OREANDA-NEWS. S&P Global Ratings today affirmed its 'A' long-term insurer financial strength and issuer credit ratings on Korea-based credit and guarantee insurer Seoul Guarantee Insurance Co. (SGIC). The outlook is stable.

The ratings reflect our view that SGIC will maintain its solid market position in Korea, strong operating performance, and moderately strong capital and earnings over the next 18-24 months. We assess the insurer's stand-alone credit profile as 'a-' based on SGIC's strong business risk profile and upper adequate financial risk profile.

"We continue to believe that there is a moderately high likelihood the Korean government would provide timely and sufficient extraordinary support to SGIC in the event of financial distress. This follows the recent upgrade of the sovereign," said S&P Global Ratings analyst Daehyun Kim.

In accordance with our criteria for government-related entities, we base our rating approach on our view of SGIC's important role to, and strong link with, the Korean government. SGIC is important to Korea's economy and the stability of its financial system because the company is the only insurer providing both guarantee and credit insurance in the country.

The stable outlook on SGIC reflects our view that the insurer's strong business position in Korea will help it to maintain its operating performance over the next 18-24 months.

"We believe SGIC will maintain its capital and earnings at the current level despite sluggish growth in the domestic market and low interest rates. We also expect SGIC's risk profile to remain largely unchanged in the coming two years," Mr. Kim said.

We may lower the ratings if, contrary to our current expectations:

SGIC's earnings consistently fall below our base-case assumptions, preventing it from sustaining a stronger operating performance than its peers';Its capital weakens substantially from the current level, possibly because of unexpected losses in insurance operations due to a significant economic downturn in Korea; orThe guarantee market is opened up to other larger domestic property and casualty insurers, which could lower the likelihood of government support on SGIC. We could raise the ratings on SGIC if we revise upward our assessment of SGIC's stand-alone credit profile, or we assess the likelihood of extraordinary government support to SGIC to be high.