Variable Guarantee Options Hit Samsung Life’s Q2 but Underlying Trends Steady; Shares Undervalued

We maintain our fair value estimate of KRW 75,000 for Samsung Life Insurance. We expect its ROE to stay below 4% over our forecast horizon and assign a capital allocation rating of Poor based on its very large holdings of Samsung Electronics shares (an imprudent concentration in a single name), but even considering such negatives we see the shares as undervalued at their current price, at only 0.24 times embedded value as of the end of 2021.