Business Environment Should Be Smooth in 2H22
The author is an analyst of NH Investment & Securities. He can be reached at junsup@nhqv.com. -- Ed.
Among the three major domestic non-life insurers, DB Insurance boasts the lowest 2022E P/E and highest 2022E DY.
Raise TP to W88,000
We raise our TP on DB Insurance from W86,000 to W88,000 in reflection of earnings increase stemming from healthy loss ratios for long-term risk and auto insurance. We calculate our new TP by applying a target P/B of 0.96x to 2022E BPS of W91,136.
Business environment should be smooth in 2H22
Long-term risk loss ratio, which led the solid earnings of 1H22, should remain healthy in 2H22. Over-treatment centered on cataracts has decreased rapidly since April. In addition, auto insurance is also showing loss ratio improvement even in the absence of Covid-19 effects, thanks to regulation improvement and strengthened underwriting.
Impacts of Korea’s recent heavy rains should remain under control, as the firm’s related burden is limited under excess of loss (XoL) coverage (W7bn). Commercial insurance-related claims should also be minimal.
2Q22 NP of W283bn, +20.1% y-y
DB Insurance logged 2Q22 NP of W283bn (+20.1% y-y), exceeding consensus by 16.5%. Long-term risk loss ratio arrived at 87.8% (-6.6%p y-y, -1.4%p q-q), showing sharp improvement on decreased cataract-related claims, and auto loss ratio came in at 74.8% (-1.4% y-y), remaining at a low level.
For 2022, DPS should reach W4,100 (payout ratio: 27.5%) and DY should top 6.5%, the strongest among the big-3 non-life insurers. As the company’s 2022E P/E is the lowest among the big-3 non-life insurers while its DY is the highest, a solid share price trend is expected.