Best’s News & Research Service - August 14, 2025 09:11 AM (EDT)
AM Best Affirms Credit Ratings of PT KB Insurance Indonesia
- August 14, 2025 09:11 AM (EDT)
//BestWire// - AM Best has affirmed the Financial Strength Rating of B++ (Good), the Long-Term Issuer Credit Rating of “bbb+” (Good), and the Indonesia National Scale Rating (NSR) of aaa.ID (Exceptional) of PT KB Insurance Indonesia (KB Indonesia) (Indonesia). The outlook of these Credit Ratings (ratings) is stable.
The ratings of KB Indonesia reflect its 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 recognise the wide range of support provided by KB Indonesia’s parent, KB Insurance Co., Ltd. (KBI), which is fully owned by KB Financial Group Inc. (KB Group).
KB Indonesia’s risk-adjusted capitalisation is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects KB Indonesia to demonstrate continued capital growth through full profit retention over the coming years to meet its domestic regulator’s strengthened capital requirements by 2026. Offsetting factors in the balance sheet strength assessment include considerable counterparty credit risk exposure to domestic (re)insurers with relatively weaker credit quality in compliance with regulatory requirements and volatility from changes in the fair value of its available-for-sale equity investments.
AM Best assesses KB Indonesia’s operating performance as adequate, with a five-year (2020-2024) return-on-equity ratio of 4.7% and a combined ratio of 98.8%, as calculated by AM Best. The company’s underwriting performance has demonstrated moderate volatility due to its small net premium base and exposure to low frequency, high severity losses for its commercial lines of business. Prospectively, AM Best expects improved stability for the company with a growing premium volume and an increase in its generally more stable motor line of business. KB Indonesia’s conservative investment portfolio, which is mainly composed of time deposits and Indonesian government bonds, generates stable investment profits that provide a partial buffer for the underwriting volatility.
As a joint venture between KBI (70%) and PT AB Sinar Mas Multifinance (30%), KB Indonesia is a small-sized non-life insurer domiciled in Indonesia with a majority of its current business sourced from offering coverage to Korean companies in Indonesia. The company’s source of business has demonstrated a diversifying trend following a rising cross-selling business with KB Group affiliates, which entered Indonesia as part of the group’s global expansion strategy and its efforts in penetrating the local market. In terms of the company’s product portfolio, there is a level of concentration on property and engineering lines; however, AM Best expects KB Indonesia to have a more diversified portfolio going forward with an increasing volume of motor and other products sourced through its affiliated companies and other local channels.
KB Indonesia receives rating enhancement from implicit and explicit support from its parent, KBI. The company plays an important role in KB Group’s overall expansion strategy in Indonesia’s insurance market and benefits from the group’s network and distribution channels there. AM Best expects that the parent will provide capital support to KB Indonesia if needed, as evidenced by KBI’s public announcement to support the company fully in fulfilling the strengthened domestic capital requirements that will be applied over the coming years. AM Best expects that KB Indonesia’s planned change in organisational structure with a new intermediate holding company, in compliance with the Indonesian Financial Services Authority’s (OJK) new regulation for financial conglomerates, will lead to a more efficient decision-making process and stronger synergy among affiliates in Indonesia, while the support from the group and KBI to KB Indonesia remains unchanged.
Negative rating actions could arise if KB Indonesia’s risk-adjusted capitalisation significantly deteriorates such as from heightened credit risk following major loss events or from excessive business expansion that materially outpaces the capital growth. Negative rating actions also could occur for KB Indonesia if support from the group and KBI is reduced to an extent that no longer supports the current level of rating enhancement. Positive rating actions could arise if KB Indonesia’s operating performance improves and reaches a level that positively distinguishes the company from its industry peers in a sustainable manner.
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 Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.