AM Best Revises Issuer Credit Rating Outlook to Stable for Korea P&I Club

HONG KONG--(BUSINESS WIRE)--#insurance--AM Best has revised the outlook to stable from negative for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Korea P&I Club (Korea P&I or the Club) (South Korea). The outlook of the FSR is stable.

The Credit Ratings (ratings) reflect Korea P&I’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also reflect the wide range of support that the Club receives from the South Korean government.

The revision of the Long-Term ICR outlook to stable from negative reflects the Club’s mitigative initiatives over the past years, especially the recent enhancement in its reinsurance structure with a lower net retention. The improvement is expected to lower its underwriting performance volatility from mid- to large-size claims. In 2025, the Club’s underwriting profitability also improved materially from the prior year, driven mainly by lower claims costs in the absence of high-severity losses during the year, which in turn resulted in higher reinsurance commission income. Over the past five years (2021-2025), Korea P&I recorded three out of five years of negative operating performance, generally lagging its global P&I peers. AM Best will continue monitoring the effectiveness of management’s measures for improving the underwriting results.

AM Best assesses Korea P&I’s risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy ratio (BCAR), and expects it to remain at that level over the intermediate term. The Club’s balance sheet strength is supported by its low underwriting leverage and a highly conservative investment portfolio. The Club demonstrated an improvement in its capital and surplus in 2025, supported by an increase in its retained earnings and a partial collection of voluntary contributions from shipowners. Offsetting balance sheet strength factors include the Club’s relatively small absolute capital base that can be susceptible to potential underwriting volatility from large losses.

Korea P&I has a relatively modest presence in the global protection and indemnity (P&I) market in comparison with the members of the International Group of P&I Clubs, in terms of geographic and product concentration. Nonetheless, the Club leverages its local expertise and strong network with South Korean shipping companies to maintain a stable presence in the domestic market.

Underpinned by its strategic role to support the long-term development of maritime infrastructure in South Korea, the Club receives a wide range of government support across various areas, including subsidies, corporate tax exemptions, a no-dividend payout policy to its members, as well as domestic/overseas marketing and diplomatic efforts.

Negative rating actions may occur if Korea P&I’s operating profitability demonstrates material deterioration to a level that becomes no longer suitable for the adequate assessment. Positive rating actions could occur if the Club’s balance sheet strength fundamentals demonstrate material and sustained improvement.

Negative rating actions also may arise if support from the South Korean government is reduced to an extent that it no longer supports the current level of enhancement.

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

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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Minji Cha
Financial Analyst
+852 2827 3424
minji.cha@ambest.com

Seokjae Lee
Senior Financial Analyst
+852 2827 3407
seokjae.lee@ambest.com

Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310
christopher.sharkey@ambest.com

Al Slavin
Senior Public Relations Specialist
+1 908 882 2318
al.slavin@ambest.com