[Click e-Stock] "Hanwha Life Insurance Enters a Phase of Easing Capital Ratio Burden"

On December 23, Korea Investment & Securities analyzed that Hanwha Life Insurance has entered a phase where its capital ratio burden is significantly easing. However, the firm also diagnosed that the company's 2026 performance will be the key to further stock price increases. The investment opinion was set to Neutral.

Hong Yeran, a researcher at Korea Investment & Securities, stated, "Hanwha Life Insurance is entering a phase where its previously concerning capital burden is being alleviated," adding, "According to the Financial Supervisory Service's K-ICS discount rate calculation criteria, the final observation maturity for 2026 is set at 2023, and the long-term forward rate is 4.30%, which is the same as in 2025."

Hong noted, "As recently as the first half of this year, both the final observation maturity and the long-term forward rate for 2026 were expected to decline further, but they have been frozen, reflecting regulatory easing and the current market interest rate environment."

She continued, "The company's target K-ICS ratio at the end of 2025, announced during the third quarter earnings release, is 155%, which should be readily achievable given the recent market interest rate environment. The relaxed reserve requirement ratio for surrender value reserves in 2026 is set at 160%, down 10 percentage points from 170% in 2025. Considering all relevant factors, the capital ratio burden in 2026 should be limited."

Hong highlighted the visible improvements in the surrender value reserve system. Following the Financial Services Commission Chairman's remarks in October about the need to rationalize surrender value reserve requirements, the financial authorities reiterated their commitment to continuously refine soundness regulations at the insurance sector's productive finance activation seminar held in December.

Hong projected, "As of the end of September 2025, the reserve amount stands at 5.3 trillion won, the largest among peer companies. Therefore, if the system is improved, the scale of distributable profit secured is also expected to be the largest."

Hanwha Life Insurance faces low valuation pressure, but a rebound in earnings is deemed necessary for stock price appreciation.

Hong explained, "As of the closing price on the 19th, the trailing PBR is only 0.21 times. However, after system improvements, a rebound in earnings will be essential for further stock price gains. Given the slowdown in new contract competition across the industry, the key going forward will be improving persistency rates and maintaining a net increase in CSM."