A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit rating of “a” of UK-based Samsung Fire & Marine Insurance Company of Europe Limited (SFME), both with stable outlooks.
The ratings of SFME “reflect its excellent risk-adjusted capitalization, which is expected to support its growth plans. In addition, the ratings factor in the company’s good underwriting performance and the strong support it receives from its parent, Samsung Fire & Marine Insurance Co. Ltd (SFM), which provided SFME’s initial capital of £10.6 million [$16.25 million] in 2011,” said Best.
“SFM provides substantial reinsurance protection to SFME, predominantly on a facultative basis but also through participation in surplus share and per risk excess of loss treaties. Concern regarding SFME’s high dependence on reinsurance is mitigated by the good credit quality of its reinsurers.”
Best also indicated that SFME reported “a good profit-before-tax of £1.1 million [$1.685 million] in 2012, its first full year of operation. The combined ratio was 79 percent, reflecting the strong performance of its cargo book and a fall in initial start-up costs. Gross written premiums increased 66 percent, largely driven by higher demand for the Samsung electronic goods in Europe, as well as the fact that SFME only operated for the final nine months of 2011.
“In 2011, SFME reported a small profit-before-tax of £5,000 [$7,663]. A break-even underwriting result was achieved in spite of initial start-up expenses, while solid investment earnings offset foreign exchange losses.”
Best also pointed out that in “2012, the majority of SFME’s business was comprised of the insurance of Samsung group operations in Europe. In addition, SFME insured third party Korean and Japanese risks within Europe as well as Samsung group affiliates in Africa. Portfolio diversification is expected to continue into 2013, as SFME expands its external business. As a subsidiary of SFM and as part of the Samsung group, a South Korean conglomerate, SFME benefits from an excellent business profile within its target market.”
In conclusion Best said it “believes SFME is well positioned at its current rating level.
Factors that could lead to positive rating actions include enhanced support from SFM. Factors that could lead to negative rating actions include a significant decline in the company’s risk-adjusted capitalization, a weaker than expected operating performance or deterioration in the support provided by SFM.”
Source: A.M. Best Europe
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