[Click eStock] "DB Insurance, Focus on Improvement in Risk Loss Ratio"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a buy rating and a target price of 73,000 KRW for DB Insurance on the 13th.

In the first quarter, DB Insurance recorded a net profit of 280 billion KRW on a standalone basis, exceeding market expectations by 31%. Loss ratios improved in long-term and automobile insurance, operating expenses decreased, and investment income increased.

The automobile insurance loss ratio stood at 77.2%, below the 80% level. This was due to a decrease in accident rates caused by an increase in quarantined population amid the spread of Omicron. The risk loss ratio was 89.2%, which is encouraging as it declined compared to the same period last year despite cataract surgery insurance claims reaching a record high in March.

The general insurance loss ratio rose significantly to 74.8%, but due to the very small sample size, volatility was high even with a few accidents.

Sales of protection-type individual insurance amounted to 30.6 billion KRW, down 12% from the same period last year. However, it has shown signs of recovery since the third quarter. Researcher Hyejin Park of Daishin Securities said, “Following the strengthening of GA policy standards, the overall expense ratio was recorded at 18.8%. The long-term insurance expense ratio was 19.4%, maintaining the 18% range since the fourth quarter, highlighting its strengths.”

Due to the sharp rise in interest rates, the yield on interest-earning assets increased, resulting in an investment return rate of 3.43% and investment income of 252.7 billion KRW. However, unrealized losses on available-for-sale financial assets amounted to 52.1 billion KRW, decreasing by 554.7 billion KRW, and the RBC ratio fell by 15.6 percentage points from the previous quarter to 216.6%.

Improvement in the risk loss ratio is expected in the second quarter. Researcher Park stated, “The 2022 rate hike for indemnity insurance has been applied since April, and the problematic cataract claims have significantly decreased in April. The originally strong low expense ratio is also positive.”

This content was produced with the assistance of AI translation services.