KUALA LUMPUR, March 16 (Bernama) -- Global credit rating agency, 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 assessed as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
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 including underwriting and pricing, business development and reinsurance.
The agency assessed 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 capital and surplus has steadily increased driven by favourable 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 for five consecutive years, with a low-to-mid single digit return-on-equity ratios reported during that period, and its operating expense ratio has been favourable due to low acquisition costs and positive reinsurance commission income.
As a foreign-owned insurer focusing on serving Korean Interests Abroad business, KBFG China has a defensible competitive advantage in this niche market.
However, with a limited market presence in China’s non-life industry with market share less than one per cent, the company intends to maintain its underwriting risk tolerance appetite and plans to explore investment opportunities with higher yields.
-- BERNAMA
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