[Click eStock] "Hyundai Marine & Fire Insurance, Insurance Premium Increase and System Improvement Effects Up... Target Price Up"

[Asia Economy Reporter Kwon Jae-hee] Daishin Securities maintained a 'Buy' rating on Hyundai Marine & Fire Insurance on the 8th and raised the target price to 38,000 KRW.

Last year's annual profit was 438 billion KRW, a 43.2% increase compared to the previous year (2020). The common stock dividend per share was 1,480 KRW, with a payout ratio of 26.8%, corresponding to a dividend yield of 6.4%.

Researcher Park Hye-jin of Daishin Securities analyzed, "The dividend per share (DPS) growth rate exceeded the profit growth rate, confirming high confidence in the dividend policy."

The rate increase for indemnity insurance was higher than expected, and especially this year, the rate increase for the 2nd generation indemnity insurance, which has the highest renewal ratio, was set favorably, estimating that insurance operating losses could be reduced by 50 billion KRW. Additionally, if the payment standards for non-reimbursable items, including cataract surgery, are strengthened, further profit increases are expected. Hyundai Marine & Fire Insurance also forecasted that the loss ratio for indemnity insurance this year will decrease by 1 percentage point compared to last year.

Hyundai Marine & Fire Insurance is understood to have a higher proportion of indemnity insurance compared to competitors. It is estimated to be about 33% of the total written premiums, with the average coverage appearing to be around 30%. Therefore, it is expected to benefit the most from this premium increase and system improvement.

Also, in 2021, the total risk premiums amounted to 3.26 trillion KRW, and a 1 percentage point decrease in the risk loss ratio is expected to increase insurance operating profit by 33 billion KRW.

Researcher Park said, "The rate increase effect of -1 percentage point and the system improvement effect of -1 percentage point are expected to be reflected, which is anticipated to improve the total insurance operating profit by 66 billion KRW," adding, "Accordingly, Hyundai Marine & Fire Insurance's net profit for 2022 is expected to increase by 7.3% to 473 billion KRW compared to 2021."

She added, "Nevertheless, the price-to-book ratio (PBR) is only 0.42x, indicating it is still undervalued."

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