[Click eStock] Hanwha Life Insurance, Earnings Momentum Slows... Target Price Downgraded

[Asia Economy Reporter Hwang Yoon-joo] Hana Financial Investment maintained a 'Buy' rating on Hanwha Life Insurance on the 18th, adjusting the cost of equity (CoE) and lowering the target price to 3,900 KRW.

Lee Hong-jae, a researcher at Hana Financial Investment, stated, "The 2022 earnings are expected to decline by 9.3% year-on-year due to decreases in insurance profits (-10.0%) and investment gains (-4.8%)."

He evaluated, "Thanks to the recent expansion of forward bonds, asset duration has improved while the interest rate spread on held bonds is defended at 3.16%, which is viewed positively."

He added, "An important aspect of the company's long-term business value is asset-liability management (ALM), new contracts, and contract retention rates," explaining, "Considering the possibility, as recently reported in the industry, that the long-term forward rate (LTFR) may decline to the 3% range in the long term, even if market interest rates rise, liability sensitivity will weaken, thus the importance of asset-liability management (ALM) to defend net asset volatility is expected to increase."

Lee also noted, "Hanwha Life Insurance's guaranteed annualized premium equivalent (APE) for 2021 decreased by 14.8% compared to the previous year, but other guaranteed APE was defended with only a 0.3% decline, and considering the recent upward trend in the 13th contract retention rate, further improvement in the 25th contract retention rate is expected this year."

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