Banking News — AM Best has affirmed the Financial Strength Rating of B++ (Good), the Long-Term Issuer Credit Rating of “bbb+” (Good), and the Indonesia National Scale Rating (NSR) of aaa.ID (Exceptional) for PT KB Insurance Indonesia (KB Indonesia). The outlook for all ratings remains stable.

The affirmation reflects KB Indonesia’s strong balance sheet strength, adequate operating performance, limited business profile, and appropriate enterprise risk management, alongside significant support from its parent company, KB Insurance Co., Ltd. (KBI), a wholly owned subsidiary of KB Financial Group Inc. (KB Group).

According to AM Best, KB Indonesia’s risk-adjusted capitalisation is at the strongest level under its Best’s Capital Adequacy Ratio (BCAR). The insurer is expected to maintain capital growth through full profit retention to meet stricter capital requirements by 2026. However, the balance sheet assessment is offset by counterparty credit risk exposure to domestic (re)insurers with weaker credit profiles and volatility from changes in equity investment values.

Over the 2020–2024 period, KB Indonesia recorded a five-year return-on-equity ratio of 4.7% and a combined ratio of 98.8%, indicating moderate underwriting volatility due to its small net premium base and exposure to high-severity commercial line losses. AM Best expects greater stability as premium volumes grow, particularly in the motor segment, which offers more stable returns. Its conservative investment strategy focusing on time deposits and Indonesian government bonds continues to provide steady investment income to offset underwriting fluctuations.

A joint venture between KBI (70%) and PT AB Sinar Mas Multifinance (30%), KB Indonesia primarily serves Korean companies in Indonesia. Recent years have seen diversification, with increasing cross-selling through KB Group affiliates and new local market penetration. While property and engineering lines dominate its portfolio, growth in motor and other products is expected.

AM Best highlighted the strategic role of KB Indonesia in KB Group’s Indonesian expansion and confirmed expectations of ongoing capital support from KBI, including to meet the upcoming regulatory capital requirements. Planned organisational restructuring in line with new Indonesian Financial Services Authority (OJK) regulations is expected to enhance decision-making efficiency and synergy among KB Group affiliates in Indonesia, without reducing parent company support.

AM Best noted that negative rating actions could result from a significant deterioration in capitalisation, excessive expansion, or reduced parent company support. Conversely, positive rating actions could follow sustained improvements in operating performance that set the company apart from industry peers.