AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of a- of LIG Insurance (China) Co Ltd (LIG China) (China). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect LIG Chinas balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also reflect the wide range of support the company receives from its parent, KB Insurance Co., Ltd. (KB Insurance) in areas including business development, reinsurance and investment.
LIG Chinas risk-adjusted capitalization remains at the strongest level, as measured by Bests Capital Adequacy Ratio (BCAR), supported by very low underwriting leverage and a highly conservative investment portfolio. The company has generated positive net profits consistently in the past five years, mainly attributable to a solid stream of interest income and low acquisition costs from its direct distribution channel. Despite having a small market share, LIG China occupies a niche market by focusing on servicing Korean Interests Abroad (KIA) that operate in China, which generate more than 90% of the companys revenue.
An offsetting rating factor is LIG Chinas underwriting of large commercial accounts with potentially large losses, leading to volatility in its underwriting performance. This is mitigated by a comprehensive reinsurance program that lowers the companys net retention in these risks. However, the high reinsurance dependence also exposes the company to reinsurer credit risk in the event of major losses. As a foreign-owned insurer concentrated on KIA businesses, LIG China is vulnerable to regulatory and political uncertainties in its operating environment.
While positive rating actions are unlikely in the near term, negative rating actions could occur if there is a substantial decline in the companys risk-adjusted capitalization, a significant deterioration in its operating performance, or reduced support from the parent.
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 Credit Ratings that have been published on AM Bests 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 AM Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.
Copyright 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
+852 2827 3426
Manager, Public Relations
908 439 2200, ext. 5159
Director, Public Relations
439 2200, ext. 5644