[Click eStock] "DB Insurance, Improved Insurance Operating Balance... Net Profit Exceeds Market Expectations"

[Asia Economy Reporter Park Jihwan] Daishin Securities forecasted on the 20th that despite investment profits expected to decline by nearly 9% compared to last year for DB Insurance, net income will increase due to improvements in insurance underwriting results. Accordingly, they maintained a 'Buy' investment rating and a target price of 65,000 KRW.

On the day, Daishin Securities researcher Park Hyejin stated, "Although the investment sector inevitably maintains a conservative stance, leading to an expected 8.8% decline in investment profits compared to last year, net income is expected to increase due to improvements in insurance underwriting results." She added, "The improvement in the automobile liability insurance loss ratio is greater than expected, so the deficit in insurance underwriting results is expected to improve by 70 billion KRW from 146 billion KRW last year to 76 billion KRW this quarter."

First-quarter net income is expected to exceed the consensus of 147.2 billion KRW by 8.3%. Since the automobile insurance loss ratio improved more than expected, the estimate is expected to be revised upward from the previous estimate of 134.5 billion KRW. The automobile liability insurance loss ratio is analyzed to decrease by 3.5 percentage points to 81.1% in the first quarter compared to the previous year.

Researcher Park said, "It is difficult to identify the exact cause of the improvement in the automobile liability insurance loss ratio, but it is presumed that the reduction in driving volume due to the impact of COVID-19 played a significant role," adding, "Recently, the automobile repair industry is pushing for an 8.2% increase in repair fees, so the possibility of insurance premium hikes in the second half of the year cannot be ruled out."

He also said, "With the GA 1200% rule implemented from this year and the continued increase in earned premiums, the expense ratio is expected to decline," forecasting, "Considering it was 20% last year, it is likely to record the 19% range in the first quarter."

Given that overseas investments have been restricted due to COVID-19 and that there were bond disposal gains until the first half of last year, researcher Park expects investment profits to inevitably decrease. The investment yield is estimated to decline by 0.51 percentage points from the previous year to 3.0%.

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