2Q22 NP of W341bn (+9% y-y)
The author is an analyst of NH Investment & Securities. He can be reached at junsup@nhqv.com. -- Ed.
Samsung F&M reported sound 2Q22 earnings. If the firm chooses to enhance its dividend policy, it would be the icing on the cake.
Business environment and earnings to improve in 2H22
Samsung F&M’s sound business environment and an overall earnings improvement at non-life insurers were confirmed again with 2Q22 earnings. At the auto insurance business, loss ratio remained sound thanks to enhanced regulations and strengthened underwriting. While pressure was building for a premium rate decrease amid recent inflation, related concerns should ease somewhat following the recent heavy rain.
Long-term risk loss ratio also continued to improve. Over-treatment centering on cataracts has decreased rapidly since 2Q22. Assuming no more issues in 2H22, loss ratio is expected to remain sound.
The impact of recent heavy rain should be limited. As of Aug 11 at 7AM, total claims for auto insurance stood at W51.1bn. However, the firm’s exposure is limited under excess of loss coverage (W14.5bn). Claims from commercial insurance are also reported to be under W10bn as of Aug 10 at 4PM.
2Q22 NP of W341bn (+9% y-y)
The company reported 2Q22 NP of W341bn, beating consensus by 5.7%. Long-term risk loss ratio improved sharply to 84.5% (-4.9%p y-y, -3.6%p q-q) and auto loss ratio remained stable at 78.5% (+0.3% y-y).
We forecast 2022E NP of W1,168bn (+6.9% y-y). DPS is conservatively estimated at W12,000 (payout ratio: 43.7%; 2022E DY: 5.9%). However, we believe that there is still room for DPS growth, depending on management’s commitment and changes in the external/internal environment.