A.M. Best Co. has affirmed the financial strength rating of “A-” (Excellent) and the issuer credit rating of “a-” of Korean Reinsurance Company with a stable outlook.
“The ratings reflect Korean Re’s continuous growth in absolute capitalization, its stable operating performance and dominant market position in the Korean reinsurance industry,” said Best.
“Korean Re has a balanced business portfolio, and has consistently maintained its combined ratio at a level of lower than 100 percent for the past five years,” the bulletin continued. “The company has generated stable investment income due to its conservative investment strategy, which was mainly fixed-income driven.
“As the sole domestic reinsurer in South Korea, Korean Re has a dominant presence in the Korean reinsurance market. The company maintains its competitive edge by its well established business relationship with local insurers, its proactive product development strategy to meet market demand and its expertise in the domestic reinsurance market. Further diversification has been brought into the business portfolio as the company has expanded its life and overseas reinsurance operations with major growth in Asian business.
“Korean Re is adequately capitalized on a risk-adjusted basis, with a local solvency ratio of 194 percent as of fiscal year 2005. The company has shown strong improvement in its absolute capitalization in recent years. Its five-year average growth of adjusted capital stood at 15 percent. The Best’s Capital Adequacy Ratio (BCAR) also demonstrates Korean Re’s moderate capitalization.
“An offsetting factor is Korean Re’s high underwriting leverage. A large portion of the company’s retained premium both in life and personal lines contributed to the high leverage of 2.72 times as at fiscal year 2005 but had limited catastrophe exposure and no significant risk exposure.”
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