[Click eStock] "Samsung Life Insurance, Expectations for Shareholder Return Policy... Target Price Raised"

Meritz Securities raised the target price for Samsung Life Insurance to 110,000 KRW on the 21st, anticipating an expansion in shareholder returns. The investment rating was maintained at 'Buy.'

Jo Ahae, a researcher at Meritz Securities, presented this view in a corporate report on the same day, stating, "The solvency ratio (K-ICS) is stably maintained within the target range of 200-220%, and it is free from restrictions on distributable profits due to surrender reserve funds," adding, "This is a reason to expect specific capital policies."

The solvency ratio is an indicator showing whether an insurance company can pay insurance claims to policyholders on time. It is commonly used as a measure of an insurer's capital soundness. Additionally, as explained by researcher Jo, improvements in the surrender refund system that change the calculation standards for surrender reserve funds could significantly improve distributable profits, which is positive from a shareholder return perspective.

Samsung Life Insurance's controlling shareholder net profit for the second quarter was 622.1 billion KRW, exceeding consensus estimates by 14.8%. The better-than-expected strong performance was thanks to favorable investment gains.

Researcher Jo Ahae analyzed, "Insurance profit was weak at 267.8 billion KRW, and the insurance contract service margin (CSM) continued to increase to 12.5 trillion KRW," adding, "The CSM adjustment expanded due to the impact of changes in the discount rate system (120 billion KRW)."

Investment gains were 478.6 billion KRW, which is considered favorable when taking into account the one-time gain from the previous year (1.97 trillion KRW related to retirement). The expansion of new contract CSM and rising interest rates partially offset losses.