DB Insurance : 2020 Business results & 2021 Outlook

February 19, 2021

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Disclaimer

This material was prepared for the convenience of investors and based on the figures herein have not yet completed full review by external auditors. Therefore, please note that some of the information herein may vary depending on the audit results.

The business outlook of 2021 and some information are written depending on projections analyzed from external and our own materials. This forward-looking information may vary due to various risks, uncertainties, and external forces surrounding the company. Therefore, some figures in this presentation used explicitly are subjected to change.

Certain of the statements contained herein are statements of future expectations and projections. These expectations and projections involve risks and uncertainties that are known or unknown based on current time and assumptions. Actual results, performance or events may differ materially from those in such statements due to various risks and future uncertainties. The reasons for the difference include overall economic conditions, financial market performance, frequency, depth of insurance incidents, mortality, trends, contract retention rates, interest rates, market competition, changes in laws and regulations, changes in government, regulatory policy and so on.

We have no obligation to update any forward-looking statements or forecasts contained in this document. No obligation or liability is assumed for investment results based on this document.

Contents

Ⅰ . 2020 Key Performance

• 1. 2020 Key Financials

• 2. 2020 Key Results

  • - Auto

  • - Long-term

  • - Investment & ALM

  • - Capital

Ⅱ. 2021 Business Outlook

• 1. Business Environment and Strategic Direction

• 2. 2021 Business Strategy

• 1. 2020 Key Financials

• 2. 2020 Key Results

  • - Auto

  • - Long-term

  • - Investment & ALM

  • - Capital

I. 2020 Key Financials

[unit: KRW bn, %, %p]

2019

2020

YoY

Direct Premium Written1)

Loss Ratio

Expense Ratio

Combined Ratio

13,027

86.3

20.9

107.2

Investment Yield

Net Profit before Tax

Net Profit

Total Asset

Shareholder's Equity

RBC(separate)2)

RBC(conslidated)2)

• 1) Including lump-sum premium

  3.91

  505.1

  372.7

  43,667

  47,124

  7.9%

  5,721 251.0

  223.8

  6,064	6.0%
  234.0	17.0%p
  205.7	18.1%p

• 2) RBC ratios(stand alone/consolidated) as of Dec. 2020 are the figures after dividend payment and subject to change after an audit

Net profit

Improved underwriting profit due to decreased Auto loss ratio and stable expenses ratio (-31.1% YoY )

Auto

Top Line

Higher premium growth focused on online channels(TM/CM)*

⚫ Direct Premium Written

(unit : KRW bn)

(G/R)

16,737

(+4.7%) (+11.6%) 19,551 17,521

2018

⚫ (Online) Percentage & Direct Premium Written (unit : KRW bn)

2019

2020

* CM: Cyber Marketing, TM: Tele Marketing

L/R	Despite rising insurance costs, improved frequency due to adequate pricing and reduced traffic volume

⚫ Net Premium Earned per vehicle

*Installment premium is exchanged to annual payment

⚫ Accident Rate per policy (unit : %)

(G/R)

(-0.3%p)

(-1.5%p)

13.4

13.1

⚫ Loss Amount per accident (unit : KRW k)

(G/R)

(+5.7%)

(+10.2%)

1,830

2018

2019

2020

2018

2019

2020

Long-Term

Top Line

Despite COVID-19 impact, risk premium growth widened through product competency and improved persistency ratio

⚫ Risk Premium

(unit : KRW bn)

⚫ New monthly premium of Protection

(unit : KRW bn)

3,469

⚫ Persistency Rate

(unit : %)

(G/R)

2018

(G/R)

2019

2020

2018

2019

2020

2018

2019

2020

L/R

Loss

Increasing risk loss ratio trend slowing down in spite of continued high loss ratio of medical indemnity

⚫ L-T Risk/ MI Loss Ratio

(unit : %)

(G/R)

111.4(+9.4%p)

120.8 (+1.6%p)

122.4

(+9.3%p)

(+0.2%p)

92.7

92.9

2018

⚫ 1st UY loss ratio for '20

(unit : %)

2019

2020

Investment & ALM

Investment

Efficient asset management through proper asset allocation

⚫ Invested asset G/R

(unit : KRW bn)

38,936

36,974

⚫ Invested asset portfolio

(unit : %,%p)

Bond

2018

2019

2020

Overseas

Stock

Deposit

Real estate

(+1.3)

43.0

0 (△2.4)

*( ) is YoY increase

ALM	Limited decrease of running yield under strengthened ALM strategy

⚫ Duration

(unit : yr)

AssetLiability

⚫ Duration & Running Yield on Interest-bearing assets

Running Yield

Investment Yield

(unit : yr, %)

Duration Gap 0.8

1.2

3.91

△0.50%p △0.07%p

2018

2019

2020

2018

2019

2020

DB Insurance I 9

Capital

Capital

Increased shareholder's return under strong capital adequacy

⚫ RBC Ratio

(unit : KRW bn, %)

Shareholder's EquityRBC(separate)RBC(conslidated)

⚫ Payout Ratio

(unit : KRW bn, %)

Net Profit Total dividend

DPS

DPR

127

132

24.6	26.3
25.5

2018

2019

2020

2018

2019

2020*

* Buyback of KRW 123 bil(4.6% of total number of share issued) as shareholder-friendly policy and support for reduced DPS in '19

• 1. Business Environment and Strategic Direction

• 2. 2021 Business Strategy

1. Business Environment and Strategic Direction

Business Environment

Strategic Direction

"Increased business uncertainty amid expanding financial market volatility"

• - COVID 19-related uncertainties (vaccines,mutations, etc.) continue

• - Digital-related rapid environmental change expected

• - Visualization of consumer protection- oriented regulations

• - Strengthened overall supervision of the financial sector regarding capital adequacy

• - Increased needs to improve long-term profit structure

• - Deteriorating investment environment due to increased volatility in interest rates

Promotion of Digital Transformation to secure future growth engines

Profitability-oriented growth through channel competency

3 4

Promote qualitative products based on New Contract Value (NCV)

Strengthening preemptive management for competitive advantage in loss ratio

Continuous investment profit expansion through efficient management of running yields

Digital Transformation

■ Building the foundation for securing digital competency

- Build data governance to expand data-related business areas

- Enhancement of digital customer experience at customer contact points

■ Expansion of platform-based sales model

• - (Affiliate) Launching partnership business models optimized for platform operators

• - (Direct) Development of our own program to provide personalized plans

■ Strengthening integrated marketing for online channels

• - Powering synergy through organized database acquisition and database utilization in online business

• - Enhancement of customer value by strengthening AI analysis of "auto ins-experienced customer" database

DB Insurance I 13

Auto

■ Proper Premium adjustment and product expansion to increase profitability

- Timely securing of appropriate premiums through segmentation

- Maximizing efficiency and developing high-covered products for target markets

■ Preemptive U/W for competitive advantage in loss ratio

- U/W operation by scenario according to accident rate change

- Collaboration by channels and discovering new U/W elements using internal and external information

■ Establish a loss management system based on profit creating perspective

• - Establish a performance management system reflecting profit & loss and differentiate in loss management

• - Establish a digital claim compensation system to respond to changes in the claim environment

Long-term

Business Plan

■ Profit-oriented product P/F operation and increase in NCV

• - Profitability-oriented product operation and advancement of premium strategy

• - New product development for leading market trend

• - Enhancement of contained contract management system by using digital tools

■ Promote sustainable growth by securing channel competitiveness

• - (Tied) Sales support* system improvement based on New technology

  *Big data-based marketing tool and app development

• - (GA) Preemptive response to market changes by strengthening the competitiveness

■ Stabilization of loss ratio through U/W operation from comprehensive perspective

• - Enhancement of contract quality management through elaboration of U/W prediction model

• - U/W strategy differentiation reflecting the characteristics of each channel

• - Elaborate monitoring of non-benefit items and strengthen response to areas of high damages

Commercial

■ Expand market share based on profitability and secure stable revenue

• - Increasing market share by strengthening core competencies (pricing & judgement rates)

• - Improve reinsurance revenue by optimizing retention and reinsurance

■ Lay the foundation for sustainable growth in the midst of stable expanding business

• - (US) Strengthen US business capabilities through localization strategies

• - (ASEAN) Improve competitiveness of local subsidiaries and pursue new business model

(단위: %)

Investment & ALM

■ Defend against deteriorating running yield through efficient asset allocation

- Increase risk-return efficiency

- Strengthen monitoring of market/credit cycle changes and refine overseas investment

■ Generate additional profits and enhance investment expertise

-Find valued investment & expand strategic alliance operators

- Mid/long-term development of experts in asset management area

■ Strengthen asset management systems to respond to regulation changes

• - Build a new ALM System in response to interest rate risks and expansion of capital volatility

• - Reinforce efficiency-focused asset rebalancing and liquidity management