KUALA LUMPUR, Oct 20 (Bernama) -- AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” (Superior) of Construction Guarantee Cooperative (CG), South Korea.
The credit ratings (ratings), which have a stable outlook, reflected CG’s balance sheet strength, which AM Best assessed as strongest, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management (ERM).
The company’s risk-adjusted capitalisation is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio, underpinned by a large capital base of 6.8 trillion Korean won (US$5.4 billion) as of year-end 2022, extremely low underwriting leverage, and a conservative and liquid investment portfolio with the majority of its investments placed in stable fixed-income assets. (US$1=RM4.77)
CG’s strong operating performance is backed by its favourable underwriting performance with a five-year average combined ratio of 62 per cent (2018-2022), as calculated by the rating agency.
The company’s surety premiums continued to be stable over the past years and contributed to its very low loss ratio, along with growing insurance business that also remained profitable supported by its prudent underwriting management to ensure steady profitability.
Despite sizeable unrealised capital losses in 2022 from the stock market volatility, AM Best expects CG’s investment yield to improve over the coming years supported by a high interest rate environment and its efforts to realign investment strategy.
AM Best in a statement said it considers the company’s risk management capabilities to be appropriate with a comprehensive ERM structure to manage its key risk areas effectively.
Established under the Korea Construction Financial Cooperative Law, CG is a government-designated surety underwriter for general contractors in South Korea, having the largest share of the construction surety segment and a strong membership base.
-- BERNAMA
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