Best Affirms Ratings Samsung Fire & Marine (Europe) Ratings

April 30, 2012

A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit rating of “a” of UK-based Samsung Fire & Marine Insurance Company of Europe Limited (SFME), both with stable outlooks.

Best noted: “SFME’s risk-adjusted capitalization is expected to remain excellent and supportive of its growth plans. The company benefits from strong support from its parent, Samsung Fire & Marine Insurance Co., Ltd (SFM), which provided SFME’s initial capital of £10.6 million [$17.26 million] in 2011.

“SFME benefits from substantial reinsurance protection from SFM, predominantly on a facultative basis but also through participation on surplus share and per risk excess of loss treaties. Concern regarding the company’s high dependence on reinsurance is mitigated by the good credit quality of reinsurers used.”

Best also pointed out that SFME commenced trading on 29 March 2011 and reported a small profit before tax of £5,000 [$8,140] for the final nine months of 2011. “A break-even underwriting result was achieved in spite of initial start-up expenses, while solid investment earnings offset foreign exchange losses. Lower start-up expenses are expected to support improved overall performance in 2012, despite weaker market conditions for SFME’s core business.

“In 2011, SFME operated as a captive insuring such risks as manufacturing plant and machinery and logistics on behalf of the larger Samsung group. Expansion is expected in 2012 through insuring other Korean companies within Europe as well as Samsung affiliates in Africa. As a subsidiary of SFM, and as part of the wider Samsung group, SFME benefits from an excellent business profile within its target market.”

Best said it believes SFME is “well positioned at its current rating level. Factors that could lead to positive rating actions include enhanced support from SFM. Factors that could lead to negative rating actions include a significant decline in risk-adjusted capitalization, weaker than expected operating performance or deterioration in the support provided by SFM.”

Source: A.M. Best

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