S&P upgrades Korean Re, securities

Standard & Poor's said it raised its financial strength and counterparty credit ratings on Korean Reinsurance Co. to A from A- following the insurer's issuance of subordinated capital securities.

The outlook on the ratings is stable.

At the same time, the agency raised the issue rating on the subordinated capital securities to BBB+ from BBB, which it had assigned to the proposed issuance on Sept. 30.

On the same day, S&P had placed the ratings on Korea Re on CreditWatch with positive implications based on its view that Korean Re could strengthen its capital and earnings to levels that are commensurate with higher ratings, depending on the details of the issuance.

S&P said the upgrade reflects a revision in its assessment of Korean Re's capital and earnings. Following its $200 million subordinated capital securities issuance, the agency believes it could further strengthen its capital and earnings over the medium-term.

The agency now assesses its capital and earnings as "moderately strong" (its prospective capital stands significantly above the prospective risk-based capital requirement at the BBB confidence level, but slightly below the prospective risk-based capital requirement at the A confidence level).

S&P said its view takes into account the insurer's business expansion prospects and profitability over the next 18 to 24 months. It regards the securities as having "intermediate" equity content. Accordingly, the agency is incorporating them as part of Korean Re's capital base in its capital assessment, based on final issuance documentation.

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