DB Insurance shares fall despite increased shareholder return targets

DB Insurance shares fell by 3.36% following the announcement of its mid-to-long-term corporate value enhancement plan. While the company raised its shareholder return targets—aiming for a 40% return rate on a consolidated basis and 50% on a separate basis by 2030, with annual dividend per share increases of over 10%—investors reacted negatively to the fact that share buybacks and cancellations were not included as regular return methods.

The insurance industry faces structural challenges in expanding shareholder returns due to regulatory requirements. Specifically, the accumulation of surrender value reserves (SVR) reduces distributable profits, and the Korea Insurance Capital Standard (K-ICS) ratio acts as a hurdle. Because regulators require the exclusion of planned dividends from available capital, increasing dividends exerts downward pressure on the K-ICS ratio.

DB Insurance has introduced the Dividend Coverage Ratio (DCR) to manage sustainability, setting a target range of 100% to 400%. The company also established safety thresholds for K-ICS at 180% and DCR at 200%. Other major insurers, such as Hanwha Life and Hyundai Marine & Fire Insurance, have also faced difficulties in maintaining dividends due to high reserve requirements under IFRS17.