Record-Breaking Performance by Non-Life Insurers, Only Growth Ahead

Samsung Fire & Marine Insurance, DB Insurance, Meritz, etc. exceed pre-COVID levels with strong performance
All indicators stable, further growth expected

[Asia Economy Reporter Park Jihwan] Non-life insurance companies have posted record-breaking results in the first half of this year, raising expectations for further stock price increases.

According to the Korea Exchange on the 13th, the stock prices of major non-life insurers such as Samsung Fire & Marine Insurance, DB Insurance, and Meritz Fire & Marine Insurance have risen by an average of 40.9% from the beginning of the year to the 12th. DB Insurance's stock price, which was in the 43,000 KRW range at the start of the year, recently rose to the 58,000 KRW range, approaching entry into the 60,000 KRW range. Meritz Fire & Marine Insurance also increased from the 14,000 KRW range at the beginning of the year to the recent 25,000 KRW range. Samsung Fire & Marine Insurance settled in the 210,000 KRW range from the 180,000 KRW range at the start of the year.

Until mid-June, non-life insurers were among the industries that had not recovered to pre-COVID-19 levels. From January 2, last year, before the COVID-19 impact, to June 17 this year, Samsung Fire & Marine Insurance's (-11.11%) returns declined, while DB Insurance (2.40%) and Meritz Fire & Marine Insurance (4.37%) saw only slight increases. However, after strong performances in both the first and second quarters, their stock prices are steadily surpassing pre-COVID-19 levels.

Commonly, the loss ratio of automobile insurance improved, significantly reducing the deficit. Due to strengthened social distancing measures, vehicle movement and hospital visits decreased, improving the loss ratios of deficit products such as automobile and general insurance. Samsung Fire & Marine Insurance posted a net profit of 744.1 billion KRW in the first half of this year, a 71.7% increase from last year. DB Insurance (425.6 billion KRW) and Meritz Fire & Marine Insurance (291.9 billion KRW) achieved record half-year net profits, increasing by 21.8% and 36.8% respectively compared to a year ago.

The securities industry forecasts further stock price increases following the better-than-expected second-quarter earnings announcements from the non-life insurance sector. Lee Hongjae, a researcher at Hana Financial Investment, said about DB Insurance, "The scale of new protection contracts in the second quarter increased by 19.9% year-on-year, showing a solid performance," adding, "Not only growth in scale but also the trends of key indicators such as contract retention rate, automobile loss ratio, and business expenses are all stable." Hana Financial Investment raised DB Insurance's target price by 7.4% to 73,000 KRW.

Meritz Fire & Marine Insurance's upward revision of earnings estimates due to strong performance and the implementation of share buybacks, reducing uncertainties regarding shareholder returns, were cited as factors improving investor sentiment. Jeon Baeseung, a researcher at Ebest Investment & Securities, stated, "The expected annual net profit this year is 551.4 billion KRW, with significant profit growth and a return on equity (ROE) of about 20% expected." Ebest Investment & Securities raised Meritz Fire & Marine Insurance's target price by 29% to 27,000 KRW.

Samsung Fire & Marine Insurance's strength lies in the highest dividend yield within the industry. Jung Junseop, a researcher at NH Investment & Securities, said, "Based on solid performance, annual net profit is expected to increase by 52.7% compared to last year," adding, "The dividend yield is expected to be 6.3%, the highest among major non-life insurance stocks." NH Investment & Securities raised Samsung Fire & Marine Insurance's target price from 255,000 KRW to 282,000 KRW.

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