KUALA LUMPUR, Dec 5 (Bernama) -- AM Best has affirmed South Korea’s NongHyup Property and Casualty Insurance Company Ltd’s (NH P&C) financial strength rating of A- (excellent) and the long-term issuer credit rating of “a-” (excellent).
It said the ratings, which have a stable outlook, reflected NH P&C’s balance sheet strength, which was assessed as strong, and its adequate operating performance, limited business profile and appropriate enterprise risk management.
“The ratings also reflect the implicit and explicit support the company receives from its ultimate parent, National Agricultural Cooperative Federation,” it said in a statement.
AM Best said NH P&C’s risk-adjusted capitalisation remained at a very strong level, as measured by Best’s Capital Adequacy Ratio.
It said the company’s solid expansion of retained earnings in recent periods, backed by its no-dividend policy and improved earnings, provide some buffer against the recent pressure on its capital due to the impact of rapid interest rate rises on available-for-sale bond valuations.
“NH P&C demonstrated good accessibility to the capital market through its previous issuances of subordinated bonds and has secured additional financial flexibility from its immediate parent, NongHyup Financial Group Inc (NHFG).
“Its conservative investment portfolio, which consists largely of fixed-income assets, also supports the current balance sheet strength assessment,” it added.
AM Best said it assessed NH P&C’s operating performance as adequate, with a weighted five-year average operating ratio of 97.4 per cent (2017-2021) and a return-on-equity ratio of 4.4 per cent.
The rating agency said the company’s net profit improved materially in 2021, primarily driven by better underwriting performance in the general insurance line, given fewer natural catastrophe events and large claim cases, coupled with a product redesign for government policy insurance.
“An improved expense ratio also contributed to its favourable performance, while its stable investment income continued to be a major source of earnings,” it added.
AM Best said it also recognised various forms of explicit support, such as capital support from NHFG, as well as direct reinsurance support and full expense reimbursement from the government for its crop insurance line.
-- BERNAMA
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