[Click eStock] Rising Interest Rates and Dividend Appeal... "Korean Re, Additional Upside Potential"

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment stated on the 25th that Korean Re has favorable indicators such as rising interest rates, and with this year's expected dividend yield estimated to be in the 6% range, there is sufficient potential for further price increases within the year. They maintain a buy investment opinion with a target price of 12,000 won.

Korean Re's stock price has steadily increased every month since January this year, rising 5.6% in February, 7.6% in March, and 8.4% in April. This month, after rising about 19%, the stock price has recently shown some correction due to profit-taking and a slight weakening of foreign buying pressure.

In the first quarter of this year, the global reinsurance rate increased to 191 points, but the rally has somewhat slowed. This is because the burden of reinsurance costs on primary insurers has sharply increased due to 12 consecutive quarters of reinsurance rate hikes. Reinsurers have shifted their strategy to reduce the cost burden on primary insurers by changing the reinsurance contract structure, such as increasing deductibles and reducing coverage limits, rather than raising rates, while also aiming to reduce loss ratio volatility.

Lee Hong-jae, a researcher at Hana Financial Investment, said, "The profitability of reinsurers does not immediately or explosively improve with rate or contract structure improvements but has a lagging characteristic that is gradually reflected after at least one year," adding, "The effects of the trend of rate increases over the past three years are expected to be reflected at least until the end of 2022. Considering the global reinsurance demand, which is expected to expand further due to COVID-19, it is judged that profitability improvement is still in its early stages."

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