[Click eStock] "DB Insurance, Q4 Weakness Priced In... 3.4% Earnings Growth Expected This Year"

[Asia Economy Reporter Park Jihwan] Yuanta Securities maintained its investment opinion 'Buy' and target price of 57,000 KRW for DB Insurance on the 24th, stating that although the 4th quarter earnings fell short of expectations, they had already been reflected in the stock price.

Jung Taejun, a researcher at DB Insurance, predicted, "Despite a reduction in bond sale profits this year due to the prolonged COVID-19 situation and eased sales competition, net income is expected to increase slightly (3.4%)."

Last year, DB Insurance's 4th quarter profit was 44.1 billion KRW, falling short of the market expectation of 58.3 billion KRW. This was analyzed to be due to a high loss ratio and higher-than-expected new contracts, which caused the expense ratio to exceed estimates.

Researcher Jung Taejun explained, "The loss ratio worsened to 89.3%, up 2.8 percentage points year-on-year, and the expense ratio increased by 1.9 percentage points to 21.3%." However, he added that the investment operating profit margin rose by 1.2 percentage points year-on-year to 4.2%, which is believed to be due to more bond sales than initially expected.

He forecasted, "With the recovery of insurance operating profit this year, bond sale profits are expected to decrease," adding, "If sales competition eases, excessive medical treatment and claims decrease, and market interest rates rise, all management targets can be achieved."

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