Non-life stocks are now selling at just under nine times this year's earnings, says LG Securities' Kim. Despite the blood-letting, fundamentals still look attractive. Companies are also seeing lower claims from auto insurance and improved cash flows. But the longer-term earnings picture looks far less rosy. The changing business environment could wreak havoc with profitability, says Kim, in turn capping the potential of non-life insurance counters.
Rules barring life and non-life insurers from selling similar products are likely to fall in time.
Though the competition isn't cut-throat as yet, rates are declining and that will put pressure on bottom lines. But a sustained price rise is unlikely. The big companies have already got sound infrastructure in place and are likely to weather a storm better than the smaller companies. Among the larger firms, he favors LG Insurance for its strong growth potential. Other analysts also like the counter for its hidden real estate assets.