NH Investment & Securities on the 23rd said the equity value of affiliates such as Samsung Electronics has risen sharply for Samsung Life Insurance. It maintained a Buy and raised the target price by 18.3% to 252,000 won. Samsung Life Insurance's previous closing price was 178,800 won.
NH Investment & Securities said that while the value of the core business has not changed much, it raised the target price by reflecting the equity value of affiliates such as Samsung Electronics.
On a consolidation basis, Samsung Life Insurance's shareholders' equity is expected to increase from 3Q last year's end at 3.89 trillion won to 4Q end at 6.33 trillion won.
Jeong Jun-seop, an analyst at NH Investment & Securities, said, "With the end of deviation accounting, most of the 1.28 trillion won liability policyholder equity adjustment moved to shareholders' equity, and the rise in Samsung Electronics' share price was reflected."
The rise in Samsung Electronics' share price itself does not provide a direct benefit to Samsung Life Insurance, but it is still positive, the analysis said.
Jeong said, "If Samsung Electronics cancels treasury shares in the future, the capital gains from Samsung Life Insurance's sale of excess equity will increase," and added, "There is also anticipation of higher dividends based on Samsung Electronics' solid results, and the rise in Samsung Electronics' share price could help improve Samsung Life Insurance's Basic Capital Solvency (K-ICS) ratio."
Meanwhile, Samsung Life Insurance's controlling net profit in 4Q last year is expected to be 211.6 billion won. That is below market expectations.
Jeong said, "The insurance claims variance is expected to hold up relatively well, but the expense variance will worsen," adding, "In addition, cost factors such as 300 billion won in loss component expense are expected to occur."