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AM Best Affirms Credit Ratings of LIG Insurance (China) Co Ltd

March 28, 2019

HONG KONG--(BUSINESS WIRE)--Mar 28, 2019--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of LIG Insurance (China) Co Ltd (LIG China) (China). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect LIG China’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also reflect the wide range of support the company receives from its parent, KB Insurance Co., Ltd. (KB Insurance) in areas including business development, reinsurance and investment.

LIG China’s risk-adjusted capitalization remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by very low underwriting leverage and a highly conservative investment portfolio. The company has generated positive net profits consistently in the past five years, mainly attributable to a solid stream of interest income and low acquisition costs from its direct distribution channel. Despite having a small market share, LIG China occupies a niche market by focusing on servicing Korean Interests Abroad (KIA) that operate in China, which generate more than 90% of the company’s revenue.

An offsetting rating factor is LIG China’s underwriting of large commercial accounts with potentially large losses, leading to volatility in its underwriting performance. This is mitigated by a comprehensive reinsurance program that lowers the company’s net retention in these risks. However, the high reinsurance dependence also exposes the company to reinsurer credit risk in the event of major losses. As a foreign-owned insurer concentrated on KIA businesses, LIG China is vulnerable to regulatory and political uncertainties in its operating environment.

While positive rating actions are unlikely in the near term, negative rating actions could occur if there is a substantial decline in the company’s risk-adjusted capitalization, a significant deterioration in its operating performance, or reduced support from the parent.

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 AM 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 AM 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 . For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases .

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com:https://www.businesswire.com/news/home/20190328005717/en/

CONTACT: Yizhou Hong

Financial Analyst

+852 2827 3426

yizhou.hong@ambest.comChristie Lee

Director, Analytics

+852 2827 3413

christie.lee@ambest.comChristopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.comJim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

KEYWORD: EUROPE ASIA PACIFIC SINGAPORE HONG KONG

INDUSTRY KEYWORD: PROFESSIONAL SERVICES BANKING FINANCE INSURANCE

SOURCE: AM Best

Copyright Business Wire 2019.

PUB: 03/28/2019 12:37 PM/DISC: 03/28/2019 12:37 PM

http://www.businesswire.com/news/home/20190328005717/en