Pension funds keep buying Samsung Fire & Marine Insurance, drawn by its 1.38% stake in Samsung Electronics and prospects for a Samsung Electronics special dividend

[Financial News] Pension funds have been steadily buying Samsung Fire & Marine Insurance. Their purchases, even amid foreign investors’ selling, have renewed attention to the Samsung Electronics shares held by the insurer and the appeal of its dividends and shareholder returns. Analysts say that if Samsung Electronics pays a special dividend, Samsung Fire & Marine Insurance’s investment income could rise, giving it greater capacity for shareholder returns.
According to the Korea Exchange on the 23rd, pension funds were net buyers of Samsung Fire & Marine Insurance shares worth 32.9 billion won over the past month. During the same period, foreign investors were net sellers of shares worth 84.1 billion won, while institutions were net buyers of 81.1 billion won. Pension funds accounted for about 40% of institutional net purchases.
Securities analysts are focusing on Samsung Fire & Marine Insurance’s stake in Samsung Electronics and its shareholder returns. Samsung Fire & Marine Insurance holds a 1.38% stake in Samsung Electronics. If Samsung Electronics’ share price rises, the valuation of that holding increases; if its dividend grows, the dividend income flowing to Samsung Fire & Marine Insurance also increases.
A special dividend could boost investment income. BNK Investment & Securities assumed a total Samsung Electronics special dividend of 30 trillion won and estimated that Samsung Fire & Marine Insurance would receive 414 billion won in special dividends in the fourth quarter. That figure is based on applying its 1.38% stake to the total special dividend.
Taking into account the effects of increasing its stake in overseas insurer Canopius and other factors, BNK Investment & Securities forecast Samsung Fire & Marine Insurance’s investment operating profit this year at 1.735 trillion won and net income attributable to controlling shareholders at 2.551 trillion won. Analysts say that if the special dividend materializes, it could increase income beyond insurance operations and help provide funds for dividends.
Shareholder returns are also seen as an investment attraction. Samsung Fire & Marine Insurance has a payout ratio of around 44% and actively retires treasury shares. Its expected dividend per share this year is 26,000 won, with an expected dividend yield of about 4.3%.
However, short-term earnings are expected to soften. Samsung Fire & Marine Insurance’s third-quarter net income attributable to controlling shareholders is estimated at 509.6 billion won, down 5.3% from the same period a year earlier. Despite an improvement in insurance operating profit, investment operating profit is expected to decline due to reduced gains and losses related to marketable securities and replacement trades involving some low-yield bonds.
Kim In, an analyst at BNK Investment & Securities, said, “Despite the high level of shareholder returns, its P/B ratio is only 0.8 times,” adding, “Strategic investment to expand overseas operations is also positive, and the company has strong investment appeal as both a dividend stock and a value stock.”
[email protected] Choi Doo-seon Reporter