View this article online: https://www.insurancejournal.com/news/international/2003/02/18/26304.htm
Standard & Poor’s has raised its ratings based on public information on Hyundai Marine & Fire Insurance Co. Ltd. and Oriental Fire & Marine Insurance Co. Ltd. to ‘BBpi’ from ‘Bpi’. At the same time, Standard & Poor’s withdrew its ‘CCCpi’ rating on Ssangyong Fire & Marine Insurance Co. Ltd.
The upgrade of Hyundai Marine reflects the insurer’s stable market position and profitability, which has recovered after losses incurred in fiscal 2000 (ended March 2001). The ratings are constrained by Hyundai Marine’s improving but still weak capitalization and its vulnerability to the volatile capital markets. Concerns also remain over the company’s pressured earnings amid intensifying competition in the deregulating Korean non-life insurance sector.
The upgrade of Oriental Fire reflects the insurer’s strengthening market position and stable profitability. Factors constraining the ratings are continuing underwriting losses and concerns over Oriental Fire’s capitalization.
“The ratings on the Korean non-life insurers incorporate their improved underwriting performance and capitalization as the domestic insurance industry has recovered after the Asian financial crisis,” Young Il Choi, a Standard & Poor’s credit analyst, remarked.
“However, deregulation in the Korean non-life sector will intensify competition, which will add pressure on domestic insurers’ earnings. Furthermore, the volatile investment environment makes profits from investment activities vulnerable,” Choi said.
The flight to quality by Korean consumers resulted in increased market shares for most of the five largest insurers (including Samsung Fire & Marine Insurance Co. Ltd., and LG Insurance Co. Ltd.).
Hyundai Marine’s market share grew to 14.3 percent in fiscal 2001 from 14.1 percent in fiscal 2000 based on direct premiums. Its underwriting performance improved in fiscal 2001, resulting in a combined ratio of 101.2 percent, down from 107.7 percent in fiscal 2000. Hyundai Marine’s strength in auto insurance is backed by its business relationship with Hyundai Motor and Kia Motor.
Oriental Fire’s market share grew sharply to 8.4 percent in fiscal 2001 from 7.7 percent in fiscal 2000 in terms of direct premiums. Its combined ratio improved to 102.5 percent in fiscal 2001 from 109.0 percent in fiscal 2000, and, despite continuing underwriting losses, Oriental Fire’s expense ratio was one of the lowest among its domestic peers.
The rating on Ssangyong Fire was withdrawn due to a lack of publicly available information on the company.