Align Gives Positive Assessment of DB Insurance Value-Up Plan... Recommends Share Buybacks and Cancellations

Align Partners Asset Management (Align) has given a positive assessment of DB Insurance's 'corporate value enhancement plan (Value-Up Plan),' describing it as the first step toward changes that will improve shareholder value. However, Align also recommended that, given the company is in an undervalued range, it is necessary to actively utilize share buybacks and cancellations.

On September 22, a representative from Align commented on the corporate value enhancement plan disclosed by DB Insurance on August 28, saying, "The focus on sustainable balanced growth centered on capital efficiency and increased shareholder returns aligns with the demands we have made as shareholders over time." Previously, in February, Align sent a letter to the DB Insurance board proposing eight items, including the establishment of a reasonable capital management and shareholder return policy.

Aligned with Sustainable Balanced Growth

In the latest Value-Up Plan, DB Insurance set targets for 2030 shareholder return rates: 40% on a consolidated basis and 50% on a separate basis. The company also announced a goal to raise the dividend per share (DPS) by more than 10% each year. For new contracts and investments, DB Insurance decided to apply a risk-adjusted return on capital (ROR) of at least 200%—a metric representing the benefit relative to required capital. The company also formally institutionalized a principle to refrain from excessive competition in new contract contractual service margin (CSM) accumulation.

Align evaluated that DB Insurance’s Value-Up direction broadly incorporates the intent of Align’s proposals for risk-adjusted profitability-focused management strategies and stepwise capital management policies. In particular, Align cited as a leading example the documentation of a principle to expand shareholder returns based on the dividend cover ratio (DCR)—the amount of profit available for dividends compared to expected dividends—which would reinforce shareholder payouts using the company's own resources.

Active Use of Share Buybacks and Cancellations Proposed

Align also pointed out areas for improvement. The firm argued that share buybacks and cancellations should not be used only as occasional tools, but as ongoing methods for capital allocation.

According to Align’s analysis based on the closing price on September 21, DB Insurance's price-to-book ratio (PBR) on an accounting basis was 0.82, while the adjusted PBR based on embedded value (EV) was only 0.54. Align emphasized, "In this valuation range, share buybacks and cancellations immediately enhance per-share embedded value and are also tax-efficient. The remaining funds earmarked for shareholder returns should, as a rule, be fully allocated to share buybacks and cancellations."

Align also suggested several supplementary measures, including regular roundtables with institutional investors involving the board and management, restructuring executive compensation systems, and strengthening board independence.

Changhwan Lee, CEO of Align, stated, "This plan represents the first step toward restoring DB Insurance’s shareholder value to a normal level, and the outcome depends on future implementation. As shareholders, we will closely monitor the progress and continue to engage in constructive communication."

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