[Click eStock] "DB Insurance, LA Wildfire Issue Is an Excessive Concern"

On the 15th, NH Investment & Securities viewed that although the stock price of DB Insurance plummeted due to the wildfire in Los Angeles (LA), the largest city in the western United States, it was a one-time event and the losses are not expected to be significant.

Jung Joon-seop, a researcher at NH Investment & Securities, explained, "The stock price adjustment was large the previous day due to the LA wildfire issue," but added, "I believe the decline was excessive."

He continued, "Even considering the non-proportional reinsurance limit (XOL) of 40 million dollars and reinstatement premiums, the company's total loss is expected to be less than 100 billion won," and added, "The impact on the annual pre-tax profit, which exceeds 2 trillion won, is minimal."

He emphasized, "Since there are plans for value-up going forward, including policies for upward trends in dividends per share (DPS) and dividend payout ratio, the wildfire issue is unlikely to lead to a decrease in dividends."

Researcher Jung analyzed, "Due to the stock price decline, the expected dividend yield has risen to 7.1%," and stated, "The appeal of high dividends and value-up is greater than concerns about one-time losses."

However, considering insurance contract margin (CSM), profit adjustments, and expected losses related to the LA wildfire, the target stock price was lowered from the previous 139,000 won to 133,000 won.