After Samsung Electronics announced its stock buyback and retirement, the share prices of Samsung Life Insurance and Samsung Fire & Marine Insurance surged. Considering the '10% rule' of the Financial Industry Improvement Act, it appears there are expectations that Samsung Life Insurance and Samsung Fire & Marine Insurance will sell their stakes in Samsung Electronics again and use the funds for shareholder returns.
Shares of Samsung Life Insurance traded at 132,100 won on the KOSPI market at 11 a.m. on the 9th. The share price has risen by 3.08% (3,900 won) from the previous day and is up 1.3% (1,700 won) today as well. During the same period, the share price of Samsung Fire & Marine Insurance jumped from 440,500 won to 477,000 won, an increase of 8.3% (36,500 won).
Alongside expectations for reforms of the dividends tax system, Samsung Electronics' stock buyback is noted as a driving force for the surge in share prices. Samsung Electronics announced on the previous day that it would buy back stocks worth 3.9119 trillion won, including ordinary shares and preferred shares (Samsung Electronics Preferred). Among this, 2.8119 trillion won will be retired as quickly as possible after repurchase to enhance shareholder value.
According to DAOL Investment & Securities, if Samsung Electronics' stock retirement volume is reflected, the equity stake of Samsung Life Insurance in Samsung Electronics will increase from 8.51% to 8.57%. The equity stake held by Samsung Fire & Marine Insurance in Samsung Electronics will also rise from 1.49% to 1.5%. This means it will change from the current stake rate of 10% to exceeding it by 0.07%.
According to the Financial Industry Improvement Act, financial companies must obtain approval from the Financial Services Commission to hold more than 10% equity in non-financial affiliates. The market expects that Samsung Life Insurance and Samsung Fire & Marine Insurance will sell Samsung Electronics shares before the retirement to minimize uncertainty.
In February this year, Samsung Life Insurance and Samsung Fire & Marine Insurance sold Samsung Electronics shares through off-hours large transactions (block trades) just before Samsung Electronics was set to retire about 3 trillion won of its shares. At that time, they publicly disclosed the purpose of the disposal as 'preemptively eliminating risks of violating the Financial Industry Improvement Act.'
If Samsung Life Insurance and Samsung Fire & Marine Insurance sell their stakes again before the stock retirement, they could secure about 250 billion won based on the current stock price. However, there are still many uncertainties regarding whether they will dispose of their stakes in Samsung Electronics this time and how different Samsung Electronics' stock buyback volume will be from expectations.
How Samsung Electronics' share price trends is also important. The company’s performance in the second quarter (April to June) is expected to fall short of market expectations, and, following the mention of semiconductor tariffs by U.S. President Donald Trump, the stock price has been declining for four consecutive trading days.
Securities firms at home and abroad generally expect that Samsung Electronics' performance has hit rock bottom and will improve. However, the lack of results related to high bandwidth memory (HBM), a core component of artificial intelligence (AI) semiconductors, is causing them to lower the annual profit forecast for this year and 2026. This stock buyback will conclude the 10 trillion won stock buyback announced last year.
The management performance conference call scheduled for the 31st is expected to be a turning point for the stock price trend. Both Goldman Sachs and JP Morgan advised paying attention to explanations from executives regarding the 12-layer certification of the 5th generation HBM (HBM3E), the development status of the 6th generation HBM (HBM4), and the current status of the system LSI division and foundry division with large deficits, along with forecasts for memory semiconductors including HBM this year and in 2026.