LONDON: AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of Samsung Fire & Marine Insurance Company of Europe Limited (SFME) (United Kingdom). The outlook of these Credit Ratings is stable.
The ratings reflect SFME’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings also factor in both implicit and explicit support from SFME’s parent, Samsung Fire & Marine Insurance Co., Ltd (SFMI).
SFME’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s BCAR scores are underpinned by a conservative investment portfolio and prudent reserving practices, which are demonstrated by a track record of favourable reserve development.
Offsetting factors include the company’s small capital base and its high reinsurance dependence for underwriting large limit risks. However, reinsurance dependence is partially mitigated through use of a strong and stable reinsurance panel. Prospectively, AM Best expects SFME to maintain a level of capital adequacy that is supportive of the very strong balance sheet strength assessment.
SFME has a track record of strong operating performance, demonstrated by a five-year weighted average (2015-2019) return on equity ratio of 10.4%. Earnings are underpinned by robust, albeit volatile, underwriting performance, demonstrated by a combined ratio that has fluctuated between 45.8% and 94.8% over the past five years. Investment income accounts for a small component of overall earnings.
The business profile assessment reflects SFME’s small scale and concentration toward the property and cargo business. The majority of the company’s revenue is generated by insuring Samsung group risks across the U.K., Europe, Central Asia, Middle East and Africa. As a subsidiary of SFMI and part of the Samsung group, SFME benefits from the business profile of the wider group, which is considered supportive of its strategy to grow locally sourced third-party business over the medium-to-long term.