[Click eStock] "Hyundai Marine & Fire, Continued Turnaround in This Year's Performance"

[Asia Economy Reporter Park Jihwan] BNK Investment & Securities maintained a 'Buy' rating and a target price of 30,000 KRW for Hyundai Marine & Fire Insurance on the 14th, expecting a favorable performance this year due to a decline in the loss ratio.

Kim In, a researcher at BNK Investment & Securities, stated, "The net profit for the first quarter of this year is expected to increase by 20.8% year-on-year to 108.3 billion KRW," adding, "This is attributed to the recovery in insurance operating profit driven by sustained growth in automobile insurance and a decline in the loss ratio starting from the second quarter, along with solid growth in long-term life insurance."

He anticipated a steady increase in long-term insurance premiums due to the continued effect of a 10.5% year-on-year increase in insurance premium rates leading to higher automobile insurance premiums and expanded new life insurance contract sales. While the expansion of self-owned properties is expected to contribute to a favorable trend in general insurance premiums, restrictions on mobility and reduced insurance claims due to the spread of COVID-19 are expected to continue improving the automobile insurance loss ratio and stabilizing the long-term insurance loss ratio compared to the same period last year. Accordingly, the overall loss ratio is expected to decline from 86.3% to 84.8%.

He evaluated that the annual net profit for this year is expected to increase by 12.7% from a year ago to 344.9 billion KRW. This is due to the improvement in insurance operating profit resulting from continued automobile insurance performance improvement and downward stabilization of expense ratios, despite an anticipated reduction in investment operating profit.

Researcher Kim emphasized, "Given the relatively high sensitivity of the automobile sector's performance, if rates are increased in the second half of the year, additional profit growth and profit stability will be further strengthened."

He added, "Since 2020, despite performance improvements, the price-to-book ratio (PBR) and price-to-earnings ratio (PER) stand at only 0.4 times and 5.3 times respectively, and a high dividend yield exceeding 5% is highlighted."