AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a” (Excellent) of Korean Reinsurance Company (KRE).
According to AM Best, the ratings reflect KRE’s balance sheet strength, which it assesses as very strong, as well as its “adequate operating performance, favourable business profile and appropriate enterprise risk management.”
The rating agency noted that the revision of the Long-Term ICR outlook reflects its expectation of an improvement in KRE’s balance sheet strength from 2023 onward.
AM Best observed that KRE’s risk-adjusted capitalisation, which the rating agency assesses comfortably at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), is expected to “improve further following its plan to restructure the underwriting portfolio, coupled with increased capital from recent hybrid bond issuances and continued solid profit retention.”
AM Best stated that positive rating actions could occur if there is a sustained improvement in KRE’s balance sheet strength. Meanwhile, negative rating actions could arise if a sustained deteriorating trend in KRE’s operating performance occurs.
“Negative rating actions also could occur if there is a material decline in its risk-adjusted capitalisation, triggered by incidents such as multiple medium- or large-scale catastrophe losses retained in a fiscal year,” The rating agency concluded.
