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A.M. Best Affirms Ratings of Dongbu Insurance Co., Ltd.

A.M. Best has affirmed the financial strength rating of A(Excellent) and the issuer credit rating of "a+" of (Dongbu)(South Korea). The outlook for each rating remains stable.

The rating affirmations reflect Dongbu's very strongrisk-adjusted capitalization, favorable operating performance and sound marketprofile. Dongbu's risk-adjusted capitalization, as measured by Best's CapitalAdequacy Ratio (BCAR), remains at a very strong level and supportive of thecurrent ratings. Although profitability has remained stagnant in recent yearsprimarily due to the deterioration in medical indemnity and auto insurancelines, the company's five-year results outperformed the industry in several keyfinancial measures as evidenced by the profitable level of its operating ratio.Profitability was mainly supported by strong net investment income and anefficient cost structure. Moreover, Dongbu continued to gradually increase itsdomestic market share across all three major product lines of auto, commercialand long-term insurance during the period.

Partially offsetting these positive factors are thepersistently low interestrates that negatively affect profitability of the long-terminsurance products, which are Dongbu's major product line, and could have anegative impact on capitalization under the upcoming tightening of regulations.