What’s Behind DB Insurance Co., Ltd.’s 224% Surge in Insurance Profit... Hanwha Investment & Securities Co., Ltd. Keeps It as a ‘Top Pick’

[Financial News]  DB Insurance Co., Ltd. is receiving positive reviews from securities analysts after significantly improving the profitability of its core insurance business despite investment losses. In particular, profitability in long-term and auto insurance has recovered, while the burden of surrender value reserves has also eased, raising expectations for higher dividends.
On the 13th, Kim Do-ha, an analyst at Hanwha Investment & Securities Co., Ltd., maintained DB Insurance Co., Ltd. as the top pick in the insurance sector, issuing a ‘Buy’ rating and a target price of KRW 247,000.
DB Insurance Co., Ltd.’s standalone net income for the third quarter was KRW 332.4 billion, up 13% from the same period a year earlier. Although it was 7% below market expectations, insurance profit surged 224% year on year to KRW 330.6 billion. Claims incurred in long-term insurance were lower than expected, and the combined ratio for auto insurance also improved despite seasonal headwinds, supporting results.
By contrast, investment income fell 56% year on year to KRW 133.6 billion. Asset trading and valuation losses were about KRW 70 billion greater than expected, partially offsetting the improvement in the profitability of the core insurance business.
Dividend capacity is a key point to watch. Analysts say the easing burden from increases in surrender value reserves is reducing a factor that had constrained distributable profits. CSM from new contracts fell 18% from the previous quarter, but the total CSM balance rose 2% as the downward adjustment to CSM for existing contracts narrowed.
In addition, the acquisition of overseas subsidiary Fortegra Group helped boost consolidated net income attributable to controlling shareholders by 35% year on year. Fortegra Group’s investment losses were deemed a non-recurring factor arising during the transfer of its bond portfolio.
Analyst Kim said, “Better-than-expected improvements in long-term insurance claims and auto insurance profitability reaffirmed our key investment points,” adding, “It is also positive that the company’s own reduction in its reserve burden has improved dividend visibility.”


[email protected] Kim Gyeong-a Reporter