[Click eStock] "Samsung Life Insurance Target Price Raised by 9%... Investment Opinion 'Hold'"

On the 21st, Ebest Investment & Securities raised the target price of Samsung Life Insurance by 9% to 85,000 KRW from the previous level. The investment rating was maintained at 'Hold.' The medium-term dividend payout ratio target remains at 35-45%, and due to the ongoing need for capital management amid a shift to an interest rate cut cycle and a decline in debt discount rates, as well as the difficulty in expecting flexible profit growth in 2024-2025, the possibility of a significant short-term improvement in ROE (Return on Equity) is considered low. The expectation of expanded shareholder returns is analyzed to be partially reflected in the current stock price level.

The net profit for Q4 2023 was 445.6 billion KRW, exceeding market expectations. Insurance profit was 242.5 billion KRW, significantly down compared to the Q1-Q3 average of around 400 billion KRW, but investment profit increased sharply due to improved valuation disposal gains and dividend income. Combined profits showed solid performance. The decrease in insurance profit is analyzed to be due to costs related to large loss contracts despite an increase in CSM (Contractual Service Margin) amortization. At the end of last year, the CSM balance was 12.2 trillion KRW, increasing by 500 billion KRW compared to the end of September, offsetting the Q3 decrease of 200 billion KRW. This is attributed to new contract CSM amounting to 860 billion KRW, down 100 billion KRW from the previous quarter, but the CSM formation scale was 41.5 billion KRW due to some one-time factors, which was not large.

The guaranteed APE (Annual Premium Equivalent) continued to decline by more than 100 billion KRW following Q3, indicating a slowdown in new contract CSM. However, the proportion of health insurance continues to increase, raising the CSM multiple to over 15 times. The retention rate for guaranteed insurance also saw a reduced decline, lowering concerns about CSM adjustments to the same level as Q3 last year. Therefore, a steady increase in CSM is likely to continue going forward. Despite a seasonal increase in loss amounts, the loss ratio remains low at 78%, and although the variance in operating expenses worsened, it maintained the same level as the previous year, showing overall good efficiency indicators. Researcher Jeon Bae-seung of Ebest Investment & Securities forecasted, "Although growth slowdown and margin pressure are expected in 2024, the trend of improving insurance profit is expected to continue, and investment profit volatility is likely to keep decreasing, making it possible to maintain earnings stability and financial soundness."