AM Best Affirms Credit Ratings of KBFG Insurance (China) Co., Ltd.

AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of KBFG Insurance (China) Co., Ltd. (KBFG China) (China). The outlook of these Credit Ratings (ratings) is stable.

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

KBFG China’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s consolidated capital and surplus has continued to increase driven by positive operating performance with full profit retention.

KBFG China maintains a low underwriting leverage, strictly limited net exposures to large commercial accounts and a conservative investment appetite. The company has in place a comprehensive reinsurance programme with a panel of financially sound reinsurers to mitigate risks. The company has not paid dividends for the last five years and plans to continue retaining its profits fully to support growth over the medium term. KBFG China’s statutory solvency ratios were restored to a comfortably healthy level at year-end 2024, due to a material reduction in the required capital of counterparty concentration and credit risks owing to the settlement of sizeable reinsurance receivables as planned.

KBFG China has achieved positive operating profit over the last five years (2020 to 2024), with low-to-mid single digit return-on-equity ratios reported during the period. The company’s underwriting performance has remained profitable, supported by low acquisition costs and positive reinsurance commission income despite the periodic unfavourable net loss experience. The company’s five-year average net combined ratio was 84.7% based on AM Best’s calculations. KBFG China has projected a moderate increase in management expenses over the next three years due to an ongoing system upgrade. Stable investment returns are expected to remain the backbone of KBFG China’s overall operating results.

As a foreign-owned insurer focusing on serving Korean interests abroad, KBFG China has a defensible competitive advantage in this niche market. However, the company has a limited market presence in China’s non-life industry with less than 1% of total market share. AM Best views KBFG China’s ERM as appropriate for its risk profile.

Negative rating actions could occur if there is a reduced level of support from KB Insurance Co., Ltd., or if there is a material change to KBFG China’s shareholding structure, such that there is a diminished level of explicit and implicit support from its new shareholders. Negative rating actions also may arise from a sustained deteriorating trend in the company’s operating performance. Positive rating actions may occur if there is a significant increase in KBFG China’s capital size with robust risk-adjusted capitalisation.

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 Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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