HONG KONG–(BUSINESS WIRE)–#insurance—AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of Korean Reinsurance Company (KRE) (South Korea). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect KRE’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management.
KRE’s risk-adjusted capitalisation is assessed comfortably at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects the company to maintain its risk-adjusted capitalisation at an elevated level, supported by its controlled growth of underwriting risk through continued portfolio restructuring and a stable stream of income. KRE’s strong solvency ratio and effective asset-liability management strengthen the company’s resilience to changes in the business environment, such as interest rate fluctuations and regulatory changes, as well as capital buffer for future business expansion. The company’s balance sheet strength also is supported by good accessibility to capital markets and a conservative investment strategy.
AM Best assesses KRE’s operating performance as adequate, with a return-on-equity ratio of 9.4% and a non-life combined ratio of 91.5% (net/net), as calculated by AM Best. The company’s property/casualty lines recorded an improvement in 2024, largely due to the absence of major natural catastrophes and large-scale claims in domestic and overseas markets. AM Best expects the various measures implemented by KRE, such as improving terms and conditions for domestic treaties and reducing exposure to overseas catastrophe risks, will support its underwriting profit stability over the medium term. Meanwhile, KRE’s life/health (L/H) business profitability deteriorated in 2024, mainly attributable to valuation adjustments of certain overseas life book of business and higher claims payout. Nonetheless, AM Best expects the company’s L/H profit fundamentals to improve following its ongoing portfolio enhancement in domestic and overseas markets. KRE’s robust investment income is expected to be supported further by an enlarged asset base from coinsurance business and favourable returns from alternative investments.
As the dominant and only local reinsurer in South Korea, KRE was ranked as the seventh-largest IFRS 17 reporting reinsurer in the global reinsurance market in terms of gross insurance service revenue (ISR) in 2024. Despite its ongoing portfolio restructuring in the domestic market, AM Best believes that KRE’s dominant market position will remain unchallenged over the medium term. Moreover, despite increased competition, AM Best expects KRE will maintain its competitive advantage in the growing coinsurance market in South Korea, which will provide the company with growth opportunities and an additional source of earnings. KRE’s overseas business continues to expand gradually, underpinned by expansion in Europe and North/Latin America, constituting over 40% of its gross ISR in 2024.
Negative rating actions could occur if there is a sustained deteriorating trend in KRE’s operating performance. Negative rating actions also could occur if there is a material decline in the company’s risk-adjusted capitalisation, triggered by incidents such as multiple medium- or large-scale catastrophe losses retained in a fiscal year. Positive rating actions could occur if KRE’s operating performance demonstrates strong and consistent results to positively distinguish itself from industry peers.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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Contacts
Seokjae Lee
Senior Financial Analyst
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Al Slavin
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