Samsung Life Insurance is benefiting hugely from the spike in the stock price of Samsung Electronics with its holdings now valuing more than its market capitalization and also from generous dividend policy of the cash-rich chipmaker whose profits have surged from chip business.

According to securities industry sources on Friday, the value of Samsung Electronics shares held by Samsung Life Insurance reached roughly 22 trillion won ($19.7 billion), exceeding its market cap of 21.7 trillion won. The life insurer owns 10,622,814 shares or 7.55 percent stake in its electronics affiliate.

Samsung Life also has 484,248 shares in Samsung Electronics in a special account, with which it makes regular transactions to leverage or profit. Shares of Samsung Life Insurance ended Friday at 108,500 won, up 1,000 won or 0.93 percent from the previous session. Samsung Electronics shares fell 1.86 percent to 2,060,000 won. Its stock gained 14.1 percent from the beginning of the year on the strong performance in the chip sector and buyback program.

Equity holding in another outweighing its own corporate value is the first experience for the top life insurer.

But market watchers expect Samsung Life’s stock to gain from generous dividend plan of Samsung Electronics. The electronics maker paid out a cash dividend of nearly 4 trillion won and bought back 9.3 trillion won treasury shares for cancellation to boost the stock price.

The payout would be made quarterly this year, which would also benefit non-operating income for the life insurer.

Samsung Life collected 300 billion won in dividends from Samsung Electronics last year, which is huge when compared to its 996.5 billion won operating profit for the year.

The life insurer also would be helped by rising interest rates, market watchers said.

By Hong Jang-won

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]