KUALA LUMPUR, Dec 5 (Bernama) -- Global credit rating agency, AM Best, has upgraded South Korea’s Meritz Fire and Marine Insurance Co Ltd (Meritz) Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to “a” (Excellent) from “a-” (Excellent).
In a statement, AM Best said that the outlook of these Credit Ratings (ratings) has been revised to stable from positive.
It said the ratings reflected Meritz’s balance sheet strength, which AM Best assessed as strong, as well as strong operating performance, neutral business profile and appropriate enterprise risk management.
AM Best said the rating upgrade reflected the company’s strong profitability in recent years, which has been supported by consistently superior investment performance and improved underwriting performance.
“The company reported a double-digit return-on-equity ratio in each of the past five years with an average of 17.7 per cent (2017-2021),” it said.
It said while Meritz continued to outperform its domestic peers in terms of loss ratio and investment returns, its expense ratio had increased steeply prior to 2019 driven by strong new business growth.
AM Best said Meritz’s risk-adjusted capitalisation was assessed as very strong, as measured by AM Best’s Capital Adequacy Ratio, supported by strong internal capital generation and good financial flexibility.
It added that although the general agency channel remained a major distribution channel, Meritz has recently been trying to expand its tied agent channel to strengthen its control over distribution as well as improve overall channel profitability.
Meritz is the fifth-largest non-life insurer in South Korea and its market share has gradually increased over the past five years to 11.3 per cent in 2021 in terms of gross premium written from 8.6 per cent in 2017.
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