Press Release - NOVEMBER 07, 2019

AM Best Affirms Credit Ratings of KB Insurance Co., Ltd.


CONTACTS:
 Chanyoung Lee
Senior Financial Analyst
+852 2827 3404
chanyoung.lee@ambest.com

Christie Lee
Senior Director, Analytics
+852 2827 3413
christie.lee@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

HONG KONG - NOVEMBER 07, 2019
AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of KB Insurance Co., Ltd. (KBI) (South Korea). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect KBI’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also reflect the support the company receives from its parent, KB Financial Group Inc. (KB Group) and its strategic importance to the KB Group.

KBI’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is assessed at very strong, supported by the solid growth of its capital and surplus, and mainly driven by net profit retention. The company maintains a relatively low dividend payout ratio and has no outstanding debt obligations, which helped grow its capital size from profit retention. However, KBI’s asset and net premium leverage still remain relatively high compared with its domestic peers, although this has experienced a declining trend over the past five years.

KBI’s strong balance sheet strength assessment is supported by its conservative investment strategy, which prioritizes asset-liability management. Approximately 80% of the total invested assets are in fixed-income securities while alternative investments are increasing gradually, as the company aims to achieve a secure, higher investment yield.

Operating performance is assessed as adequate, with a five-year average return on equity of 9.5%. KBI’s underwriting profitability has shown a generally improving trend since 2015, albeit with a moderate level of volatility compared with its peers, although the company reported a steep decline in its net income in 2018 due to industry-wide deterioration in auto insurance profitability and increasing expenses in the long-term insurance line amid strong competition. However, the company’s stable and growing investment income stream supports the overall operating performance by partially offsetting the moderately volatile underwriting performance.

KBI is the fourth-largest non-life insurance company in South Korea, with a market share of approximately 13% in terms of direct premium written in 2018, which has remained stable over the past five years amid strong market competition. The company has limited operations in overseas markets, with those businesses representing less than 1% of KBI’s consolidated gross premiums written in 2018.

As a wholly owned subsidiary of the KB Group, one of the largest financial groups in South Korea, KBI is strategically important to its parent in terms of business diversification, enabling the group to provide a wider spectrum of financial services. Since its affiliation to the group in 2015, KBI has received capital support from the KB Group, which also allowed it to increase ownership of KBI gradually. As the KB Group emphasizes synergy among its subsidiaries to provide better one-stop services to customers, KBI benefits in various ways such as business opportunities through customer referrals from its affiliates and cross-selling through shared distribution channels, as well as group-wide marketing activities under one KB brand.

Negative rating actions could occur if there is a material deterioration in the company’s risk-adjusted capitalization, or if there is a significant decline in the parent company’s financial strength and credit profile.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM 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 AM 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 AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with an exclusive focus on the insurance industry.


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