AM Best affirms credit ratings of NongHyup Property and Casualty Insurance Company Limited


AM Best confirmed the financial strength rating of A- (excellent) and the long-term issuer credit rating of “a-” (excellent) of NongHyup, Property and Liability Insurance Company (NH P&C) (South Korea). The outlook for these credit ratings (ratings) is stable.

The ratings reflect the strength of NH P & C’s balance sheet, which AM Best believes to be strong, as well as its adequate operational performance, limited business profile and appropriate management of business risks. The ratings also reflect the implicit and explicit support the company receives from its ultimate parent, the National Federation of Agricultural Cooperatives (NACF).

NH P & C’s risk-adjusted capitalization is considered very strong, as measured by Best’s capital adequacy ratio (BCAR). Although its capital is sensitive to moderate volatility caused by the recent surge in long-term investment returns, NH P & C’s capital and surplus have increased in 2020 and the first nine months of 2021 due to a strong expansion in retained earnings. NH P&C has maintained a zero dividend policy since 2017 to strengthen its capitalization in view of IFRS 17 and K-ICS, a new solvency regime that will be implemented in South Korea. The company’s very conservative investment portfolio, largely comprised of high-quality fixed income assets, also supports the assessment of the strength of the current balance sheet.

NH P & C’s operating performance is considered adequate with a five-year (2016-2020) average operating ratio of 98.2% and a return on equity ratio of 3.3%. The company recorded favorable underwriting performance in 2020, mainly due to improved claims experience and robust premium growth in the long-term line of insurance, coupled with an improved expense ratio. AM Best notes that the underwriting fundamentals of fast growing government policy insurance products, which reported significant losses due to abnormal weather conditions in 2018 and 2019, have shown signs of improvement since 2020, following the efforts. of the company such as underwriting strengthening, product restructuring and rate hikes.

NH P&C is a wholly owned subsidiary of NongHyup Financial Group Inc. (NHFG), which is the financial arm of NACF and one of the largest financial groups in South Korea. NH P&C accounted for around 4% of South Korea’s non-life market based on direct premiums written in 2020. While the long-term insurance line constitutes the largest share of its business, NH P&C is also the exclusive provider of South Korean government insurance policies such as crop and livestock insurance. Distribution remains highly concentrated in the cooperative channel, which is a network of NACF members, although the company has tried to gradually diversify into general agent and tied agent channels.

NH P&C is strategically important to its ultimate parent company, NACF, due to its role as the exclusive provider of state policy insurance to members of the NACF cooperative. The improved rating reflects the operational and financial benefits that NH P&C derives from being a key member within the NACF, including government reinsurance grants and support for government insurance policies, l ‘exclusive access to the NACF cooperative channel and capital support from its immediate parent company, NHFG.

Negative rating actions could arise in the event of a significant deterioration in the company’s risk-adjusted capitalization. Negative rating actions may also arise if the level of support or the strategic importance of the business to its ultimate parent company is reduced to a degree that no longer supports the current level of improvement.

Ratings are communicated to rated entities before their publication. Unless otherwise indicated, the ratings have not been changed as a result of this communication.

This press release relates to credit ratings published on the AM Best website. For all rating information relating to the posting and relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this post, please see AM Best’s Recent Rating Activity webpage. . For more information on the use and limitations of credit rating reviews, please see Best’s Guide to Credit Ratings. For more information on the proper use of Best Credit Ratings, Best Preliminary Credit Ratings, and AM Best press releases, please see the Guide to Appropriate Use of Best Ratings and Ratings.

AM Best is a global credit rating agency, news publisher, and data analytics provider specializing in the insurance industry. Based at United States, the company operates in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico. For more information, visit

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Chang Sim
Financial Analyst

+852 2827 3400

[email protected]

Chanyoung lee
Associate Director, Analytics

+852 2827 3404

[email protected]

Christophe sharkey
Manager, Public Relations

+1 908 439 2200, ext. 5159

[email protected]

Jim peavy
Director, Communications

+1 908 439 2200, ext. 5644

Yes[email protected]

Source: AM Best


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