Samsung Fire & Marine Insurance Expects Double-Digit Profit Growth This Year... Focus on Improvement in Auto Insurance Loss Ratio

[Asia Economy Reporter Park Jihwan] Hyundai Motor Securities on the 20th issued a 'Buy' investment opinion and set a target price of 237,000 KRW for Samsung Fire & Marine Insurance, expecting double-digit profit growth to continue this year.

Kim Jinsang, a researcher at Hyundai Motor Securities, analyzed that Samsung Fire & Marine Insurance's loss ratio and expense ratio in the fourth quarter of last year fell by 2.7 percentage points and 1.5 percentage points respectively compared to the same period last year, significantly improving insurance operating profit.

He particularly focused on the improvement trend in the automobile insurance loss ratio. In the fourth quarter of last year, Samsung Fire & Marine Insurance's automobile insurance loss ratio and expense ratio decreased by 12.9 percentage points and 0.8 percentage points respectively compared to the same period last year, driving the overall combined ratio improvement. The automobile insurance loss ratio improved due to a decrease in accident rates and the effect of rate increases, while the expense ratio was effectively reduced by the expansion of direct sales proportion and cost efficiency.

Samsung Fire & Marine Insurance's long-term loss ratio and expense ratio in the fourth quarter of last year also improved by 0.4 percentage points and 1.7 percentage points respectively compared to the same period last year. This was because the side effects of the 2019 external competition were resolved and quarterly new contracts also decreased.

This year, the loss ratio for automobile insurance and general insurance is expected to further improve due to the qualitative growth policy direction of the expense ratio and the online shift of sales channels. The investment yield is expected to be maintained at the previous year's level by offsetting the low-interest burden with increased dividend income from Samsung Electronics. Profits this year are analyzed to increase by 23.7% compared to the previous year. However, normalization of medical service usage, which was contracted due to COVID-19 last year, may act as a burden factor by causing an increase in long-term risk loss ratio.

Automobile insurance is also expected to lead loss ratio improvement this year. Researcher Kim said, "The remaining effects of last year's rate increases, proactive adjustments of special contracts and discounts, and efficient compensation system operation based on digital technology are anticipated."

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