SK Securities analyzed that the corporate value enhancement (value-up) plan announcement regarding Samsung Fire & Marine Insurance on the 3rd is positive, but uncertainties must be considered. It maintained a target price of 474,000 won and an investment opinion of 'buy'. The previous trading day's closing price for Samsung Fire & Marine Insurance was 381,500 won.
The value-up announcement of Samsung Fire & Marine Insurance, made on the 31st of last month, included details such as an unchanged solvency ratio (Korea Insurance Capital Standard - K-ICS) of 220%, achieving a shareholder return rate of 50% centered on cash dividends, a medium- to long-term return on equity (ROE) target of 11-13%, and the cancellation of ownership exceeding 5% of treasury shares (including preferred shares).
Seol Yong-jin, a researcher at SK Securities, noted, 'Considering that the cancellation of existing treasury shares is not included in the shareholder return rate of 50%, Samsung Fire & Marine Insurance's total shareholder return rate by 2028 will be nearly 60-70%.' However, he expressed disappointment that the previous communication of achieving a medium- to long-term shareholder return rate of 50% in three years has been delayed to 2028.
SK Securities emphasized that Samsung Life Insurance's actions are ultimately the key. Given that Samsung Life Insurance is currently the largest shareholder of Samsung Fire & Marine Insurance with approximately 14.98% equity, if the equity from the cancellation of treasury shares exceeds 15%, regulatory approval from the Financial Services Commission must be obtained for it to be consolidated as a subsidiary. If Samsung Life Insurance does not consolidate Samsung Fire & Marine Insurance as a subsidiary, it may have to dispose of its equity exceeding 15%, resulting in an overhang. Furthermore, if consolidated, Samsung Life Insurance's financial statements will reflect the performance of Samsung Fire & Marine Insurance, leading to fluctuations in profits and losses; thus, significant changes in Samsung Life Insurance's shareholder return policies are expected.
Since Samsung Fire & Marine Insurance has not made clear mentions on this matter, uncertainties about the timing and impact of the treasury share cancellation still exist.
Research Institute Seol stated, 'The value-up announcement is positive in terms of reconfirming existing content, enhancing per-share value through treasury share cancellations, and reducing concerns about index exclusion.'
He added, 'It's disappointing that the timing and ultimate impact of the treasury share cancellation depend on Samsung Life Insurance's decision, and there is a lack of plans to utilize excess capital.' He pointed out the need for confirmations regarding the complex matters related to group governance in the future.