[Click eStock] "Samsung Life Insurance, Unresolved Insurance Business Act Amendment Issue... Investment Opinion Neutral"

[Asia Economy Reporter Son Sunhee] Yuanta Securities announced on the 22nd that it maintains a 'Neutral' investment rating and the existing target price of 80,000 KRW for Samsung Life Insurance. This is because there is a possibility of sharp stock price fluctuations during the National Assembly discussions over the amendment to the Insurance Business Act, commonly referred to as the 'Samsung Life Insurance Act.'

Samsung Life Insurance's operating profit for the fifth quarter of last year was 1.05 trillion KRW, significantly exceeding market expectations (600 billion KRW). However, this was influenced by the revision of the Corporate Tax Act, and due to increased reinsurance costs from co-reinsurance underwriting, the pre-tax profit fell short of estimates. The common stock dividend per share (3,000 KRW) was in line with expectations.

This performance appears to reflect the impact of large-scale policy surrenders. Insurance profit and loss deteriorated significantly due to a surge in insurance claim payments, and the reserve for policy liabilities and non-operating profit and loss decreased.

Jeong Taejun, a researcher at Yuanta Securities, stated, "(Samsung Life Insurance) management has announced plans for new insurance contract margins (CSM) ranging from 2.5 trillion to 3 trillion KRW, continuous increases in dividends per share, and a dividend payout ratio of 35-45%," adding, "Whether dividends per share continue to increase will be an important variable influencing the stock price direction."

Earlier, Yuanta Securities downgraded its investment rating from Buy to Neutral in the report titled 'Insurance: Checking Life Insurance Liquidity Issues' published on December 19 last year, citing the need for a cautious approach to potential sharp stock price changes related to the Samsung Life Insurance Act. It stated that the Neutral rating is maintained as the related issues have yet to be resolved.

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