AM Best affirms credit ratings of Korea P&I Club

KUALA LUMPUR: AM Best has affirmed the financial strength rating of A- (excellent) and the long-term issuer credit rating of ‘a-’ of Korea P&I Club (KP&I) South Korea and the outlook of these ratings is stable.

KP&I was founded in 2000 under the Ship-Owners’ Mutual Protection and Indemnity Association Act. The club benefits from various support from the South Korea government pivoting on its strategic role in the long-term development of the country’s marine infrastructure, which serves as a positive rating factor.

The ratings reflect KP&I’s balance sheet strength, which AM Best categorised as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

AM Best said KP&I’s balance sheet strength is underpinned by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio.

KP&I has maintained highly profitable operating performance with the five-year average return on equity of 10 per cent with a modest level of volatility.

However, the club experienced a sharp drop of net income in 2017 mainly due to the impact of exchange rate movement on its underwriting and investment performance.

With its business primarily concentrated in Korea, KP&I maintains about 16 per cent of market share based on premium within the domestic market.

Amid the prolonged recession in the shipping industry and increasing competition, multiple initiatives are on the way to secure its market position: strategic partnership with a member of International Group of P&I Clubs, new business opportunity under the government’s plan to build new vessels to support Korean shipping industry and overseas expansion plan. — Bernama