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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JANUARY 13, 2003 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength rating of A (Excellent) of ING Life Insurance Korea Ltd, South Korea. The outlook is stable.
The rating reflects ING Life Korea's enhanced market presence, excellent profitability, and strengthened capitalization. The rating also reflects its well-balanced insurance portfolio, which is supported by prudent risk management and sound investments. In addition, the company benefits from its position within ING Group's global insurance operations and receives strong business support from the parent.
The company increased its market share (measured by total premium amount) in the Korean life market to 1.6% in 2001 from 1.0% in 2000. The company is viewed as one of the life companies in Korea that will benefit from bancassurance, given its strategic alliance with Kookmin Bank. The partnership will deliver enhanced customer service by broadening the line of products offered and extending the bank's financial services to insurance clients.
Net income improved to KRW 37 billion (USD 28 million) in 2001 from a net loss of KRW 7 billion (USD 5 million) in 2000, and the 25th month persistency rate has been maintained at over 80% level. Going forward, the company is expected to maintain an adequate level of capitalization to support its business activities through internal capital generation.
ING Life Korea's insurance portfolio is prudently managed. Although margin pressure on the annuity business exists due to the depressed investment environment, the potential upside remains high when market conditions improve. In 2002, the company further diversified its assets into inherently more volatile mutual funds; this is coupled with strict investment guidelines in place to limit the amount of risk assets acquired.
Offsetting factors include adverse investment conditions and increased competition in the industry. While ING Life Korea will benefit from a flight to quality, it is exposed to the low interest rate environment. The introduction of the revised mortality table ("Fourth Mortality Table") will exert additional pressure on the mortality profit margin. In the foreseeable future, Korea's life industry will remain competitive. Domestic life insurers will continue to penetrate the whole-life market, while other financial institutions will prove to be popular distributors of annuity products.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.