AM BEST AFFIRMS KBFG CHINA CREDIT RATINGS AS EXCELLENT

KUALA LUMPUR, March 15 (Bernama) -- The United States-headquartered AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) of KBFG Insurance (China) Co Ltd (KBFG China).

The outlook of these credit ratings (ratings) is stable, reflecting KBFG China’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

According to AM Best in a statement, the ratings also reflect the wide range of support that the company receives from its parent, KB Insurance Co Ltd, in areas of underwriting and pricing, business development and reinsurance.

The credit rating agency assesses KBFG China’s balance sheet strength at the very strong level, supported by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio.

The company’s consolidated capital and surplus has continued to increase driven by positive operating performance with full profit retention. Given its relatively small capital base and the nature of its underwriting portfolio, KBFG China’s risk-adjusted capitalisation is exposed to volatility in the event of large losses.

KBFG China has achieved positive operating profit over the last five years (2019 to 2023), with a low-to-mid single digit return-on-equity ratios reported during that period, despite having incurred a major commercial fire loss in 2023.

With a very low level of net retention ratio, the loss on a net basis has had a limited impact on the company’s underwriting results and it has projected that the solvency ratio will improve as reinsurance receivables are gradually settled in 2024.

As a foreign-owned insurer focusing on serving Korean Interests Abroad business, KBFG China has a defensible competitive advantage in this niche market.

However, the company has a limited market presence in China’s non-life industry with share less than one per cent of total market. AM Best views KBFG China’s ERM as appropriate for its risk profile.

-- BERNAMA