Korea Insurance: 1H26 preview: Yield appeal returns, but 3Q volatility is the key test

研报英文原文证据摘录

J P M O R G A N

Asia Pacific Equity Research

05 August 2026

Korea Insurance

1H26 preview: Yield appeal returns, but 3Q volatility is

the key test

Korea insurers outperformed in July after significant YTD underperformance,

with the sector now offering an average FY27E dividend yield of 5%. Seoul

Guarantee Insurance, DB Insurance and Korean Re look particularly attractive at

9%, 6% and 6%, respectively. We expect positive 2Q26 NP growth of 121% oya

for life insurers and 11% oya for non-life insurers, but the 2Q print itself is unlikely

to be the key share price driver. Instead, investor focus should shift to the 3Q

earnings risk, given significant KOSPI volatility and 44% of FY25 pre-tax profit

was supported by investment profit rather than insurance profit. Dividend

visibility, supported by stronger core capital and the value-up initiative, remains

the key investment case, in our view. Our preference order into the 2Q reporting

is Seoul Guarantee Insurance (SGI), Korean Re, DB Insurance, Samsung F&M,

Samsung Life, Hyundai M&F and Hanwha Life.

Dividend. Korea’s 10-year Treasury yield has risen to 4.34%, up 1.55%p YTD,

supporting core capital but also raising shareholders’ required cost of capital.

On dividend yield spreads over the risk-free rate, we prefer SGI, DB Insurance,

Korean Re and Samsung F&M. SGI’s planned quarterly dividend proposal

from 1H26 could be a catalyst after 14% YTD underperformance, while DB

Insurance and Korean Re remain compelling with 6% yields (Figure 4).

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Value-up. We expect limited progress during 1H results, with the theme likely

to become more visible during 3Q reporting. DB Insurance and SGI should

provide more detail on value-up plans, while clarity on SEC-related disposal

gains and dividend income could reduce volatility for Samsung insurers.

CSM quality. Korea remains one of the few markets in Asia with significant

CSM volatility, following repeated actuarial assumption strengthening,

suggesting initial assumptions may not have been conservative enough. We

expect volatility to persist in 2Q26, driven by further loss ratio strengthening

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