CI Guarantee stands strong with solid capital buffer

The return on equity rose to 3.1% in 2023, higher than the 2021-2023 average of 2.7%. 

CI Guarantee (CIG) holds a strong buffer against potential fluctuations in its business portfolio, Fitch Ratings said.

CIG's regulatory capital ratio stood at 383% in the first half of 2024, down slightly from 389% in 2023, yet remains well above the 100% regulatory minimum. 

As of the end of 2023, CIG’s capital exceeded $72m (KRW1t), covering more than 90% of its total assets. 

The company’s guarantee exposure to total shareholders’ funds increased to 10.4 times, compared to 9.3 times in 2022, but remains below the regulatory limit of 20 times.  

Profitability metrics showed modest improvement. The return on equity rose to 3.1% in 2023, higher than the 2021-2023 average of 2.7%. 

The combined ratio, which had climbed to 120% in 2023 due to increased guarantee claims, improved to below 100% in the first half of 2024 as reserve provisions declined.

Fitch highlighted potential risks stemming from CIG's concentration in the niche construction sector. 

However, efforts to diversify geographically and expand product lines have gradually broadened its revenue base. 

In 2023, 10% of its total guarantee exposure was attributed to overseas business.  

CIG maintains a dominant market share of over 90% in plant and mechanical construction guarantees within South Korea but accounts for less than 0.5% of the aggregate non-life insurance industry premiums.