DB Insurance aims to increase its consolidated shareholder return rate to 40% and standalone rate to 50% by 2030. The company plans to raise its dividend per share (DPS) by more than 10% annually. This shift marks a transition in its growth and capital management strategy, focusing on securing stable dividend resources rather than merely expanding accounting profits.
On August 28, DB Insurance announced its corporate value enhancement plan and held a conference call. The previous target of a 35% standalone return by 2028 has been raised to 50% by 2030, extending the achievement timeline by two years.
Nam Seung-hyung, Chief Financial Officer of DB Insurance, stated during the call, "Achieving both 40% consolidated and 50% standalone rates means we will accomplish both, not just one. After 2030, we will also consider whether to increase the consolidated shareholder return rate to 50%."
The distinction between consolidated and standalone targets is due to the acquisition of the U.S. specialty insurer Fortegra in May. While Fortegra's profits will be reflected in consolidated results, it will take time for DB Insurance to utilize dividends from its subsidiary as a source for its own dividends.
The shareholder return strategy will focus on cash dividends. Over the past five years, DB Insurance has increased its DPS by an average of 21.4%. The company will not include its current repurchased shares in this target. If it has sufficient capital or determines that its stock price is significantly low, it will consider additional returns through share buybacks and cancellations.
This plan reflects the assessment that the gap between accounting profits and actual dividend resources has widened since the introduction of new accounting standards. A combined analysis of ten non-life insurance companies showed that last year, accounting profits under IFRS 17 exceeded 9 trillion won, while dividend resources dropped to 700 billion won, creating a gap of 8.7 trillion won.
To address this, DB Insurance will introduce a new management indicator called the dividend coverage ratio (DCR), calculated by dividing distributable profits by expected dividends. It will set safety lines at a K-ICS (Korean Insurance Capital Standard) ratio of 180% and a DCR of 200%. If both exceed a K-ICS of 220% and a DCR of 400%, the company will assess its capacity for additional shareholder returns.
DB Insurance will also refrain from aggressive expansion. According to the company's simulations, excessive growth could reduce distributable profits to 400 billion won by 2030, while balanced growth that manages loss ratios and business expenses could increase profits to 2.9 trillion won.
Nam emphasized, "Shareholder value is not a leftover from management results but the starting point for growth and capital allocation decisions. We will implement this plan for sustainable performance rather than short-term expansion."
* This article has been translated by AI.
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