Hanwha Life Insurance shares have plunged over 7% as the company forecasts a transition to losses in the third quarter. The decline is attributed to the suspension of sales for its main whole life insurance product and uncertainty surrounding dividends, which has dampened investor sentiment.
According to the Korea Exchange, as of 1:53 PM on October 21, Hanwha Life was trading at 4,277 won, down 353 won (7.62%) from the previous trading day.
On the same day, iM Securities lowered its target price for Hanwha Life from 5,900 won to 5,400 won, a decrease of 8.5%. This adjustment reflects concerns over deteriorating investment profits and slowing growth in new contracts.
Seol Yong-jin, a researcher at iM Securities, projected that Hanwha Life would report a net loss of 75.5 billion won for the third quarter, marking a transition to losses compared to the same period last year. He noted that rising interest rates and declining exchange rates would contribute to losses from the valuation and disposal of financial assets, along with losses from variable insurance hedging operations.
Investment profits are estimated to record a deficit of 206.6 billion won in the third quarter. In contrast, insurance profits are expected to turn positive at 116.2 billion won compared to the same period last year.
The suspension of sales for the flagship '700 Whole Life' product adds to the company's challenges. Hanwha Life halted sales of this product on September 21, which reportedly accounted for about 30-40% of its monthly premium income, raising concerns about future volumes of new contracts and potential declines in contract margins.
The uncertainty surrounding the resumption of dividends also persists. Ongoing burdens related to the accumulation of surrender reserve funds, coupled with delays in related regulatory improvements, have diminished expectations for shareholder returns.
Seol emphasized, "The suspension of sales for the main whole life insurance product and concerns over the short-term cancellation rates may necessitate further strengthening of assumptions. Given the ongoing uncertainty regarding dividends, it is essential to clarify strategies and responses for new contracts."
* This article has been translated by AI.
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