Stable underwriting, investment support DBI Insurance medium-term performance

DBI’s risk-adjusted capitalisation is backed by solid growth of its capital, which reached $5b as of end-2020.

The operating performance of South Korea’s DB Insurance (DBI) is expected to remain strong over the median term, underpinned by stable underwriting performance and robust investment returns, according to an AM Best report.

DBI’s risk-adjusted capitalisation is backed by solid growth of its capital, which reached $5b (KRW6.5t) as of end-2020 on strong profit retention. Its net underwriting and asset leverage metrics compare favourably with its domestic peers and have trended downward over the past five years.

DBI also has a high quality of capital and prudent asset-liability management, the report said. Although its capital is exposed to moderate volatility from the recent rise in long-term yields, a solid base of retained earnings is expected to provide a sufficient capital buffer against such volatility. 

DBI’s strong operating performance assessment is underpinned by a five-year average return-on-equity ratio of 10.4% from 2016 to 2020, underwriting performance that has outperformed its peers and effective investment management, as demonstrated by relatively low combined ratios and solid investment income. 

Whilst its investment income continued to be a major source of earnings, underwriting performance markedly improved in 2020 when compared with the previous year. This was largely driven by improved loss experience in the auto line due to its cumulative premium hikes, combined with the favourable impact from the COVID-19 pandemic due to fewer accidents from reduced miles driven.

DBI ranks third in South Korea’s non-life insurance segment with a 17% market share in terms of direct premium written in 2020. The company’s strong brand in its domestic market, wide product offerings within non-life and life insurance through its subsidiary and its leadership in digital innovation in South Korea’s insurance industry support the favourable business profile assessment.