A.M. Best Affirms Credit Ratings of Construction Guarantee Cooperative
HONG KONG--(BUSINESS WIRE)--Sep 21, 2018--A.M. Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa-” of Construction Guarantee Cooperative (CG) (South Korea). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect CG’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).
CG’s balance sheet strength is underpinned by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Its robust capitalization is supported by a large capital base and low underwriting leverage.
CG has maintained a highly profitable operating performance over the past five years. Underwriting performance improved in 2016 and 2017 through the company’s efforts to improve claims management and tighten its underwriting process. Investment income, which mostly consists of interest income, brings a stable profit stream to the company while underwriting performance remains volatile because of the nature of the surety business.
CG is a cooperative organization specializing in writing surety bonds for its members, which are general construction companies in South Korea. As a government-designated provider of surety bonds for general construction companies, CG has maintained a dominant market share in South Korea over the long term. In addition, CG is under the supervision and control of South Korea’s Ministry of Land, Infrastructure and Transport and executes government policies that support the construction industry.
CG’s risk management capabilities are considered appropriate given its risk profile. CG has implemented a comprehensive ERM structure to effectively manage its key risk areas, including a sophisticated credit assessment and monitoring process of its members.
Negative rating actions could occur if CG’s risk-adjusted capitalization materially deteriorates due to significant accumulation of claims caused by a prolonged recession in the construction industry.
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 web page. For additional information regarding the use and limitations of Credit Rating opinions, please view . For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view .
Copyright © 2018 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/20180921005423/en/
CONTACT: A.M. Best
Sergio Hidenori Agena, +852 2827 3407
Associate Financial Analyst
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
Christie Lee, +852 2827 3413
Jim Peavy, +1 908 439 2200, ext. 5644
Director, Public Relations
KEYWORD: EUROPE ASIA PACIFIC HONG KONG
INDUSTRY KEYWORD: PROFESSIONAL SERVICES INSURANCE
SOURCE: A.M. Best
Copyright Business Wire 2018.
PUB: 09/21/2018 12:03 PM/DISC: 09/21/2018 12:03 PM