KUALA LUMPUR: Global credit rating agency, AM Best has affirmed the financial strength rating of A- (excellent) and the long-term issuer credit rating of ‘a-‘ (excellent) of South Korea’s NongHyup Property and Casualty Insurance Company Limited (NH PandC).

According to BERNAMA News Agency, these credit ratings have a stable outlook, reflecting NH PandC’s strong balance sheet strength, adequate operating performance, limited business profile, and appropriate enterprise risk management. The ratings also highlight the implicit and explicit support the company receives from its ultimate parent, the National Agricultural Cooperative Federation (NACF).

NH PandC’s risk-adjusted capitalisation is assessed at the strongest level as measured by Best’s Capital Adequacy Ratio. The company’s capital and surplus showed significant increase in 2023, attributed largely to the adoption of IFRS 17, while its balance sheet fundamentals remain unchanged. However, the company’s capital is exposed to a relatively high level of v
olatility from interest rate movements compared to its domestic peers under the new accounting and local solvency standards.

In response to this challenge, NH PandC is increasingly focusing on asset-liability management to enhance its capital management under the new solvency regime. The company’s financial flexibility is bolstered by its good access to the capital market, supported by previous issuances of subordinated debts and additional financial support from its immediate parent, NongHyup Financial Group Inc.

As a domestic non-life insurer in South Korea, NH PandC holds a 3.7 percent market share in terms of gross insurance service revenue in 2023. The firm is the exclusive provider of crop insurance in the country, operating largely under the principle of ‘no profit no loss.’ It is also a major provider of other government policy insurance products for farmers, such as livestock and agricultural vehicle insurance.

NH PandC is working on gradually improving its underwriting profitability by expanding
sales of protection-type products with high margins. However, its market share in the long-term insurance segment remains modest due to strong market competition. The distribution of its products remains highly concentrated in the cooperative channel, a network of NACF’s members.