AM Best Affirms Credit Ratings of DB Insurance Co., Ltd.

AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” (Superior) of DB Insurance Co., Ltd. (DBI) (South Korea). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect DBI’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.

DBI’s risk-adjusted capitalisation is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company has demonstrated relatively low volatility in its economic capital over the past years attributable to its strong capability of internal capital generation. Under IFRS 17, AM Best expects DBI’s capital will remain resilient amid unfavourable business conditions, such as interest rate movements, supported by its robust retained earnings and strong asset-liability management. DBI has low dependency on supplementary capital securities such as hybrid bonds and subordinated bonds given its strong capital position, while having favourable financial flexibility as a public company.

AM Best assesses DBI’s operating performance as strong, underpinned by its underwriting performance that outperforms its domestic peers as demonstrated by the continued relatively low combined ratio (both before and after the adoption of IFRS 17) and robust investment income. In 2023, the company demonstrated strong generation of new business contractual service margin from its long-term insurance line, which is a source of future profit. Prospectively, DBI’s long-term insurance line also is expected to benefit from its efforts, such as tightened underwriting and premium rate increases for medical indemnity policies, while the auto and general lines are expected to generate relatively stable profits. Investment income, which is composed largely of stable interest income from the fixed-income portfolio, has continued to support the bottom line with robust investment assets.

DBI remains one of the leading non-life insurers in South Korea, with a market share of about 19% in terms of insurance service revenue in 2023. The company benefits from a strong brand in its domestic market and its diversified product offerings, including long-term, auto, and general insurance. Its profile is enhanced further by the life insurance business through its subsidiary, DB Life Insurance Co., Ltd. Moreover, DBI is one of the leading insurers in digital innovation in South Korea’s insurance industry.

Negative rating actions could occur if there is a significant deterioration in DBI’s balance sheet strength fundamentals. Negative rating actions also could arise if the company shows a sustained deterioration in its operating performance to a level that no longer supports the current strong assessment. Although unlikely in the medium term, positive rating actions could occur if the company demonstrates unquestionable market leadership position with high brand recognition in domestic and overseas markets.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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