The ratings reflect BKI’s strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, good operating profitability and favorable business profile.

BKI’s gross and net underwriting leverage measures are lower than its local peers. Overall, BKI has maintained a good operating performance over the past three years with combined ratios below 90% and operating ratios below 80%, which outperformed the overall non-life market in Thailand. Furthermore, BKI’s business profile continues to benefit from its affiliation with Bangkok Bank, which has one of the largest corporate and retail customer bases in Thailand.

Offsetting rating factors include BKI’s large allocation to equity investments and the significant concentration within BKI’s equity portfolio. In particular, equity investments comprised 73% of BKI’s invested assets with 87% of its equity portfolio concentrated in three equity securities. The combined carried value of these securities represented 93% of BKI’s capital as of Dec. 31, 2015.

In terms of operating environment, BKI is facing a low premium growth period in Thailand’s non-life market. To manage its operating performance during this period, BKI is focusing on technology and process improvements to manage its expense ratio and for the retention of good insurance risks.

While positive rating actions are not likely at present, negative rating pressure could result from a material deterioration in BKI’s risk-adjusted capitalization due to adverse movements in the equity market.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.

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