[Click eStock] "Hanwha Sonbo, Focus on Profitability Improvement Speed... Target Price Up 40%"

[Asia Economy Reporter Jihwan Park] Hana Financial Investment on the 9th raised its investment opinion to 'Buy' and increased the target price for Hanwha General Insurance from 4,000 KRW to 5,600 KRW, a 40% upward revision, expecting a rapid improvement in profitability.

Researcher Hongjae Lee of Hana Financial Investment analyzed, "This year, Hanwha General Insurance is expected to record a net profit of 90.5 billion KRW, recovering from last year's deficit," and "the incurred loss ratio and expense ratio are expected to improve by 0.6 percentage points and 2.2 percentage points respectively compared to the previous year." Although there is a possibility of a slight increase in the incurred loss ratio assuming a reduction in the impact of COVID-19, the expense ratio is expected to continue its downward stabilization due to the application of the sales commission restructuring next year.

What stands out for the time being is the speed of the turnaround. Hanwha General Insurance has been classified as a management target by financial authorities starting this year due to accumulated deterioration in soundness and profitability. Thanks to this, it was able to raise actual loss insurance premiums by more than 50% this year, and the visibility of profitability improvement is high due to the reduction of loss-making automobile insurance contracts and implementation of workforce restructuring, according to the researcher’s assessment.

Researcher Lee emphasized, "The simplification of actual loss insurance claims, which recently raised expectations for loss control, has effectively fallen through, and the premium increase is also expected to be conservative," adding, "While the burden on the entire non-life insurance industry is increasing, Hanwha General Insurance’s significant increase in actual loss insurance premiums inevitably stands out."

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