Moody’s Investors Service has upgraded the insurance financial strength rating of Kyobo Life Insurance Co. to “A1” from “A2,” the South Korean insurance firm said Tuesday. The rating outlook is stable.

Some of Moody’s “A1” players in insurance include Prudential, Dai-ichi, Meiji Yasuda and Manulife. Moody’s “A1” banks include Morgan Stanley Bank, Goldman Sachs, Bank of America and Citibank.

“The rating upgrade reflects Kyobo Life’s proven track record of maintaining a good level of profitability, consistently solid capital strength with low financial leverage, and a strong business profile,” the credit ratings agency said in a statement.

“Kyobo Life’s capitalization profile is solid, with no financial debt,” Moody’s said.
 
   Kyobo Life’s annualized adjusted return on capital ratio was about 10 percent as of the third quarter that ended Sept. 30, compared to 7 percent in 2014.

Moody’s pointed at Kyobo Life’s “consistently strong mortality/morbidity gains and expense gains” as the key contributors to Kyobo Life’s consistently good profitability levels, despite a relatively stable negative spread over the past few quarters.

The credit rater estimated that, because of the insurance firm’s track record of low shareholder dividend payout ratios, the company has been able to grow its equity organically over the past five years.

Moody’s metric of adjusted capital-to-assets ratio gradually improved to 7.3 percent at end-September 2015 from 6.5 percent at end-2010.

Kyobo Life was able to narrow its asset-liability duration gap by investing more in longer-term assets, such as government, quasi-government and longer term overseas bonds.

On the liability side, Moody’s saw that Kyobo Life continued to build up its floating-rate portfolio, which resulted in a lower interest rate charge under the risk based capital regime.

By Chung Joo-won (joowonc@heraldcorp.com)

   (photo: Kyobo Life Insurance Facebook)