AM Best has upgraded the Financial Strength Rating to A+ (Superior) from A (Excellent) and the Long-Term Issuer Credit Rating to 'aa-' (Superior) from 'a+' (Excellent) of DB Insurance Co., Ltd. (DBI) (South Korea).

The outlook of these Credit Ratings (ratings) has been revised to stable from positive.

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 (ERM).

The rating upgrades reflect DBI's balance sheet strength metrics that have continued to demonstrate positive distinction from its industry peers over the past years, including its risk-adjusted capitalization that is assessed consistently at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR), amid recent capital market volatility. Despite the rapid rise in interest rates, which resulted in increased pressure on South Korean insurance companies' balance sheets in recent periods, DBI demonstrated relatively low volatility in its economic capital supported by strong internal capital generation capability. AM Best expects that DBI's prudent asset-liability management will continue to help the company effectively manage capital volatility under the new accounting and solvency standards (IFRS 17 and K-ICS), implemented in early 2023.

While having favourable financial flexibility as a public company, DBI maintains low dependency on supplementary capital securities such as hybrid bonds and subordinated bonds, demonstrated by its low debt leverage ratio. Its prudent investment strategy also supports the balance sheet strength assessment.

DBI's strong operating performance is underpinned by its underwriting performance that outperforms its domestic peers as demonstrated by the continued relatively low combined ratio and stable investment income. Its net income increased further in 2022, primarily due to an improvement in the long-term line profitability and the expansion of sales on highly profitable protection products. The company's auto insurance line also maintained favourable performance as a result of reduced claims frequency amid the outbreak of the Omicron coronavirus variant and its expansion of the online channel. Its robust investment income continued to support its bottom line with a stable net investment return in 2022.

DBI remained the third-largest non-life insurer in South Korea, with a stable market share of approximately 17% in terms of gross premiums written in 2022. Its business profile also is underpinned by the company's strong brand in its domestic market and its diversified product offerings across the non-life and life segments through its life subsidiary, DB Life Insurance Co., Ltd. DBI is also 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 risk-adjusted capitalisation, as measured by BCAR. Negative rating actions also could occur if the company shows a sustained deterioration in its operating performance to a level that no longer supports the current strong assessment. Positive rating actions could occur if the company's ERM framework is proven to be highly sophisticated with market best practice techniques, and the company is able to deliver successful results over the long term, evident in superior risk management capabilities embedded across the enterprise.

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.

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