AM Best Affirms NongHyup Property and Casualty Insurance’s Ratings

KUALA LUMPUR, Nov 25 (Bernama) -- Global credit rating agency, AM Best has affirmed the financial strength rating of A- (excellent) and the long-term issuer credit rating of “a-” (excellent) of South Korea’s NongHyup Property and Casualty Insurance Company Limited (NH P&C).

In a statement, AM Best said these credit ratings (ratings) have a stable outlook, which reflected NH P&C’s balance sheet strength, was assessed as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The ratings also reflect the implicit and explicit support the company receives from its ultimate parent, National Agricultural Cooperative Federation (NACF).

NH P&C’s risk-adjusted capitalisation is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio, in which the company’s capital and surplus increased significantly in 2023, largely due to the adoption of IFRS 17 while its balance sheet fundamentals remain unchanged.

The company’s capital is being exposed to a relatively high level of volatility from interest rate movements compared with its domestic peers under the new accounting and local solvency standards.

In response, the company is increasingly focusing on asset-liability management to enhance its capital management under the new solvency regime.

NH P&C’s financial flexibility is supported by its good accessibility to the capital market underpinned by its previous issuances of subordinated debts and additional financial support from its immediate parent, NongHyup Financial Group Inc.

A domestic non-life insurer in South Korea, NH P&C has a 3.7 per cent market share in terms of gross insurance service revenue in 2023. The company is an exclusive provider of crop insurance in the country, which is largely operated under the principle of “no profit no loss,” and a major provider of other government policy insurance products for farmers, such as livestock and agricultural vehicle insurance.

NH P&C focuses on gradually improving its underwriting profitability by expanding sales of protection-type products with high margins; however, its market share in the long-term insurance segment remains modest due to strong market competition. Distribution remains highly concentrated in the cooperative channel, which is a network of NACF’s members.

-- BERNAMA