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A.M. Best Affirms Credit Ratings of Construction Guarantee Cooperative


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Seewon Oh
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FOR IMMEDIATE RELEASE

HONG KONG - DECEMBER 05, 2016 12:32 PM (EST)
A.M. Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” of Construction Guarantee Cooperative (CG) (South Korea). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect CG’s excellent risk-adjusted capitalization and strong business profile in South Korea’s surety bond market.

CG is a cooperative organization that specializes in writing surety bonds for its members, which are general construction companies in South Korea. Over the long term, CG has maintained a dominant market share in South Korea’s highly regulated surety bond market. In addition, CG is under the supervision and control of the Ministry of Land, Infrastructure and Transport and executes government policies that support the construction industry.

CG’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains very strong and supports its current ratings. A.M. Best expects CG to maintain a substantial amount of capital to withstand economic stress scenarios.

Offsetting rating factors are CG’s volatile operating performance and geographic concentration. Due to this geographic concentration, the company’s performance is vulnerable to local regulatory and market conditions.

While positive rating actions are unlikely, negative rating actions could occur if CG’s risk-adjusted capitalization materially deteriorates due to a significant accumulation of claims caused by a prolonged deterioration in the construction economy.

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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AMB# Company Name
093791 Construction Guarantee Cooperative