As Samsung Electronics' shareholder return policy emerges as a key variable determining the dividend size for Samsung Life Insurance shareholders, investor attention is focusing more on Samsung Electronics' dividends than on Samsung Life Insurance's core business. The securities industry, despite disappointing insurance operating results, is collectively raising its target price for Samsung Life Insurance, reflecting the rise in the equity value of Samsung Electronics and the possibility of a special dividend.
According to the financial investment industry on the 19th, securities firms have repeatedly raised their expectations for Samsung Life Insurance over the past three months. Hanwha Investment & Securities raised its target from 148,000 won to 176,000 won, and Mirae Asset Securities lifted its target from 131,000 won to 166,000 won. In addition, Kiwoom Securities (160,000 won→220,000 won) and NH Investment & Securities (187,000 won→213,000 won) also raised their target prices.
Despite the slump in the insurance industry, the reason the securities sector is offering a rosy outlook is the premium from the rise in the equity value of Samsung Electronics. Since the second half of last year, the stock price of Samsung Electronics has surged sharply, driving up the value of the stake held by Samsung Life Insurance, the largest shareholder.
According to Hanwha Investment & Securities, as of the end of last year, Samsung Electronics' equity is estimated to account for about 19% of Samsung Life Insurance's total assets (separate basis). That is nearly double the 10% at the end of 2024. As a result, analysts say the impact of dividends from Samsung Electronics on the return on assets (ROA), which indicates Samsung Life Insurance's profitability, has grown further.
On the other hand, looking only at insurance performance, conditions are not favorable. DB Securities projected that loss component costs would occur in Samsung Life Insurance's participating annuity insurance, leaving insurance service profit and loss still sluggish. On top of that, the industry-wide chronic issue of loss from the gap between expected and actual insurance payouts is weighing, further weakening basic strength.
As a result, Samsung Life Insurance shareholders are paying more attention to Samsung Electronics' shareholder return policy than to core business results. If Samsung Electronics pays a special dividend, a "dividend trickle-down effect" is expected for Samsung Life Insurance as well. In addition, if Samsung Electronics proceeds with additional share cancellations, there is also an expectation that Samsung Life Insurance could sell excess equity to meet the 10% rule under the separation of finance and industry law, expanding resources for shareholder returns.
Kim Do-ha, an analyst at Hanwha Investment & Securities, said, "If the disposal gains from Samsung Electronics' share cancellation are reflected in the dividend pool by the estimated payout ratio (41%), the expected dividend per share (DPS) for 2025 would be 5,800 won, with a dividend yield of about 3.7%," adding, "If Samsung Electronics additionally cancels the second- and third-round treasury shares it bought last year at the current share price level, Samsung Life Insurance's DPS could increase by about 1,070 won."
In fact, in 2021 Samsung Electronics paid a special dividend of 1,578 won per share in addition to the regular dividend. That was driven by a sharp increase in free cash flow, the source of dividends, during the semiconductor supercycle. Also cited as a factor fueling expectations is that of the 10 trillion won in treasury shares purchased last year, about 5 trillion won worth has not yet been canceled.
However, Samsung Electronics' shareholder return policy remains a variable. An insurance industry analyst who requested anonymity said, "There is no set timeline yet for when Samsung Electronics will pursue a special dividend or additional share cancellation," adding, "However, Samsung Life Insurance has presented a mid- to long-term payout ratio target of 50%, and is expected to announce specific plans to enhance corporate value in the first half, so it is necessary to watch the direction of shareholder returns going forward."
Another insurance industry analyst added, "Given the recent announcement of the basic capital ratio introduction regulation and the controversy over Samsung Life Insurance's accounting treatment of Samsung Electronics shares, there could be constraints on dividend expansion going forward."