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FOR IMMEDIATE RELEASE
LONDON - APRIL 11, 2014 10:09 AM (EDT)
A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of "a" of Samsung Fire & Marine Insurance Company of Europe, Limited (SFME) (United Kingdom). The outlook for both ratings remains stable.
The ratings of SFME reflect its excellent risk-adjusted capitalisation, which is expected to support its growth plans. In addition, the ratings factor in the strong support SFME receives from its parent, Samsung Fire & Marine Insurance Co. Ltd (SFM), which provided SFME's initial capital of GBP 10.6 million in 2011. SFM provides substantial reinsurance protection to SFME on a facultative basis and through participation in surplus share and per risk excess of loss treaties.
SFME reported an exceptional profit before tax of GBP 3.1 million in 2013, driven by a strong technical result. The combined ratio was 47%, reflecting a benign claims environment, a strong reserve release and high net reinsurance commission income. For 2012, which was SFME's first full year of operation, the company also reported a good profit before tax of GBP 1.1 million, driven by an excellent combined ratio of 82%.
As a small company writing large risks, SFME is highly dependent on reinsurance. Although the risks associated with this are partly mitigated by the good credit quality of its reinsurers, it is an offsetting factor for the ratings.
In 2013, the majority of SFME's business was comprised of the insurance of Samsung group operations in Europe. In addition, SFME insured a small amount of third-party Chinese, Korean and Japanese risks within Europe, and locally sourced business. Portfolio diversification is expected to continue over the coming years, as SFME expands its external business. As a subsidiary of SFM and part of the Samsung group, a South Korean conglomerate, SFME benefits from an excellent business profile within its target market.
Factors that could lead to positive rating actions include enhanced support from SFM. Factors that could lead to negative rating actions include a significant decline in SFME's risk-adjusted capitalisation, weaker than expected operating performance or deterioration in the support provided by SFM.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
This rating announcement has been issued by A.M. Best Europe - Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.