A.M. Best Affirms Rating of Korean Reinsurance Company.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 5, 2003 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength rating of A- (Excellent) of Korean Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Company (KRIC) (South Korea). The rating outlook is stable. The rating reflects the company's significant improvement in operating performance, continuous growth in capital and dominant market position in the Korean reinsurance industry. KRIC has consistently improved its financial position. The Korean solvency ratio Solvency Ratio One of many ratios used to gauge a company's ability to meet long-term obligations. Notes: Derived by taking a company's net worth and dividing by total assets. See also: Asset, Asset Valuation, Balance Sheet, Fundamental Analysis, Income Statement , which stood at 190.4% in fiscal year 2002, indicates the company's adequate solvency position. The company's adjusted capital has grown by 15% in fiscal year 2002 and 22% in fiscal year 2001. KRIC has achieved consistent improvement in its operating performances in recent years. With a balanced portfolio composition, the company has been able to generate underwriting profits Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. in the last five years. Contributed by its conservative investment strategy, KRIC has limited exposure to the volatile Korean equity market. In fact, its investment yield has remained relatively stable over the past few years. Being the sole local reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. , the company has established a dominant presence in the Korean reinsurance market. Despite the moderate capital base, when compared to international competitors, KRIC's expertise in the Korean reinsurance market since 1963, its strong ties with domestic insurers and its well-established network have enabled the company to maintain its competitive edge. Offsetting the positive factors are the company's high underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. leverage, moderate credit risk associated with the accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying , the increasing competition in the Korean reinsurance market and the low interest environment. An underwriting leverage of 2.97 times is considered to be high for KRIC with a reinsurance portfolio that has a low level of geographical risk diversification, although the catastrophe exposure is limited in Korea. With the increased competition in the Korean insurance market, more direct insurance companies with small capital size may possibly experience financial difficulties, which will translate into credit risks for Korean Re's insurance receivables. In addition, the low interest environment is expected to insert pressure on KRIC's investment margin given the portfolio asset mix. Furthermore, A.M. Best will continue to closely monitor the developments of the company's top-line growth--especially in the overseas market--to ensure that it will be well supported by the level of capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. appropriate for an A- rating. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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