LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Rating of “a” of Samsung Fire & Marine Insurance Company of Europe, Limited (SFME) (United Kingdom). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect SFME’s balance sheet strength, which A.M. Best categorises as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). In addition, the company’s ratings incorporate rating enhancement to reflect the company’s role and integration within, and reinsurance support provided by, Samsung Fire & Marine Insurance Co., Ltd (SFMI), its intermediate parent.
The company’s balance sheet strength assessment is underpinned by risk-adjusted capitalisation, which, as measured by Best’s Capital Adequacy Ratio (BCAR), is at the strongest level. Prospectively, A.M. Best expects business growth and other capital consuming factors to remain well-controlled and supportive of risk-adjusted capitalisation being maintained at the strongest level. Offsetting balance sheet strength factors include the company’s small absolute capital base, which makes it sensitive to shock events, and its significant dependence on reinsurance for underwriting large limit risks.
SFME has a track record of adequate operating performance over the past five years, as evidenced by an average return on equity of 9.7% (2013-2017) and underpinned by strong technical results. Given the small size of the company and the large risks underwritten, combined ratios have exhibited a level of volatility and ranged between 51% and 95% over the same period. Net investment yields have remained between 1% and 2% consistently, reflecting a low risk investment portfolio that is focused on cash and short term deposits.
A.M. Best views the company as having a limited business profile given its small scale of operation and niche portfolio of business. The majority of SFME’s premiums are generated by insuring Samsung group operations, encompassing mainly property and cargo risks in the Europe and Middle East regions. SFME also underwrites a small volume of third-party Korean risks within Europe and a gradually increasing amount of locally sourced business. However, in 2017, non-group business accounted for less than 10% of total premiums. As a subsidiary of SFMI and part of the Samsung group, a South Korea conglomerate, SFME benefits from the excellent business profile of the wider group, which is likely to support its external growth strategy.
SFMI’s ERM framework is well-developed and its risk management capabilities are viewed to be aligned appropriately with its risk profile. The company also benefits from the strength of risk management at SFMI and oversight from the group.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.