AM Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa+” (Superior) of Samsung Fire & Marine Insurance Co., Ltd. (SFM) (South Korea) and its subsidiaries, Samsung Fire & Marine Insurance Company of Europe Limited (United Kingdom), Samsung Vina Insurance Co., Ltd. (Vietnam) and Samsung Reinsurance Pte. Ltd. (Singapore). Concurrently, AM Best has affirmed the FSR of A- (Excellent), the Long-Term ICR of “a-” (Excellent), and the Indonesia National Scale Rating of aaa.ID (Exceptional) of PT Asuransi Samsung Tugu (AST) (Indonesia). The outlook of these Credit Ratings (ratings) is stable.

The ratings of SFM reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, very favourable business profile and very strong enterprise risk management (ERM).

The ratings of AST reflect its balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and appropriate ERM. The ratings also recognise the wide range of support provided by AST’s parent, SFM.

SFM’s risk-adjusted capitalisation is expected to remain comfortably at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR), mainly supported by its robust available capital. The company maintains the highest regulatory solvency ratio among its non-life peers in South Korea even after transitioning to a more stringent solvency regime, and it plans to use excess capital for growth opportunities and shareholder returns in future years. While SFM’s capital is exposed to certain volatility resulting from the changes in the market value of its affiliated stock holdings, its risk-adjusted capitalisation has demonstrated strong resilience to various capital market stress scenarios. Additionally, SFM’s balance sheet strength is supported by its debt-free position, low level of underwriting leverage and conservative investment strategy.

SFM has a long-term track record of strong operating performance supported by a highly stable underwriting performance with a relatively low combined ratio compared with its domestic peers, and robust investment profits. The company’s long-term insurance line performance is expected to continue demonstrating a positive distinction from its market peers, underpinned by its large profitable book of existing policies and strong capability to generate a new business contractual service margin. In addition, SFM’s auto line remains profitable through various underwriting initiatives, favourable regulations, and acquisition cost efficiency from its online channel, despite the cumulative effect of prior base rate cuts and inflation on repair costs in recent years.

SFM is the market leader in South Korea’s non-life sector with an approximately 22% market share in terms of gross insurance service revenue in 2024 and has superior branding power being a part of the wider Samsung Group. The company has strong control over its distribution of long-term insurance through a large network of tied agents, and it is capable of flexibly adjusting its channel strategy to balance growth and profitability. SFM also has market-leading online channel for its auto insurance and benefits from first-mover advantages. Furthermore, the company’s affiliation with Samsung Group enables it to provide group-related business in South Korea and overseas, which serves as a good source of profits in its general insurance line with favourable loss ratios.

As part of its long-term vision, SFM has been cautiously pursuing global expansion, including investment and partnerships in overseas markets over the past few years. SFM’s recent ventures include expanding its investment in Canopius Group Limited and this business partnership in the U.S. market, as well as the transition of its China subsidiary into a joint venture with Tencent Holdings Limited, in order to tap into that country’s online personal lines segment more effectively.

With a sophisticated risk management culture and framework that are entrenched in the organisation, AM Best views SFM’s ERM capabilities as superior to those of its domestic and international peers with similar risk profiles.

AST’s risk-adjusted capitalisation is assessed at the strongest level, as measured by BCAR, and is expected to remain so over the intermediate term. The company’s balance sheet strength is supported by its low net underwriting leverage and conservative and liquid investment portfolios, which partially offset AST’s small absolute capital base. AST’s capital at the end of 2024 was well above the upcoming capital requirements set by its domestic regulator for 2026. Moderately high credit risk derived from AST’s sizeable reinsurance exposure to domestic (re)insurers is mitigated partially by affiliated and international reinsurance partners of high credit quality and strict counterparty monitoring by SFM.

AST’s strong operating performance is supported by its highly profitable underwriting and stable investment income as evidenced by a five-year average combined ratio of 28.6% (2020-2024) and a return-on-equity ratio of 9.1%, as calculated by AM Best. The company’s underwriting performance is mainly driven by its low expense ratio, which is attributable to large reinsurance commission income and low acquisition costs from the direct distribution channel. AST has historically benefitted from favourable loss ratios of Samsung group risks and the Korean Interest Abroad (KIA) business compared with local Indonesian inward business.

AST is a joint venture between SFM and PT Asuransi Tugu Pratama Indonesia Tbk, which have 70% and 30% shareholding, respectively. AM Best expects the KIA and Samsung group risks will remain as the main underwriting focus of AST over the medium term. AST plans to gradually increase its local inward business through selective partnerships for growth and to support SFM’s expansion strategy for global inward business, although AST’s current exposure to the non-Korean related Indonesian business is modest.

AST shares the Samsung brand and is highly integrated into its parent, receiving support in various areas such as key personnel, underwriting, marketing, risk management and reinsurance. Although there is no track record of capital injections from SFM due to AST’s strong capital buffer, AM Best expects the parent will provide capital support, if the need arises.

Negative rating actions could occur for SFM if there is a significant deterioration in its balance sheet strength fundamentals, including its risk-adjusted capitalisation. Negative rating actions also could arise if there is a continuous deterioration in the company’s operating performance to a level that no longer supports the current strong assessment. While it is thought to be unlikely, positive rating actions could occur if SFM’s operating performance demonstrates exceptionally strong and consistent results.

Negative rating actions could occur for AST if support from SFM is reduced to an extent that no longer supports the current level of rating enhancement. Negative rating actions also could result if there is a sustained deterioration in AST’s operating performance, or its risk-adjusted capitalisation significantly deteriorates such as from heightened credit risk following major loss events due to its high reinsurance dependency. Positive rating actions could occur if there is a notable and sustained expansion of AST’s market presence leading to an improved business profile.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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