A.M. Best Affirms Rating of Korean Reinsurance Company.OLDWICK, N.J. -- A.M. Best Co. has affirmed 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 (Korean Re) (South Korea). The outlook is stable. The rating reflects the company's continuous growth in absolute capitalization since fiscal year 1997, its excellent operating performance and dominant market position in the Korean reinsurance industry. Korean Re's financial position has shown strong improvement in recent years. The compounded annual growth rate of adjusted capital averaged 17% during the last five years. The Korean local 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 as of fiscal year 2003 was 200%, compared to 190% in fiscal year 2002. Under the Best's Capital Adequacy Ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. (BCAR BCAR Brunswick County Association of Realtors BCAR British Civil Airworthiness Requirements BCAR Bullitt County Animal Rescue (Shepherdsville, KY) BCAR Business Case Analysis Report BCAR Beaver Creek Array BCAR Buffalo Civic Auto Ramps, Inc. ), Korean Re was able to improve the ratio every year since fiscal year 1999. Providing further comfort is the extensive retrocession RETROCESSION, civil law. When the assignee of heritable rights conveys his rights back to the cedent, it is called a retrocession. Erskine, Prin. B. 3, t. 5, n. 1; Dict. do Jur. h.t. program and the lack of catastrophic exposure in Korea, which offer a substantial cushion for the company's capital base. The improvement in the operating performance has been excellent throughout the years. The combined ratio has been lower than 100% over the last five years. With a balanced portfolio composition, Korean Re was 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. (before catastrophe reserve contribution) in the last five years. The income from all eight major business lines (which includes the investment income from the premium generated from each business line) was positive in fiscal year 2003. The company maintains a conservative investment strategy, which is reflected by its ability to generate consistent investment income. As 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. , Korean Re enjoys a dominant presence in the Korean reinsurance market. Although the company's capital base is smaller than that of its international competitors, its expertise in the Korean reinsurance market since 1963, long business relationship with local insurers, its ability to quickly meet the market demand on new products and its well-established distribution network have enabled it 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 and the increasing competition in the Korean reinsurance market. Although a large part of Korean Re's portfolio is in personal lines with no significant risk exposure and limited catastrophe exposure, the current leverage of 2.73 times as of fiscal year 2003 is considered high. The leverage ratios for the company's domestic business and overseas business will be separately analyzed and monitored by A.M. Best. With the increased competition in the Korean insurance market, more direct insurance companies of smaller sizes will fall into financial difficulties, which will translate into credit risks for Korean Re's insurance receivables. As the surviving non-life companies become financially stronger, they will be able to retain more business. The reinsurance market in Korea, especially the commercial lines, is also facing a competitive environment. For current Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , independent data and analysis on more than 470 reinsurance companies, please visit http://www.ambest.com/reinsurance/. For current Best's Ratings, independent data and analysis on more than 3,000 individual property/casualty companies, groups and industry composites, please visit http://www.ambest.com/pc. 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 http://www.ambest.com. |
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