[Click eStock] "Samsung Fire & Marine Insurance, Earnings Exceed Expectations... Target Price Up 15%"

[Asia Economy Reporter Jihwan Park] Hana Financial Investment evaluated that Samsung Fire & Marine Insurance recorded first-quarter net profit exceeding expectations on the 13th. The investment opinion 'Buy' was maintained, and the target price was raised by 15.4% to 300,000 KRW.

Researcher Hongjae Lee of Hana Financial Investment stated, "The first-quarter net profit was 431.5 billion KRW, improving by 163.0% year-on-year and 212.9% quarter-on-quarter, surpassing both our estimates and consensus." The combined ratio improved by 3.2 percentage points year-on-year to 102.1%, and the return on invested assets rose by 0.8 percentage points to 3.6%.

General insurance recorded a loss ratio slowdown to 104.9%, while automobile insurance and long-term insurance posted 94.8% and 105.2%, respectively, due to improvements in both loss ratios and expense ratios compared to the previous year. Operating profit from investments improved by 40.3% year-on-year, driven by a special dividend of 140 billion KRW from Samsung Electronics and increased gains from stock disposals.

However, the general insurance loss ratio of 87.3%, which slowed by 6.2 percentage points year-on-year, remains a blemish. It recorded the highest incurred loss ratio within the insurance categories. Researcher Lee said, "Although it is a one-time factor due to a large fire accident, it is regrettable that the insurance underwriting profit of general insurance, which contributed about 90 billion KRW annually before tax until 2019, has significantly declined in trend since last year."

This year, in the non-life insurance industry, long-term life insurance competition is easing and sales commission restructuring is stabilizing long-term expense ratios, but the improvement trend in automobile incurred loss ratios due to premium increases is expected to soon peak. The researcher added, "With the easing of COVID-19, there is a possibility of a slight decline in long-term risk loss ratios," and "The underwriting capabilities, which are superior compared to competitors, may stand out."