Korea P&I faces volatility risk from large claims over near term

AM Best said the club’s small capital base leaves earnings exposed.

Korea P&I Club's relatively small capital base leaves it exposed to potential earnings volatility from large claims, but its risk-adjusted capitalisation will likely remain at the strongest level over the intermediate term.

The club's balance sheet is supported by low underwriting leverage and a conservative investment portfolio, according to AM Best.

Capital and surplus increased in 2025, supported by retained earnings growth and the partial collection of voluntary contributions from shipowners.

AM Best said the club maintains a modest position in the global P&I market compared with members of the International Group of P&I Clubs, given its concentration in South Korea and narrower product scope. 

However, it expects Korea P&I to maintain a stable presence in the domestic market through its established relationships with South Korean shipping companies and local market expertise.

The agency noted that Korea P&I's underwriting profitability improved significantly in 2025 compared with the previous year. 

The improvement was mainly driven by lower claims costs, as the club did not experience any high-severity losses during the year.

This also contributed to higher reinsurance commission income.

Despite the stronger 2025 performance, AM Best said it will continue monitoring whether the club's measures can deliver more consistent underwriting results. 

Korea P&I recorded negative operating performance in three of the past five years from 2021 to 2025, generally underperforming global protection and indemnity (P&I) peers.