Korea P&I Club’s Credit Ratings Affirmed Good - AM Best

KUALA LUMPUR, Aug 18 (Bernama) -- Global credit rating agency, AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Korea P&I Club (KP&I), South Korea.

According to AM Best in a statement, the outlook of these credit ratings (ratings) is stable, reflecting the wide range of support that KP&I receives from the South Korean government.

The ratings also reflect KP&I’s balance sheet strength, which AM Best assessed as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

KP&I’s risk adjusted capitalisation is assessed at the strongest level, as measured by Best’s Capital Adequacy ratio, and it is expected to remain at that level over the intermediate term.

The company’s balance sheet strength is underpinned by its low underwriting leverage and a highly conservative investment portfolio.

Despite various underwriting initiatives, KP&I’s underwriting performance remained deteriorated and volatile in recent years following changes in its reinsurance structure, with higher net retention and a loss-sensitive commission scheme on proportional treaties, after a large loss in 2019.

Nevertheless, KP&I has implemented stronger and more direct mitigation actions, such as general premium increases and non-renewal of historically unprofitable policies, AM Best expects KP&I’s underwriting fundamentals and profit volatility to improve over the coming years.

Underpinned by its strategic role to support the long-term development of maritime infrastructure in South Korea, KP&I receives a wide range of support from the government, including subsidies, corporate tax exemption, no dividend payout policy to its members, as well as overseas marketing and diplomatic efforts.

-- BERNAMA