[Click eStock] "Hyundai Marine & Fire Insurance, Profitability Improvement Trend Continues"

[Asia Economy Reporter Jihwan Park] Ebest Investment & Securities on the 23rd presented a 'Buy' investment opinion and a target price of 30,000 KRW for Hyundai Marine & Fire Insurance, stating that the profitability improvement trend is expected to continue.

Researcher Bae-Seung Jeon of Ebest Investment & Securities stated, "Due to a decrease in investment operating profit, the fourth-quarter performance last year fell short of market expectations." Although the net income showed a loss of 8.6 billion KRW, missing market expectations, the insurance operating loss improved significantly to a deficit of 234 billion KRW compared to a deficit of 368.6 billion KRW in the fourth quarter of 2019.

However, the investment operating profit was only 240.7 billion KRW, marking the lowest figure since the fourth quarter of 2015. The investment yield was 2.4%, which is the same scale as the standard excluding the 200 billion KRW gain from the sale of the Gangnam building in the third quarter. Researcher Jeon explained, "The loss ratio was 86.1%, down 4.0 percentage points compared to the same period last year," and "the expense ratio also decreased by 0.9 percentage points to 21.0%, resulting in a combined ratio of 107.1%." This is 4.9 percentage points lower than the fourth quarter of 2019 and 1.6 percentage points lower than the fourth quarter of 2018.

The insurance profit and loss improvement trend is expected to continue this year as well. During the fourth quarter, the automobile insurance loss ratio was 87.3%, a significant decrease of 11.9 percentage points compared to the same period last year, driving the improvement in insurance profit and loss. Researcher Jeon stated, "Although the effect of premium increases is expected to diminish and the decline in the loss ratio is expected to slow due to increased vehicle usage, the improvement trend is expected to continue," and "Regarding the long-term risk loss ratio, a similar level to last year is expected due to increased hospital utilization." However, he added that the expense ratio is expected to decline further due to the restructuring of the commission system, slowdown in new contract growth, and an increase in the proportion of automobile online sales.