HONG KONG, Aug 18 (Bernama-BUSINESS WIRE) -- AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Korea P&I Club (KP&I or the Club) (South Korea). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect KP&I’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also reflect the wide range of support that the Club receives from the South Korean government.KP&I’s risk adjusted capitalisation is assessed at the strongest level, as measured by Best’s Capital Adequacy ratio (BCAR), and it is expected to remain at that level over the intermediate term. The Club’s balance sheet strength is underpinned by its low underwriting leverage and a highly conservative investment portfolio.
Despite various underwriting initiatives, KP&I’s underwriting performance remained deteriorated and volatile in recent years following changes in its reinsurance structure, with higher net retention and a loss-sensitive commission scheme on proportional treaties, after a large loss in 2019. Nevertheless, KP&I has implemented stronger and more direct mitigation actions, such as general premium increases, non-renewal of historically unprofitable policies, as well as further enhancing terms in major programmes, AM Best expects the Club’s underwriting fundamentals and profit volatility to improve over the coming years.
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