GuruFocus -
- New Business CSM Increase: KRW834.6 billion Q-o-Q in the third quarter.
- CSM Balance: Increased by KRW0.7 trillion from the start of the year, recording KRW13 trillion.
- Net Profit Attributable to Controlling Shareholders (Q3): KRW673.6 billion on a consolidated basis.
- YTD Consolidated Profit Attributable to Controlling Shareholders: KRW2,421 billion, up KRW592.4 billion Y-o-Y.
- Insurance Service Results: KRW1.187 trillion.
- Investment Profit: KRW1.53 trillion.
- Health Products New Business CSM: 62% of new business CSM as of the third quarter.
- YTD New Business CSM: KRW2.5 trillion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Samsung Life (KS:032830) Insurance (NS:LIFI) Co Ltd (XKRX:032830) reported a significant increase in new business CSM, up by KRW834.6 billion quarter-over-quarter, driven by strong sales of health products.
- The company's CSM balance increased by KRW0.7 trillion from the start of the year, reaching KRW13 trillion, indicating strong future earnings potential.
- Year-to-date consolidated profit attributable to controlling shareholders rose by KRW592.4 billion year-over-year, totaling KRW2,421 billion.
- Samsung (KS:005930) Life Insurance Co Ltd (XKRX:032830) achieved a solid year-to-date new business CSM of KRW2.5 trillion, with health products accounting for 62% of new business CSM.
- The company is committed to expanding total shareholder return to 50% in the mid to long term, reflecting a focus on enhancing shareholder value.
- The solvency ratio has decreased compared to previous quarters, with the KIC ratio dropping from 219% at the end of last year to between 190% and 200% as of September.
- Regulatory tightening in Korea, including a decrease in the discount rate and an extension of the last liquid point, has made the KIC scheme more conservative.
- Samsung Life Insurance Co Ltd (XKRX:032830) faces challenges from growing volatility in domestic and global financial markets, which could impact future earnings.
- The company anticipates potential valuation losses on some alternative investments due to interest rate and share price volatility.
- There is a negative balance of KRW3 trillion in surrender value reserves, which is expected to turn positive only by late 2026 or end of 2027, depending on new business sales.
A: Jungsun Lee, Head of RM, explained that Samsung Life aims to maintain a solvency ratio between 200% to 220% in the long term, similar to European insurance companies. Recent regulatory tightening in Korea has led to a more conservative approach, with a target around 180% to 190%. The company is exploring measures like purchasing ultra-long bonds and using coinsurance to manage volatility.
Q: Given the significant profits this year, what are Samsung Life's plans for dividends?
A: Ho-Seok Yoo, CFO, stated that while earnings have exceeded expectations, factors like insurance reform and market volatility could impact future profits. Samsung Life remains committed to a 50% shareholder return in the mid to long term and is reviewing its dividend policy to enhance attractiveness to investors.
Q: What impact do changes in actuarial assumptions have on Samsung Life's financials?
A: Youngwoong Lee, Head of Actuary, noted that recent insurance reform meetings could impact the company by approximately KRW200 billion, affecting the KIC ratio by about 5%. The impact will mainly be a decline in CSM, with the company reviewing actuarial guidelines for 2024.
Q: How is Samsung Life addressing the negative balance in surrender value reserves?
A: Youngwoong Lee mentioned that the current negative balance is KRW3 trillion. The company expects this to turn positive by late 2026 or 2027, assuming continued robust new business sales.
Q: What are Samsung Life's strategic plans for new business areas?
A: Sang-Hee Lee, Managing Director & Head of Mid-Term Strategy, highlighted that Samsung Life is exploring new business areas, including senior living and healthcare. A task force has been established to analyze market opportunities and profitability, with plans to expand these initiatives starting next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.