[Click eStock] "Samsung Fire & Marine Insurance, Significant Improvement Expected in Insurance Operating Profit... Auto Insurance Loss Ratio Also Drops Sharply"

[Asia Economy Reporter Park Jihwan] Ebest Investment & Securities maintained a 'Buy' rating and a target price of 250,000 KRW for Samsung Fire & Marine Insurance on the 19th, expecting a significant improvement in insurance operating profit this year.

Researcher Jeon Baeseung of Ebest Investment & Securities stated, "The net profit for Q4 last year was 137.9 billion KRW, exceeding market expectations," adding, "The combined ratio and expense ratio fell by 2.7 percentage points and 1.5 percentage points respectively compared to the same period last year, driving the performance improvement."

The insurance operating loss also decreased significantly by 187.9 billion KRW compared to Q4 2019. Investment operating profit declined by 8% year-on-year due to reduced gains on disposals and impairment losses recognized amid COVID-19.

The trend of improvement in the combined ratio is expected to continue this year as well. The auto insurance loss ratio in Q4 was 87.9%, down sharply by 12.9 percentage points compared to the same period last year. Researcher Jeon evaluated, "The expense reduction effect from the expansion of direct sales channels continued, resulting in the auto insurance combined ratio recording 102.4%, the lowest level among all Q4 periods on record." Although the improvement in loss ratio is expected to narrow this year due to reduced rate hike effects and increased vehicle movement, the downward trend is expected to persist.

Researcher Jeon forecasted, "Regarding investment operating profit, pressure to reduce interest margin will continue due to the ongoing low interest rate environment, and the scale of disposal gains is also expected to shrink," adding, "Recognition of a special dividend of approximately 140 billion KRW from Samsung Electronics is scheduled, so there will be little change from last year's level."

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