A.M. Best Affirms Credit Ratings of KB Insurance Co., Ltd.

HONG KONG–(BUSINESS WIRE)–A.M. Best has affirmed the Financial Strength Rating of A
(Excellent) and the Long-Term Issuer Credit Rating of “a” of KB
Insurance Co., Ltd. (KB Insurance) (South Korea). The outlook of these
Credit Ratings (ratings) is stable.

The ratings reflect KB Insurance’s balance sheet strength, which A.M.
Best categorizes as strong, as well as its adequate operating
performance, neutral business profile and appropriate enterprise risk
management (ERM). The ratings also consider the strategic importance and
support KB Insurance receives from the parent company, KB Financial
Group Inc. (KB Group).

KB Insurance’s risk-adjusted capitalization, as measured by Best’s
Capital Adequacy Ratio (BCAR), is at the very strong level. The company
has a conservative investment portfolio and growing capital and surplus,
having benefited from improved profitability and a relatively low
dividend payout ratio. Asset leverage has declined over the past five
years but remains high, exposing the company’s capital and surplus to
asset valuation change.

KBI’s operating performance has improved over the past five years albeit
with moderate volatility. The improvement was driven mainly by
increasing net investment income. The company’s combined ratio, which
had underperformed its major peers historically, has caught up over the
past three years. However, the company’s overall operating performance
still trails its major peers.

KBI is the fourth-largest non-life insurer in South Korea. The company
benefits from the KB brand and from being a wholly owned subsidiary of
the KB Group. Nevertheless, KBI’s overseas business profile is limited,
and in particular, the company’s U.S. business has struggled with poor
operating performance for the past years.

A.M. Best considers the company’s risk management capabilities as
appropriate for its risk profile. KB Insurance has been improving its
risk management framework as it prepares for upcoming regulatory
changes. The company benefits from the group’s risk management expertise
and its integrated ERM.

KB Insurance is important to the group in terms of business
diversification and enables the group to provide a wider range of
financial services. The group provided KB Insurance with capital support
in 2015 and 2016, and turned it into a wholly owned subsidiary in 2017.
KB Insurance also benefits from implicit support in areas such as
investment, human resources and business infrastructure.

Positive rating action is unlikely in the near term. Negative rating
actions could occur if there is a material deterioration in the
company’s risk-adjusted capitalization. Negative rating actions could
occur if there is a significant decline in the parent company’s
financial strength and credit profile.

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 A.M. 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 A.M. Best’s
Recent
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Understanding
Best’s Credit Ratings
. For information on the proper media
use of Best’s Credit Ratings and A.M. Best press releases, please view
Guide
for Media – Proper Use of Best’s Credit Ratings and A.M. Best Rating
Action Press Releases
.

A.M. Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information
.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Sergio Hidenori Agena
Associate Financial Analyst
+852
2827 3407

sergio.agena@ambest.com
or
Christie
Lee
Director, Analytics
+852 2827 3413

christie.lee@ambest.com
or
Christopher
Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com
or
Jim
Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644

james.peavy@ambest.com

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