[Click eStock] Samsung Fire & Marine Insurance Q4 Net Profit Falls Short of Estimates Due to One-Time Expenses

[Asia Economy Reporter Hwang Yoon-joo] Daishin Securities maintained its investment opinion of 'Buy' and target price of 260,000 KRW on the 26th, stating that even after reflecting one-time expenses, the annual operating profit for 2021 is expected to increase compared to the previous year.

Park Hye-jin, a researcher at Daishin Securities, said, "The fourth-quarter net profit is expected to fall significantly short of consensus," adding, "This is due to the reflection of one-time expenses, and it is rather positive in that it alleviates the performance burden for 2022."

Daishin Securities forecasted that Samsung Fire & Marine Insurance's fourth-quarter net profit will fall 35.4% short of the consensus (112.1 billion KRW). The net profit on a separate basis is also expected to be 72.4 billion KRW. This is a projected decrease of 47.5% compared to the same period last year and 74% compared to the previous quarter. Researcher Park analyzed that the decline in performance is due to increased business expenses from special bonuses and contributions to the in-house welfare fund.

Researcher Park stated, "The automobile insurance loss ratio is expected to be 86.4%, almost matching the preliminary loss ratio of 86.5%. Although the loss ratio in December rose sharply to 91%, the quarterly average is expected to continue improving compared to the same period last year, but the rate of improvement will decrease."

She also explained, "The risk loss ratio is expected to rise to 91.8% due to the reserve for Incurred But Not Reported (IBNR) losses, increased operating days, and increased loss amounts," adding, "The increase in loss amounts is due to cataract surgery-related claims as well as a seasonal increase in property collateral insurance claims in the fourth quarter."

Researcher Park projected, "Samsung Fire & Marine Insurance's annual profit for 2021 will be 1.09 trillion KRW, a 42.7% increase compared to the previous year, and the dividend per share (DPS) is expected to be 12,500 KRW," forecasting that "due to the recent stock price decline, the dividend yield will rise to 6.2%."

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