Hanwha Investment & Securities on the 15th kept its investment opinion at "Hold" on Samsung Life Insurance, saying optimism over consolidated affiliate Samsung Electronics is already largely priced into the shares. However, it raised the target price to 250,000 won from 230,000 won. The previous trading day's closing price for Samsung Life Insurance was 246,000 won.
Hanwha Investment & Securities projected Samsung Life Insurance's first-quarter consolidated controlling net profit this year to come in at 751.8 billion won, up 18% from a year earlier. It cited about 20 billion won higher insurance profit and roughly 100 billion won more dividends received from Samsung Electronics.
Kim Do-ha, an analyst at Hanwha Investment & Securities, said, "Despite an expected increase in insurance claims, the claims actual-versus-expected gap will improve, and loss component from participating policies will narrow, improving insurance profit."
Quarter over quarter, a marked rebound in results is expected. In the fourth quarter of last year, higher seasonal claims and year-end experience adjustments led to about 230 billion won in loss component being recognized, resulting in a deficit, but in the first quarter of this year those factors will dissipate, and insurance profit will improve significantly, the firm said. Investment profit is also estimated to improve by about 440 billion won thanks to higher dividends, unlike the previous quarter when losses from bond and real estate valuation were reflected.
The timing of reversing provisions for the immediate annuity lawsuit liability is uncertain. The lawsuit liability amounts to 426 billion won. Kim said, "A reversal of the liability set aside is expected due to a court win, but the timing is unclear, so we reflected it in second-quarter results."
The contractual service margin (CSM) for new business is projected to reach 804 billion won, up 6% from the previous quarter. The increase reflects both higher volume and margin improvement. The CSM balance is also expected to rise about 3% even after partially reflecting higher surrenders.
On dividends, the company saw dividend appeal strengthening in the mid to long term. Kim said, "Assuming Samsung Life Insurance's payout ratio expands to around 50% by 2028, the 2026 payout ratio is estimated at about 44%," adding, "If Samsung Electronics dividends and gains on equity sales are reflected, the dividend yield could rise to as high as 3.6%."
However, it judged that such expectations are already largely reflected in the share price. Kim added, "There is an expectation for higher dividends, but considering precedent, it is unlikely to be reflected all at once."