KB Indonesia to meet new capital requirements, capital growth expected

Its five-year ROE ratio was 5.1%.

KB Insurance (KBI) Indonesia will attain a more diversified portfolio moving forward, coupled with the increasing volume of motor business sourced through its affiliated companies. The company’s product portfolio currently shows a concentration in property and engineering lines, AM Best said.

KB Indonesia, a joint venture between KBI (70%) and AM Sinar Mas Multifinance (30%), is a small non-life insurer in Indonesia, primarily serving Korean companies operating in the country. 

KB Indonesia’s risk-adjusted capitalisation is considered strong, as indicated by Best’s Capital Adequacy Ratio (BCAR), which is supported by low underwriting leverage and a conservative investment portfolio. 

Although the company has a modest capital base, AM Best expects solid capital growth through profit retention to meet strengthened local capital requirements. 

The company’s operating performance is rated as adequate, with a five-year (2019-2023) return-on-equity ratio of 5.1% and a combined ratio of 96.8%. 

Whilst its underwriting performance has shown moderate volatility due to its small net premium base and exposure to infrequent but severe losses, AM Best expects improved stability as premium volumes grow and the motor insurance business increases. 

KB Indonesia’s conservative investment portfolio, mainly comprising time deposits and Indonesian government bonds, provides stable investment returns that help offset underwriting volatility. AM Best also anticipates that KB Indonesia will receive capital support from KBI when necessary.