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[Alpha Biz=(Chicago) Reporter Kim Jisun] Hanwha Life is expected to pay dividends at the end of the year for the first time in three years.
According to the insurance industry on the 13th, a revision to the Enforcement Decree of the Commercial Act was passed at a Cabinet meeting to stabilize the dividendable profits of insurance companies after the introduction of the new International Financial Reporting Standards (IFRS17). Financial authorities expected that stable profit dividends by insurers will be possible and will also help the general public, including shareholders who invested in anticipation of dividends.
The government has exceptionally allowed insurers to offset "unrealized profits" and "unrealized losses" when calculating dividendable profits in the future. Insurers allowed offsetting unrealized gains and losses only for mutually linked transactions while making similar characteristics of transactions for risk avoidance in preparation for future insurance payments.
Financial investment companies such as asset management companies are applying the criteria. According to Article 19, Paragraph 2 of the Enforcement Decree of the current Commercial Act, financial investment firms, including asset managers, are allowed to offset interconnected unrealized gains and losses when they trade derivatives for the purpose of risk avoidance in case they pay the contract proceeds to customers.
Hanwha Life Insurance, which has been able to secure dividendable profits due to the implementation of the amendment, is likely to resume dividends after 2020. Hanwha Life Insurance has not paid dividends for two consecutive years since 2021, citing preparations for the implementation of the IFRS17. This year, he repeatedly showed his willingness to pay dividends at the end of the year, raising expectations. Hanwha Life Insurance is stable at 182% as of the end of September in the case of the new solvency ratio (K-ICS, Kicks), a financial soundness indicator.
Hanwha Life Insurance is expected to pay dividends considering its annual performance and dividend propensity in the life insurance industry. Dividend propensity refers to the ratio of total dividends divided by net profit. The insurance industry's dividend propensity average is about 30%. Stock industry sources forecast Hanwha Life Insurance's dividend payout ratio to reach 30 percent this year due to its recent weak interest rate.
AlphaBIZ 김지선(stockmk2020@alphabiz.co.kr)
