AM BEST AFFIRMS NONGHYUP P&C RATINGS; OUTLOOK STABLE

KUALA LUMPUR, Nov 24 (Bernama) -- AM Best has affirmed South Korea’s NongHyup Property and Casualty Insurance Company Limited (NH P&C) financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent), with a stable outlook.

In a statement, AM Best said the credit ratings (ratings) reflected NH P&C’s strong balance sheet, adequate operating performance, limited business profile, and appropriate enterprise risk management, along with implicit and explicit support from its ultimate parent, the National Agricultural Cooperative Federation (NACF).

NH P&C’s risk-adjusted capitalisation remains at the strongest level under Best’s Capital Adequacy Ratio. However, its Korean-Insurance Capital Standards (K-ICS) ratio declined materially in 2024 and through the first half of 2025, primarily due to various regulatory guideline changes.

AM Best expects solvency to remain comfortably above required levels, supported by improved asset and liability management and strong financial flexibility via capital-market access and backing from NongHyup Financial Group (NHFG). The insurer maintains a conservative, high-quality fixed-income investment portfolio.

Operating performance is assessed as adequate, with a 5.7 per cent return-on-equity and 95.1 per cent combined ratio in 2024. Volatility persists in its property/casualty book—including government policy insurance—given exposure to weather events and wildfires.

While long-term insurance profitability is comparable to peers, new business contractual service margin (CSM) growth has declined over 2022–2024. AM Best will monitor progress in strengthening CSM generation, a key buffer for future earnings stability. Investment income is expected to remain a consistent driver of profitability.

NH P&C held a 3.7 per cent market share in South Korea in 2024 and is the exclusive national crop insurer, operating under a “no profit, no loss” principle. It also distributes major policy insurance products for farmers.

While the company targets growth in higher-margin protection products, its long-term insurance market presence remains modest due to strong competition. Distribution is still concentrated in NACF’s cooperative network.

As a wholly owned subsidiary of NHFG, NH P&C is considered strategically important, given its exclusive policy-insurance role for cooperative members. AM Best recognises NHFG’s strong capacity and willingness to extend timely financial support if needed.

-- BERNAMA