DB Insurance Co. Ltd.

Modest pressure from the insurer's plans to raise mid-to-long-term shareholder returns through dividend payouts will not erode the strong capital position, in our view. We forecast DBI's dividend payouts to steadily increase to 25%-30% of annual net profits by 2025 from about 21% in 2023. We view the insurer has adequate investment risk controls, although some investment volatility could rise from its loans or securities with alternative-investment features. We estimate such investments to be about 44% of DBI's consolidated invested assets as of end-September 2024. The stable outlook reflects our view that DBI will maintain its very strong competitive position in Korea's insurance market and strong capitalization over the next two years. We believe DBI's prudent underwriting philosophy, focus on

...DB Insurance Co. Ltd.(DBI) can sustain better profitability than its peers. The insurer's return on average assets (ROAA) have been consistently higher than the average of major domestic peers over the past five years. We attribute this to the insurer's good underwriting strategy focusing on long-term protection-type health insurance policies with high margins and strong distribution channels that keep tight control on expenses. We expect DBI's consolidated ROAA to be 2.9%-3.0% over the next two years, higher than the average for the property and casualty (P/C) insurance sector in Korea. This is despite modest pressure from intense competition in the long-term insurance segment over the next two years. DBI will likely maintain strong capitalization. The insurer's above-average profitability, modest business growth prospects and broadly stable investment asset allocation will underpin this. We estimate DBI's insurance revenue will grow 2%-3% annually over the next two years, amid a focus...

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