[Click eStock] "Dongyang Life Insurance, Expected Impact on Actuarial Family... Target Price Downgraded"

Reflecting Financial Authorities' Guide Impact, 2025 Profit Estimates Revised Downward
Q3 Net Profit Exceeds Market Expectations, Significant Improvement in Insurance Gains

Hanwha Investment & Securities on the 14th downgraded its earnings estimates for Dongyang Life Insurance, despite solid growth in new contract CSM (Contract Service Margin), considering the impact of the financial authorities' actuarial assumption guidelines. The target stock price was lowered from the previous 6,300 KRW to 6,000 KRW. Dongyang Life Insurance's closing price on the previous trading day was 5,570 KRW.

According to Hanwha Investment & Securities, Dongyang Life Insurance reported a standalone net profit of 90.4 billion KRW in the third quarter, marking a 424% increase compared to the same period last year. This was a surprise result exceeding market consensus by more than 20%, mainly due to a significant increase in insurance profit and loss from the reversal of loss contract burden costs. Insurance profit and loss reached 96.5 billion KRW, a 44% increase year-over-year, with the reversal of loss contracts prominently boosting performance.

Dongyang Life Insurance's third-quarter insurance profit and loss increased by 44% year-over-year to 96.5 billion KRW. Although the variance between expected and actual results was below expectations due to increased insurance claims, the reversal effect of loss contracts positively impacted the results. In the investment profit and loss segment, favorable valuation gains on interest-bearing assets were reflected, turning into a profit of 18.1 billion KRW. New contract APE increased by 34% compared to the previous quarter, with protection-type insurance growing by 65%, showing solid growth. Third-quarter new contract CSM rose by 61% quarter-over-quarter, and with an increase in health coverage-centered new contracts improving margins, the CSM balance grew by 4%, maintaining a stable growth trend.

Researchers Kim Do-ha and Kwon Ji-woo of Hanwha Investment & Securities stated, "Dongyang Life Insurance's CSM is expected to decrease by 400 billion KRW when applying the actuarial assumption guidelines for no-surrender insurance." They added, "Accordingly, although the higher-than-expected increase in new contract CSM was reflected, we lowered the 2025 earnings estimates by 9% compared to previous forecasts, considering the possibility of reduced CSM amortization gains due to guideline application. The target stock price was also lowered by 5%, but the investment opinion was maintained at Hold, considering the potential for upside."