2013-12-05 19:17:03 -
A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Korea P&I Club (KP&I) (South Korea). The outlook for both ratings is stable.
The ratings reflect KP&I’s support from the South Korean government, strong risk-adjusted capitalization and profitable operating performance.
KP&I was established in 2000 under the Ship-Owners’ Mutual Protection and Indemnity Association Act to provide reliable protection and indemnity insurance for shipowners in Korea. Given its role to promote marine infrastructure in the country, KP&I receives a wide range of support from the government.
KP&I’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is well positioned to support the current ratings. The club’s free reserves grew by an average
of 37% over a five-year period ending December 2012 to KRW 32 billion, primarily due to its strong profitability. The club reported profitable underwriting results on the back of tight underwriting guidelines and loss prevention policies. It has maintained a conservative stance in selecting new business and has obtained comprehensive reinsurance protection to limit its risk retention.
Partially offsetting these positive rating factors are the challenging condition of the shipping industry and rising claim frequency. The growth of premium income is expected to be sluggish in the coming years against the backdrop of a continuously depressed shipping industry. Over the past few years, KP&I has experienced an increase in its claim frequency as shipping companies’ weak financials have resulted in a deterioration in the quality of ships and crew management.
Negative rating actions may occur if there is a significant decline in KP&I’s risk-adjusted capitalization caused by deterioration in underwriting profitability.
The methodology used in determining these interactive ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
A.M. Best Asia-Pacific Limited is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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