[Click eStock] "Hanwha Insurance's Growth Accelerates in Second Half... Target Price Up 7%"

[Asia Economy Reporter Park Jihwan] Hana Financial Investment maintained its 'Buy' rating on Hanwha General Insurance on the 24th, stating that the growth pace in the second half of the year will accelerate further, and raised the target price by 7.14% from the previous 5,600 KRW to 6,000 KRW.

Lee Hongjae, a researcher at Hana Financial Investment, said, "The second-quarter earnings are expected to be similar to the same period last year, with net profit at 36.8 billion KRW, up 1.7% year-on-year but down

41.2% quarter-on-quarter, falling short of market expectations." He forecasted that the combined ratio would improve by 1.4 percentage points year-on-year and rise by 1.2 percentage points quarter-on-quarter.

However, this is just a brief pause, and the company is regarded as the non-life insurer with the strongest earnings momentum this year. The annual net profit growth rate is estimated to be 73.8%, the highest among the universe of non-life insurance companies.

Researcher Lee Hongjae explained, "Due to the portfolio composition of earned premiums, with a low proportion of auto insurance and a high proportion of long-term insurance, the second-quarter results are less likely to stand out compared to other large non-life insurers," adding, "However, the second half is seasonally a period when auto loss ratio (L/R) somewhat slows down, and the improvement in the long-term business ratio is expected to be significant, so the earnings momentum compared to last year is likely to be more prominent in the second half." He emphasized that especially in the second half, with the expansion of vaccination and the easing of the COVID-19 situation, the company raised the medical expense insurance premiums, which were overwhelmingly high at over 50% last year, and since about 37% of contracts are up for renewal this year, the uncertainty of risk loss ratio is also the lowest.

The researcher said, "The target price increase is not unreasonable at all when compared to other non-life insurers or historical valuations," and added, "This year, with management normalization, the possibility of resuming dividends is also fully open."

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