HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of Dongbu Insurance Co., Ltd. (Dongbu) (South Korea). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Dongbu’s strong risk-adjusted capitalization, favorable market profile and improved operating performance.
Dongbu’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remained stable at a strong level in 2016. The company’s BCAR was supported by an increasing capital and surplus, driven mainly by net profit retention. Dongbu controlled its investment risks through a relatively conservative investment strategy, with a focus on asset/liability matching.
The company is the third-largest non-life insurer in South Korea and has seen its market share, in terms of net premium written, continuously increase over the past five years. Notably, this market expansion did not come at the expense of operating performance, which remained profitable and improved over the period.
Partially offsetting these positive rating factors is Dongbu’s high asset leverage, which makes its capitalization more susceptible to asset value fluctuation. A.M. Best will continue to monitor the company’s asset leverage closely.
Positive rating actions could occur if Dongbu is able to sustain its good profitability while maintaining its strong risk-adjusted capitalization. Negative rating actions could occur if there is considerable deterioration in operating performance that materially affects the company’s risk-adjusted capitalization.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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