
According to Hana Financial Investment on the 23rd, Mirae Asset Life Insurance's net profit for this year is expected to record 108 billion KRW, an 8.0% improvement compared to the previous year.
Researcher Lee Hong-jae analyzed, "Due to the continued spread of the novel coronavirus infection (COVID-19), the possibility of impairment recognition of alternative investment assets is high, so net profit for the fourth quarter of this year is estimated to decrease by 56% compared to the same period last year. However, the annual risk loss ratio is expected to improve, and special account income fees are anticipated to increase by 2.9% year-on-year due to favorable new contracts in variable insurance."
In particular, Hana Financial Investment positively evaluated Mirae Asset Life Insurance's announcement in March 2021 of a plan to separate manufacturing and sales (spin-off of the insurance sales division) by moving about 3,300 exclusive planners affiliated with the head office to the subsidiary-type GA, 'Mirae Asset Financial Services.'
Researcher Lee said, "Although the cost reduction effect on a consolidated basis is not significant, the newly launched subsidiary-type GA sells other companies' products, which can improve consolidated profits and losses due to increased consolidated sales, and prevent exclusive planners from leaving to other GAs, which is expected to have a positive effect on the retention rate of insurance contracts (renewal premiums)."
He added that since sales commissions will be reorganized from next year, uncertainties related to new contract costs due to the separation of exclusive channels are not expected to be significant.
Researcher Lee added, "However, since the existing exclusive planner organization is not large, the impact on the competitive structure within the GA industry will not be substantial."
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