A.M. Best Affirms Rating of Samsung Fire & Marine Insurance Company Limited.OLDWICK, N.J. -- 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+ (Superior) of Samsung Fire & Marine Insurance Company Limited (Samsung) (South Korea). The rating outlook is stable. The rating reflects Samsung's superior 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. , dominant market position and sound profitability. The rating also recognizes the company's excellent risk management and proactive management strategy. Samsung has the highest solvency The ability of an individual to pay his or her debts as they mature in the normal and ordinary course of business, or the financial condition of owning property of sufficient value to discharge all of one's debts. solvency n. position among all Korean non-life companies. On an adjusted basis, the company's risk-bearing insurance 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 at the end of fiscal year 2003 was 0.92 times. This conservative level is further demonstrated by the Korean regulatory 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 stands at 456%. Both 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. , as well as the company's own risk-based capital model, showed numbers above 300%. The company has a leading market position in every line of business that it writes in Korea, including motor, long-term savings and commercial lines. Its overall market share in fiscal year 2003 was 31.9%. The efficient off-line distribution network and the proactive business strategy to enter new markets through product development will enable Samsung to cope with future challenges in the alternative distribution channel. The company is in the process of changing its Chinese branch status into subsidiary status to expand its China operation. Samsung has the best profitability structure among the major non-life companies in Korea. The company differentiates itself from other non-life insurers by having a low expense ratio of 23.5% and high investment income due to its larger asset base. The company's invested asset market share was 40% in fiscal year 2003. Offsetting these positive attributes are the continuation of the low interest rate environment and market competition from the alternative distribution channel. A.M. Best believes that competitors engaged in direct sales of motor insurance 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. sales of long-term products will take up a significant portion of market share from the existing distribution channel. As competitors will tend to focus on market share rather than profitability, pressure will be exerted on Samsung's operating performance as well. Samsung is well positioned with a strong brand name and a large capital base to cope with these challenges. Another offsetting factor is the low interest rate environment. Although the company is practicing asset liability matching, low interest rates are exerting pressure on the interest margin of the long-term product portfolio. For 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. , an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. 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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