思得2000份金融行业研究报告汇丰银行保险korea non life insurance solid may loss ratio improvements continue hsbc

1、1 July 2017ab4Risk loss ratio continues to improve on the back of steady risk premium inflows and slowing claims growth4Regulators plan to enhance LAT framework also includes supportive measures4Continue to prefer HMF and Dongbu (both Buy rated), which are more leveraged to the long-term re-pricing

2、cycleSinyoung Park* Analyst, Korea FinalsTheand Shanghai Banking CorporationLimited, Seoul Securities Branch sinyoungpark* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulationsPassing through the inflection point for long-term ris

3、k loss ratioSector earnings were up 24% y-o-y driven by continued loss ratio improvementsacross thon a y-o-y basis (4.3ppt in auto, 1.9ppt in long-term and 16ppt incommercial). Of note, the risk loss ratio improved by 6-7ppt y-o-y at second-tierinsurers on the back of steady risk premium growth and

4、govt-led reform initiatives.Regulators plan to enhance LAT framework also includes supportive measuresRegulators finalized step-by-step enhancements to the LAT (Liability Adequacy Test)framework to ensure a soft-landing of the IFRS17 migration scheduled for 2021; toprevent insurers from facing a sud

5、den decline in shaolders equity from marking-to-market liabilities. While the LAT discount rate will be gradually lowered over the next three years (which will incur additional reserving), the regulator also included supportive measures: 1) allowing additional reserve to be partially counted towards

6、 available capital for RBC (risk-based capital) calculation and 2) laying out thegrounds for hybrid bond issuance as pre-emptive capital enhancements.Continue to prefer Hyundai M&F and Dongbu Insurance (both rated Buy) We continue to prefer second-tier insurers, Dongbu Insurance (005830.KS, TP K

7、RW88,000) and Hyundai M&F (001450.KS, TP KRW45,000) that are moreleveraged to the long-term insurance re-pricing cycle. Although news on pricing MiFID II ResearchIs your access agreed?CONTACT us todaypressure for medical indemproducts may hurt investor sentiment, we believe itcould potentially e

8、xpedite the reform (i.e., itemization/ standardization of non-NHI benefit coverage) and support risk loss ratio improvements. Valuation and risks areon page 4.Exhibit 1: Target price summaryHSBCRating29-June Price 284,000Target price 340,000Upside/ downside19.7%2017e PB (x) 0.95x2017e PE (x) 9.88x20

9、17e ROE 10.0%CompanyTickerSamsung F&M000810 KSBuy39,90045,00012.8%1.03x7.55x14.4%Hyundai M&F001450 KSBuySource: Thomson Reuters Datastream, HSBC estimatesIssuer of report: Theand ShanghaiDisclosures & DisclaimerBanking Corporation Limited, Seoul Securities Branchd the analyst certificati

10、ons in r, which forms part of it.View HSBC Global Research at:Dongbu005830 KSBuy68,80088,00027.9%0.99x7.72x13.5%Korea non-life insuranceSolid May, loss ratio improvements continueEQUITIESINSURANCEKorea获取金融报告1.内5+金融研究报告；2.大咖观点、证券、银行、私募、保险、衍生品、用户行为、金融科技3.每周重点；4.每月200+资料汇总，累计上万份金融报告，给专属用户；截图 扫一扫二维码或搜索公

11、众号【seed思得】点击菜单栏“资料共享”加入seed思得共享（1-100群）【seed思得】本着的目的与用户共享资料，并不拥有报告，请立即我们。Exhibit 2: Korea non-life May 2017 monthly earnings resultsSource: Company data (Samsung F&M, Dongbu Insurance and Hyundai M&F)abcEQUITIES INSURANCE1 July 2017May 2017 Samsung F&M (Monthly)KRW bn%,M-o-MKRW bnDongbu%

12、,M-o-MKRW bn%,M-o-M Hyundai M&F KRW bn%,M-o-M%,Y-o-YSectorKRW bn%,M-o-M%,Y-o-YGPW1,018-1%4%- Auto271-1%16%- Long term673-1%0%- General74-3%0%1,0581%1%2757%3%697-1%1%863%3%1,526-2%0%407-1%-2%1,0100%0%109-15%-1%3,602-1%1%9541%4%2,380-1%0%268-7%0%NEP9571%4%- Auto2484%13%- Long term662-1%0%- General

13、4716%14%9551%2%2513%11%6670%0%387%-8%1,4891%2%3923%8%9870%0%1098%5%3,4011%3%8913%10%2,3160%0%19410%4%Total Claims-7772%-2%- Auto-1958%5%- Long term-5530%-3%- General-2911%-24%-7832%-1%-1942%7%-5692%-2%-20-4%-19%-1,2142%-1%-2985%2%-836-1%-1%-8026%-9%-2,7732%-1%-6865%4%-1,9580%-2%-12917%-14%Operating

14、expenses-170-2%10%Underwriting profit1017%-139%Net investment income89-1%4%-1831%8%-10410%-53%825%10%-2840%0%-911417%-83%134-8%-24%-6370%5%-10-255%-91%305-3%-9%Operating income980%65%Non-operating income-361%-13%Pre-tax income95-1%70%Tax-23-1%70%72-5%35%1-120%-125%731%46%-18-1%46%124-15%4%-6-345%-23

15、2%119-20%-4%-28-14%-4%295-8%26%-8102%174%287-9%25%-69-7%25%Net profit72-1%70%552%46%90-21%-4%218-10%24%Investment asset30,4103%12%Adj. sha olders' fund4,1823%8%New long term sales30,9013%12%2,9743%10%60,4011%9%11,7371%12%121,7122%11%18,8922%11%Monthly LT premium8.311%-7%7.911%2%Pure6.611%2%Savin

16、g0.48%-68%8.017%-1%7.418%12%6.021%10%0.611%-58%13.35%-5%12.96%-3%8.23%-6%0.3-4%-45%3010%-5%2810%2%2110%0%16%-59%96%0.1ppt8.4ppt% Pure80%0.2ppt6.9ppt% Saving4%-0.1ppt-8.4pptProfitability92%0.5ppt10.7ppt74%2.0ppt7.3ppt8%-0.5ppt-10.7ppt97%0.3ppt1.9ppt62%-1.2ppt-0.6ppt3%-0.3ppt-1.9ppt95%0.2ppt6.0ppt70%0

17、.2ppt3.6ppt5%-0.2ppt-6.0pptTotal loss ratio81.2%0.4ppt-4.8ppt- Auto loss ratio78.7%2.3ppt-5.9ppt- Long term loss ratio83.6%0.2ppt-2.6ppt- LT Risk loss ratio (monthly)84.4%2.8ppt-7.4ppt- LT Risk loss ratio (cumulative)86.2%-0.5ppt-5.8ppt81.9%0.8ppt-2.3ppt77.3%-0.7ppt-2.8ppt85.3%1.8ppt-1.8ppt86.9%6.0p

18、pt-6.7ppt89.8%-0.7ppt-4.7ppt81.5%0.8ppt-2.8ppt75.8%1.1ppt-4.1ppt84.7%-0.2ppt-1.2ppt76.7%1.3ppt-0.7ppt78.1%-0.4ppt-2.1ppt81.6%0.7ppt-3.3ppt77.3%0.9ppt-4.3ppt84.5%0.6ppt-1.9pptNANANANANANA- General loss ratio60.4%-2.4ppt-29.4ppt54.2%-6.4ppt-7.3ppt73.5%10.5ppt-11.6ppt62.7%0.5ppt-16.1pptExpense ratio17.

19、8%-0.6ppt1.0pptCombined ratio99.0%-0.1ppt-3.8pptInvestment yield3.5%-0.1ppt-0.2ppt19.1%0.1ppt1.1ppt101.1%0.9ppt-1.2ppt3.2%0.1ppt-0.1ppt19.1%-0.2ppt-0.4ppt100.6%0.6ppt-3.2ppt2.7%-0.3ppt-1.2ppt18.7%-0.2ppt0.6ppt100.2%0.4ppt-2.7ppt2.4%-0.9ppt-1.4pptabcEQUITIES INSURANCE1 July 2017Risk loss ratio improv

20、ement continues with govt-led reform initiativesRisk loss ratio continues to improve on the back of steady risk premium growth and slowing claims growth. While steady risk premium growth was widely expected after series of price hikes since 2015 and re-pricing of policies, we highlight that the dece

21、leration in claims growth isfaster-than-expected due to 1) govt-led reform initiatives (i.e., raising the co-payment rate from10% to 20% for non-NHIC benefits from Sep2015, bigger penalty for frauds, disclosurerequirement for non-NHIC treatments) and 2) tightened underwriting for medical indemproduc

22、ts since 2012-13 having positive impact.Exhibit 3: Dongbus risk loss ratio/ risk premium/ claims growth trend40%20%30%20%10%15%10%5%0%0%-10%-20%-5%-10%Risk loss ratio yoy chg (accumulated)Incurred losses yoy chg (accumulated)Source: Company data (Dongbu Insurance)Risk premium yoy chg (accumulated)Ex

23、hibit 4: HMFs risk loss ratio/ risk premium/ claims growth trend25%20%25%20%15%15%10%5%0%10%5%0%-5%-5%Risk loss ratio yoy chg (accumulated) Incurred losses yoy chg (accumulated)Source: Company data (Hyundai M&F)Risk premium yoy chg (accumulated)3Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 M

24、ar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 May-15 Oct-15 Mar-16 Aug-16Jan-17Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17Apr-17abcEQUITIES INSURANCE1 July 2017Exhibit 5: Regulators

25、 plan to enhance LAT framework1) Step-by-step adjustment to the LAT discount rate from 2017-2019(Current) Riskrate + insurers' excess return (asset yield - policy rate)(Revised) Riskrate + liquidity premium3) Laying out grounds for capital enhancement measures such as hybrid bonds (*supportive m

26、easure, in our view)Source: FSC and FSS (Fin al Supervisory Services)Valuation and risksOur target prices for non-life insurers are based on a price-to-book value (PBV) methodologyusing Gordon growth m, net of company-specific discounts (where applicable); our multipleis predicated on a company-spec

27、ific cost of equity and a long-run growth assumption of 1.0%.For Samsung F&M, our TP of KRW340,000 implies 19.7% upside; we have a Buy rating on the stock as we believe SFMs earnings power is underestimated and we expect it to keep adominant position while industry profitability is still expecte

28、d to improve.For Dongbu, our TP of KRW88,000 implies 27.9% upside; we have a Buy rating on the stock.For Hyundai M&F, our TP of KRW45,000 implies 12.8% upside; we have a Buy rating on the stock.Exhibit 6: Valuation methodologyCompany Bloomberg code RatingSamsung F&M 000810 KSBuyDongbu 005830

29、 KSBuyHMF 001450 KSBuyPrice at Upsideof 29 June (KRW)284,00019.7%0%68,80027.9%0%39,90012.8%0%Valuation discountCurrent PBPeak (past 10Y) Avg (past 10Y) Trough (past 10Y)Fair value0.95x2.51x1.44x0.94x339,6450.99x1.54x1.08x0.76x88,1321.03x2.29x1.32x0.64x45,744Sustainable ROE COE1yr fwd BPS9.76%8.37%29

30、9,78213.45%10.06%13.85%11.17%69,59338,876FY17e PER9.88x28,7487.72x8,9167.55x5,287FY17e EPS (KRW)Source: Thomson Reuters Datastream, HSBC estimatesExhibit 7: Risks to our ratingsCompanyTickerRatingShare price 29 June 2017Fair value Key risks to rating TPSamsung F&M 000810 KSBuy284,000340,000 Down

31、side risks: (i) Acquisition of group assets; (ii) weaker-than-expected capital markets further lowering investment returns; and (iii) potential value-destructive M&A.Hyundai M&F 001450 KSBuy39,90045,000 Downside risks: (i) An unexpected auto premium rate cut negatively impacting profitabilit

32、y; (ii) a sudden rise in market rates calling for capital enhancement measures beyond sub-debt issuance; and (iii) delayed risk- loss ratio improvement with unexpected rise in number of claims.Source: HSBC estimatesDongbu005830 KSBuy68,80088,000 Downside risks: (i) Unexpected support to its manufact

33、uring affiliates or capital injection into finalsubsidiaries; and (ii) further government intervention with material negative impact.Target PB1.19x1.37x1.26xTarget Price340,00088,00045,0002) Available capital recognition (*supportive measure, in our view)(Portion subject to recognition) 90% in 2017

34、à 80% in 2018 à 70% in 2019 à 60% in 2020abcEQUITIES INSURANCE1 July 2017Finals & valuation: Samsung F&MBuyP&L summary (KRWbn)Year toGroup valuation metrics12/2016a12/2017e12/2018e12/2019eYear to12/2016a12/2017e12/2018e12/2019ePer share data (KRW)Year to12/2016a12/2017e12/

35、2018e12/2019eOperational metricsYear to12/2016a12/2017e12/2018e12/2019eIssuer informationEmbedded value (KRWbn)Year to12/2016a12/2017e12/2018e12/2019ePrice relative350000330000310000290000270000250000230000210000Profile2015SSource: HSBC Note: Priced atof 29 June 20175Samsung Fire & Marine Insura

36、nce was incorporated on 26 January 1952, under the name, "Korea Anbo Fire Marine Reinsurance," and was renamed Samsung Fire & Marine Insurance in December 1993. SFMI has been striving for sustainable growth by setting the Global Top 10 Roadmap of beco a Global Top-level Non-life Insura

37、nce Company with an insurance revenue of KRW 3.4 trillion and assets of KRW 34 trillion by 2020.ANW - life4,9025,1075,4475,840Value of in force5,4876,6468,22010,158Embedded value - life10,38911,75213,66815,998ANW - other businesses5,6985,5845,2314,529Embedded value - group16,08717,33618,89920,526- g

38、rowth9.5%7.8%9.0%8.6%APE2,0141,9812,1252,093- growth-9.4%-1.7%7.3%-1 5%Reported NBV724693722747- growth7.4%-4.4%4.2%3 5%Reported NBV margin36.0%36 3%34.7%33.7%float83%SectorInsuranceCountryKoreaAnalystSinyoung ParkContactShare price (KRW)284000.00Target price (KRW)340000.00Reuters (Equity)000810 KSB

39、loomberg (Equity)000810 KSMarket cap (USDm)11,760Total DPW growth2.2%4.1%5.9%6 2%- Auto13.4%7.6%4.6%3.8%- Long term-1.0%2.8%6.7%7 5%- General-4.3%4.1%3.4%2.7%Total Loss ratio84.0%83.3%83.0%82 5%- Auto80.9%80.2%79.9%79.7%- Long term86.3%86.0%85.5%85 2%- General73.7%69.7%70.0%65 9%Expense ratio19.2%19

40、.8%19.5%19 5%Combined ratio103.3%103.1%102.4%102.0%Investment yield3.0%3.4%3.1%3.1%EV group403,914435,274474,505515,367- growth10.2%7.8%9.0%8.6%TNAV214,374239,197254,805272,467- growth14.1%11.6%6 5%6 9%Book value273,197299,782319,693342,360- growth9.8%9.7%6.6%7.1%Adjusted book value273,197299,782319

41、,693342,360- growth9.8%9.7%6.6%7.1%Adjusted EPS21,08928,74829,11032,564- growth11.4%36.3%1 3%11 9%EPS21,08928,74829,11032,564- growth11.4%36.3%1 3%11 9%DPS6,1009,1999,89711,072P/EV Group0.70x0.65x0.60x0.55x- Group ROEV11.6%10.0%11 3%10.9%P/ Tangible NAV1.3x1.2x1.1x1.0xP/ BVPS1.04x0 95x0.89x0.83x- RO

42、E8.1%10.0%9.4%9.8%- ROE comp ensive11.7%13.1%9 9%10.6% P/ Adj. BVPS1.04x0 95x0.89x0.83x- ROAdj BV8.1%10.0%9.4%9.8%P/E13.5x9.9x9.8x8.7xDividend yield2.1%3 2%3 5%3.9%Gross written premiums18,18318,93620,05421,289- Auto4,8045,1715,4105,615- Long term12,07712,40913,24114,233- General1,3031,3571,4021,441

43、Net earned premiums17,40618,29419,40520,621- Auto4,3644,7775,0125,204- Long term11,83412,20613,04014,020- General1,2081,3111,3531,396Total claims(14,626)(15,241)(16,104)(17,014)Operating expenses(3,347)(3,614)(3,775)(4,024) Increase of cat reserve (a)-U/W pro it (after cat reserves)(568)(561)(474)(4

44、17)Net investment income1,6882,0311,9632,088Operating income1,1201,4701,4901,671Pre-tax profit1,0941,4821,5301,711Net income (b)8411,1451,1591,297Adjusted net income (b) - (a)8411,1451,1591,297abcEQUITIES INSURANCE1 July 2017Finals & valuation: Dongbu InsuranceBuyP&L summary (KRWbn)Year toGr

45、oup valuation metricsYear to12/2016a12/2017e12/2018e12/2019e12/2016a12/2017e12/2018e12/2019ePer share data (KRW)Year to12/2016a12/2017e12/2018e12/2019eOperational metricsYear to12/2016a12/2017e12/2018e12/2019eIssuer informationEmbedded value (KRWbn)Year to12/2016a12/2017e12/2018e12/2019ePrice relati

46、ve790007400069000640005900054000490004400039000Profile2015DSource: HSBC Note: Priced atof 29 June 2017Dongbu Insurance, which was launched as Koreas first public auto insurance company in 1962, became a member of Dongbu Group in 1983 and changed its name to Dongbu Insurance Co., in October 1995, eme

47、rging as a prominent comp ensive non-life insurer in Korea driven by its focus on customer satisfaction and sound fin al status.ANW - life3,0603,1953,3943,626Value of in force2,7383,4274,2725,194Embedded value - life5,7986,6237,6668,821ANW - other businesses727682490217Embedded value - group6,5257,3

48、058,1559,038- growth6.7%12.0%11.6%10.8%APE1,3861,2911,3261,244- growth-19.5%-6.8%2.6%-6.2%Reported NBV456452464464- growth10.4%-0 9%2.8%0.0%Reported NBV margin32.9%35.0%35.0%35.0%float58%SectorInsuranceCountryKoreaAnalystSinyoung ParkContactShare price (KRW)68800.00Target price (KRW)88000.00Reuters

49、(Equity)005830 KSBloomberg (Equity)005830 KSMarket cap (USDm)4,257Total DPW growth5.3%3.6%4.4%4.6%- Auto15.5%9.9%6 5%4.3%- Long term2.4%2.0%4 3%5.4%- General1.5%-2.6%-1.7%-1.1%Total Loss ratio84.6%83.0%82 5%82.2%- Auto81.6%80.0%80 2%80.5%- Long term86.1%84.7%84.0%83.5%- General76.5%73.0%71 2%71.1%Ex

50、pense ratio18.2%18.4%18 5%18.6%Combined ratio102.8%101.4%101.0%100.8%Investment yield3.6%3.1%3.0%2.9%EV group103,083115,402128,842142,783- growth6.7%12.0%11.6%10.8%TNAV35,88042,53950,24858,221- growth20.5%18.6%18.1%15 9%Book value62,62369,59378,63388,172- growth7.6%11.1%13.0%12.1%Adjusted book value

51、62,62369,59378,63388,172- growth7.6%11.1%13.0%12.1%Adjusted EPS7,3968,91610,09711,016- growth13.5%20.6%13 2%9.1%EPS7,3968,91610,09711,016- growth13.5%20.6%13 2%9.1%DPS1,6502,4072,8273,085P/EV Group0.7x0.6x0.5x0.5x- Group ROEV8.4%14.3%14.1%13.2%P/ Tangible NAV1.9x1.6x1.4x1.2xP/ BVPS1.1x1.0x0.9x0.8x-

52、ROE12 3%13.5%13.6%13.2%- ROE comp ensive10 5%15.0%17.1%16.1%P/ Adj. BVPS1.1x1.0x0.9x0.8x- ROAdj BV12 3%13.5%13.6%13.2%P/E9.3x7.7x6.8x6.2xDividend yield2.4%3.5%4.1%4.5%Gross premiums12,09212,52313,07613,678- Auto2,9883,2843,4993,648- Long term8,0918,2518,6079,070- General1,014987970959Net earned premiums11,1