DB Insurance Co. Ltd.

The stable outlook reflects our view that DBI will maintain its very strong competitive position in Korea's insurance market and satisfactory capitalization over the next 18-24 months. We believe DBI's prudent underwriting philosophy, shift toward protection products, and investment strategy that focuses on long-term high-quality bonds will support its capitalization. We may lower the rating if DBI's consolidated capital position, which includes DBL, deteriorates significantly. This could result from an aggressive investment strategy for loans or alternative investment securities, or a substantially weaker underwriting performance. Although it is unlikely, we may upgrade DBI if the insurer delivers strong and sustainable earnings with a prudent investment strategy that leads to a significant improvement in its capitalization over the next 18-24 months.

...We anticipate DB Insurance Co. Ltd.'s (DBI) profitability to decline modestly in the next two years. This follows significant improvements in 2022 and 2021 mainly driven by improved auto and long-term health profitability. In the coming years, we expect auto loss ratios to deteriorate due to auto premium cuts and a rebound in claims as traffic volumes increase after social distancing measures were lifted this year. That said, continuing upward premium rate adjustments for unprofitable medical indemnity policies and tightened claims management will partly mitigate some of the pressure on profit. Moderate business growth prospects and broadly stable investment asset allocation will likely underpin DBI's capitalization. We expect DBI's premium growth to moderate to about 4% annually over the next two years while focusing on long-term protection-type policies. Loans, or securities with alternative-investment features, account for about one-third of DBI's invested assets as of end-June 2022....

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