[Click eStock] "DB Sonhae Boheom, Expected to Benefit from Improved Uncertainty in Silseun Insurance"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating and a target price of 95,000 KRW for DB Insurance on the 22nd, expecting benefits from improved uncertainties related to indemnity insurance.

In the fourth quarter, the company's standalone profit reached 130.9 billion KRW, growing 117.5% year-on-year and surpassing market expectations. The annual profit for this year recorded 776.4 billion KRW, a 54.6% improvement compared to the previous year. Although investment operating profit rose by only 6.3%, the C/R (liquidity ratio) fell by 2.4 percentage points during the same period, driving strong performance. Despite a 4.7 percentage point increase in protection-type new contracts compared to the previous quarter, the long-term E/R recorded 18.9% due to increased deferred limits, resulting in an earnings surprise.

The area to focus on for investment is the demand for switching to the 4th generation indemnity product. The 4th generation indemnity product features premium discounts and surcharges, along with shorter coverage change cycles, making it a structure favorable for profitability management. Since the beginning of this year, switching demand has been rising significantly.

Also noteworthy are the strengthened indemnity insurance claim payment standards. Despite COVID-19, the strengthened claim payment standards for treatments such as physical therapy, which have been a cause of rising indemnity L/R in the industry, are expected to be applied as early as April this year. Premium increases are anticipated to be reflected with a time lag according to the renewal cycle, producing an immediate effect. Researcher Hongjae Lee stated, “The company’s indemnity insurance ratio within risk P is about 35%,” and added, “The proportion of 1st and 2nd generation products is 84%, so if these regulations become visible, it will be a significant opportunity.”

The current stock price has been somewhat weak in February due to the burden of an 18.9 percentage point excess rise compared to the KOSPI index in January. However, in terms of stock attractiveness, it is very appealing in the mid to long term. Considering the high interest rate environment and easing regulatory uncertainties, it is analyzed that this is a period with significant benefits for the company and other second-tier companies.

Researcher Hongjae Lee said, “There are short-term concerns about performance slowdown due to COVID-19, but the impact of this issue is not expected to be significant,” and added, “The dividend payout ratio has been steadily increasing for several years, and last year’s payout ratio also rose slightly by 0.8 percentage points compared to the previous year, enhancing trust in the shareholder return policy.”

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