KBFG China sees continuous growth in capital and surplus

AM Best said its relatively small capital base and underwriting portfolio expose it to volatility in the event of large losses.

As a foreign-owned insurer serving Korean interests abroad, KBFG Insurance (China) has a defensible competitive advantage in its niche market. However, its market presence in China's non-life industry remains limited, with less than 1% of the total market share. AM Best views KBFG China’s Enterprise Risk Management (ERM) as appropriate for its risk profile.

AM Best also notes the insurer has a stable outlook. Firstly, KBFG China demonstrates very strong balance sheet strength, supported by its robust risk-adjusted capitalization measured by Best’s Capital Adequacy Ratio (BCAR). 

The company's consolidated capital and surplus have shown continuous growth driven by positive operating performance, with full profit retention. 

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Although its relatively small capital base and underwriting portfolio expose it to volatility in the event of large losses, KBFG China maintains low underwriting leverage and a conservative investment approach. It has also partnered with financially sound reinsurers to mitigate risks. 

Secondly, KBFG China has achieved positive operating profit over the last five years, with low-to-mid single-digit return-on-equity ratios. 

Despite adverse and volatile claims experience due to factors such as a small net earned premium base and large commercial accounts, KBFG China's operating performance has remained profitable. 

This is supported by low acquisition costs, positive reinsurance commission income, and stable interest income from bank deposit investments.