HONG KONG, July 15 (Bernama-BUSINESS WIRE) -- A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a+” of Dongbu Insurance Co., Ltd. (Dongbu) (South Korea). The outlook for each rating remains stable.
 
The rating affirmations reflect Dongbu’s very strong risk-adjusted capitalization, favorable operating performance and sound market profile. Dongbu’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains at a very strong level and supportive of the current ratings. Although profitability has remained stagnant in recent years primarily due to the deterioration in medical indemnity and auto insurance lines, the company’s five-year results outperformed the industry in several key financial measures as evidenced by the profitable level of its operating ratio. Profitability was mainly supported by strong net investment income and an efficient cost structure. Moreover, Dongbu continued to gradually increase its domestic market share across all three major product lines of auto, commercial and long-term insurance during the period.
 
Partially offsetting these positive factors are the persistently low interest rates that negatively affect profitability of the long-term insurance products, which are Dongbu’s major product line, and could have a negative impact on capitalization under the upcoming tightening of regulations.
 
Positive rating actions could occur if the company achieves improvement in profitability, in line with higher-rated peers, while maintaining its risk-adjusted capitalization. Negative rating actions could occur if there is a considerable deterioration in operating performance that materially affects the company’s risk-adjusted capitalization.
 
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.
 
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
 
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Contacts
A.M. Best
Sergio Agena, +852 2827 3407
Associate Financial Analyst
sergio.agena@ambest.com
or
Seewon Oh, +852 2827 3404
Associate Director, Analytics
seewon.oh@ambest.com
or
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com
 
Source: A.M. Best
 
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