A.M. Best Affirms Rating of LG Insurance Company Ltd.Business Editors OLDWICK, N.J., U.S.A.--(BUSINESS WIRE)--Oct. 20, 2003 A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) of LG Insurance Company Ltd, South Korea. The outlook is stable. The rating reflects LG Insurance's strong capitalization, excellent market profile and the short-tailed nature of the business in the Korean market. LG Insurance is one of the most strongly capitalized companies in the Korea non-life market, with the local solvency margin standing at 183% at the end of fiscal year 2002. Although this was a slight decrease from 203% at the previous fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. , the ratio has recovered further to 205% during the first three months of fiscal year 2003. 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. ), which measures capitalization on a risk-adjusted basis, demonstrates a similar trend. LG Insurance is one of the largest non-life insurers in Korea. The company's gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. growth rate surpassed the industry average for the past four years. This trend is expected to continue in the foreseeable future as its smaller competitors face increased competition due to liberalization lib·er·al·ize v. lib·er·al·ized, lib·er·al·iz·ing, lib·er·al·iz·es v.tr. To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . . and the changing market environment. Partially offsetting these positive factors are the intensified competition in the market from direct channels and bancassurance Bancassurance A French term referring to the selling of insurance through a bank's established distribution channels. Notes: The result is a bank that can offer banking, insurance, lending, and investment products to a customer. ; a difficult investment environment; and the company's potential risk exposure from strategic investments. The market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" of less established companies through direct channels continues. While most of LG Insurance's business is distributed through solicitors and agents, the company may also enter into direct markets. Furthermore, the interest rates in the Korean market will remain low in the foreseeable future, as personal consumption and capital investment remain sluggish. The economic recovery is also limited to the export growth. LG Insurance will continue to face challenges in this operating environment. LG Insurance has potential exposure to strategic investments such as Hanaro Telecom and Lucky Life. Moreover, the weak performance of its life subsidiary, Lucky Life, will continue to drag on the capital and surplus growth. 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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