DGB Life Improves Capital Soundness with 4 Trillion KRW Asset Reclassification

DGB Financial Center

[Asia Economy Reporter Oh Hyung-gil] DGB Life Insurance announced on the 30th that its Risk-Based Capital (RBC) ratio rose to 325.2% due to asset reclassification work.

At the end of May, DGB Life Insurance reclassified all of its held-to-maturity securities worth 4 trillion KRW into available-for-sale securities.

When held-to-maturity securities are changed to available-for-sale securities, valuation gains or losses occur depending on the interest rate at the time of purchase and current interest rate fluctuations. In a low interest rate environment, valuation gains can be realized. Reflecting these valuation gains, DGB Life Insurance's RBC ratio increased by 137.7 percentage points from 187.5% at the end of March.

The RBC ratio is a key indicator of an insurer’s capital soundness, quantifying the insurer’s ability to pay insurance claims promptly if policyholders request payment all at once. The Financial Supervisory Service recommends maintaining it above 150%.

DGB Life Insurance explained that by alleviating the RBC ratio burden, it has been able to complete its Asset-Liability Management (ALM) strategy ahead of the implementation of the new International Financial Reporting Standards (IFRS 17). By securing a long-term portfolio and reducing the asset-liability duration gap, it lowered interest rate exposure risk, enabling stable RBC ratio management.

Furthermore, DGB Life Insurance plans to expand investment returns through active asset management, including increasing the proportion of alternative investments and overseas bonds.

A DGB Life Insurance official said, "In a situation where the low interest rate trend is expected to continue, we raised the RBC ratio above the industry average through asset reclassification, considering the business environment and ALM for the next 2 to 3 years. This will serve as a foundation to provide more stable benefits to customers."

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