1Q Performance Disappointing but Samsung Fire & Marine Insurance Secures Dominant Market Leadership

Poor 1Q Performance Due to One-Time Large Loss Incident
"Solid Fundamentals with Dominant Position and Conservative Underwriting"

[Asia Economy Reporter Minwoo Lee] Despite Samsung Fire & Marine Insurance's lackluster first-quarter performance, there are forecasts that it still possesses solid resilience. The poor results were due to one-off incidents requiring high compensation, but its market dominance has grown, solidifying its position as the sole leader.

On the 17th, Samsung Securities analyzed Samsung Fire & Marine Insurance in this way, maintaining a 'Buy' investment rating and a target price of 210,000 KRW. Despite the weak performance, the firm judged that there is ample room for growth given the stable market dominance.

Samsung Fire & Marine Insurance posted sales of 4.8606 trillion KRW and an operating profit of 252.2 billion KRW in the first quarter of this year. Sales increased by 5.9% compared to the same period last year, but operating profit fell by 23.8%. Net profit for the same period also dropped 28.9% to 164 billion KRW, falling more than 20 billion KRW short of the market consensus of 185.3 billion KRW. This contrasts with other non-life insurers whose net profits generally increased year-on-year. For example, Hanwha General Insurance recorded a net profit of 34 billion KRW in the first quarter, up 236.1% year-on-year, turning profitable. Meritz Fire & Marine Insurance (up 63.6%), Hyundai Marine & Fire Insurance (up 16%), and DB Insurance (up 38.7%) also saw increases.

This sluggishness is attributed to the impact of COVID-19, which led to a 14.5% decline in automobile insurance loss ratios compared to the previous quarter and a 3.0% drop in long-term risk loss ratios, stabilizing underwriting indicators. However, high-cost incidents such as a chemical plant fire caused the general insurance loss ratio to rise 13.8% year-on-year.

Nevertheless, since it has increased its market dominance, the outlook is not negative. Researcher Hyoseon Jang of Samsung Securities said, "Since last year, there has been fierce competition for the top spot in the new contract market with Meritz Fire & Marine Insurance, raising concerns about increased expenses and deteriorating profitability. However, with the recent restructuring of the market competition, Samsung Fire & Marine Insurance has established a dominant position, and its comparative advantage based on conservative underwriting is strengthening." He added, "The largest profit decline in the non-life insurance sector in the first quarter was due to an investment strategy that avoids realizing artificial gains from bond sales. Rather, the fact that it has secured a buffer role in the investment sector compared to lower-tier companies is positive."

This content was produced with the assistance of AI translation services.