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FOR IMMEDIATE RELEASE
HONG KONG - DECEMBER 02, 2016 12:57 PM (EST)
A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Korea P&I Club (KP&I) (South Korea). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect KP&I’s solid risk-adjusted capitalization and favorable business profile in the South Korea market. KP&I is a non-profit organization that was founded under the Shipowners’ Mutual Protection and Indemnity Insurance Act in 2000. A.M. Best recognizes the importance of KP&I in the domestic maritime industry and the support it receives from the South Korean government.
KP&I’s risk-adjusted capitalization remained solid to support the current ratings. The club’s free reserves doubled to KRW 49.3 billion (approximately USD 42 million) in September 2016 compared with the balance of KRW 24.6 billion in December 2011. Although the club has experienced several large gross losses in the first half of 2016, KP&I’s risk-adjusted capitalization remains strong, as measured by Best’s Capital Adequacy Ratio (BCAR).
KP&I has highly liquid and low risk investment assets, whereby it has enjoyed stable, albeit lower-yielding investment income. In addition, conservative reinsurance placements provide KP&I with a sufficient buffer to absorb potential losses in adverse scenarios.
Partially offsetting rating factors include the weak underwriting results in recent years due to the weakening of global trade, excess shipping capacity and increasing competition within South Korea’s protection & indemnity market.
While positive rating actions are not likely in the near term, negative rating actions could occur if earnings deteriorate substantially due to higher claims frequency and severity.
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 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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