AM Best Assigns Credit Ratings and National Scale Rating to PT KB Insurance Indonesia
2024年8月16日 - 1:35AM
ビジネスワイヤ(英語)
AM Best has assigned a Financial Strength Rating of B++
(Good) and a Long-Term Issuer Credit Rating of “bbb+” (Good) to PT
KB Insurance Indonesia (KB Indonesia) (Indonesia). The outlook
assigned to these Credit Ratings (ratings) is stable. Additionally,
AM Best has assigned the Indonesia National Scale Rating (NSR) of
aaa.ID (Exceptional) to KB Indonesia with a stable outlook.
The ratings reflect KB Indonesia’s balance sheet strength, which
AM Best assesses as strong, as well as its adequate operating
performance, limited business profile and appropriate enterprise
risk management. The ratings also recognise the wide range of
support provided by KB Indonesia’s parent, KB Insurance Co., Ltd.
(KBI) which is fully owned by KB Financial Group Inc. (KB
Group).
As a joint venture between KBI (70%) and AM Sinar Mas
Multifinance (30%), KB Indonesia is a small-sized non-life insurer
domiciled in Indonesia. The company mainly focuses on offering
coverage to Korean companies in Indonesia while having limited
market presence in the local non-life segment. Following active
entries of KB Group affiliates into Indonesia as part of the
group’s global expansion strategy, KB Indonesia’s source of
business is becoming diversified with a rising trend in
cross-selling business with its affiliates. In terms of product
portfolio, a level of concentration on property and engineering
lines was observed. Nonetheless, AM Best expects KB Insurance to
have a more diversified portfolio going forward with an increasing
volume of motor business sourced through its affiliated
companies.
KB Indonesia’s risk-adjusted capitalisation is assessed at the
strongest level, as measured by Best’s Capital Adequacy Ratio
(BCAR), supported by low underwriting leverage and a conservative
investment portfolio. While KB Indonesia is viewed to have a modest
absolute capital base, AM Best expects the company to demonstrate
solid capital growth through full profit retention over the coming
years to meet the strengthened capital requirements by the local
regulator. Offsetting factors in the balance sheet assessment
include considerable counterparty credit risk due to sizeable
reinsurance exposure to local (re)insurers with relatively weaker
credit quality in compliance with regulatory requirements.
AM Best assesses KB Indonesia’s operating performance as
adequate, with a five-year (2019-2023) return-on-equity ratio of
5.1% and a combined ratio of 96.8%, as calculated by AM Best.
Historically, the company’s underwriting performance has
demonstrated moderate volatility due to its small net premium base
and exposure to low frequency, high severity losses. Prospectively,
AM Best expects improved stability with growing premium volume and
increase in motor line of business. KB Indonesia’s conservative
investment portfolio, which is mainly composed of time deposits and
Indonesian government bonds, provides stable investment profits
that partially mitigate volatility in underwriting profits.
KB Indonesia receives rating enhancement from implicit and
explicit support from its parent, KBI. The company plays an
important role in KB Group’s overall expansion strategy in
Indonesia’s insurance market and benefits from the group’s network
and distribution channels in Indonesia. AM Best expects the parent
will provide capital support to KB Indonesia in times of needs, as
evidenced by KBI’s public announcement to fully support the company
in fulfilling the strengthened local capital requirement that will
be applied over the coming years.
Positive rating actions could arise if KB Indonesia’s operating
performance continues to improve and reaches a level that
positively distinguishes the company from its industry peers in a
sustainable manner. Negative rating actions could occur for KB
Indonesia if support from KBI is reduced to an extent that no
longer supports the current level of rating enhancement. Negative
rating actions also could arise if KB Indonesia’s risk-adjusted
capitalisation significantly deteriorates such as from heightened
credit risk following major loss events or from excessive business
expansion that materially outpaces the capital growth. Positive
rating actions could arise if there is a sustained improvement in
the company’s operating performance.
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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Seokjae Lee Financial Analyst +852 2827
3407 seokjae.lee@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Chanyoung Lee Director, Analytics +852 2857
3404 chanyoung.lee@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com