Domestic activist fund Align Partners Asset Management sent an open letter to the DB Insurance board of directors, urging a re-disclosure of plans to enhance shareholder value.
Align Partners said in a statement on the 6th that ahead of the regular shareholders meeting in March, it submitted, in the form of shareholder proposals to DB Insurance, the reestablishment of an internal transaction monitoring body and the separate election of two outside directors for the audit committee. The letter requested a written response by Mar. 6 along with a re-disclosure of the value-up (corporate value enhancement) plan.
Align Partners has been buying DB Insurance shares since January last year and now holds about 1.9% equity.
The firm noted that although DB Insurance delivers top-tier results in the non-life insurance industry, its stock is undervalued. It particularly cited as problems the lower shareholder return ratio compared with competitors such as Meritz Financial Group and Samsung Fire & Marine Insurance, and the conservative setting of future return targets.
It also criticized DB Insurance for failing to clearly present priorities between shareholder returns and reinvestment despite having sufficient capital capacity. Accordingly, it demanded a retooling of a management strategy centered on profitability and efficiency, an overhaul of the capital management system, and stronger shareholder return policies.
Align Partners also cited opaque corporate governance issues, such as pervasive related-party transactions involving the controlling shareholder, as reasons for DB Insurance's undervaluation. To strengthen internal transaction oversight, it called for reestablishing an internal transactions committee composed entirely of outside directors and disclosing the basis for calculating major expense items such as trademark royalty fees.
For outside director candidates, it recommended Min Su-ah, former head of Samsung Active Asset Management, and Choi Heung-beom, former executive at AIG General Insurance and partner at Samjong KPMG. Align said the two candidates are independent figures with no interests tied to DB Insurance or the largest shareholder and can provide a check on the board.
Lee Chang-hwan, head of Align Partners, said, "DB Insurance is the No. 2 non-life insurer in Korea, but its undervaluation persists due to inefficient capital allocation, the industry's lowest level of shareholder returns, and opaque corporate governance centered on the controlling shareholder."
Lee added, "This open letter to shareholders and the shareholder proposals aim to improve DB Insurance's corporate governance and sustainably enhance shareholder value."