The ratings reflect LIG's improved capitalization, sound underwriting performance, excellent market profile and stable investment performance. The ratings also recognize the company's effort to sustain profit-oriented growth.

During fiscal year 2007, the company enhanced its local solvency ratio by approximately 30 percentage points to 222%, which is favorable amongst peer competitors in the market. The company's capitalization level, as measured by Best's Capital Adequacy Ratio (BCAR), also has improved. This was due to the lower growth relative to the market in terms of premium written and increased retained earnings based on the favorable underwriting and investment performance.

The non-life market grew around 15% in terms of direct premiums written, whereas the company itself grew by 7% in fiscal year 2007. The retained earnings were KRW 118 billion (USD 117 million) in fiscal year 2007.

In fiscal year 2007, LIG's overall combined ratio improved slightly and stood at 103% due to the improvement in the motor insurance business, which is expected to continue in fiscal year 2008.

The company slightly decreased its market share in long-term insurance business mainly due to the decrease in new contracts. During fiscal year 2007, the number of solicitors decreased by 14% from the previous year, which has slowed premium growth. However, the profitability improved due to the down-trend in the loss ratio based on tightening underwriting guidelines. Moreover, LIG improved its portfolio by reducing the portion of disease protection products, which have a higher loss ratio with an upward trend.

Partially offsetting the positive factors are the uncertainties in the investment market and deregulation relating to cross-selling.

The impacts of recent market turmoil will continue over the year and cause volatility in the investment market environment in Korea. This may cause financial losses, thus reducing the capital level. While LIG slightly increased a portion of equity-like assets in its portfolio due to the expansion of the private equity fund and diversification of outsourcing, it maintained a portion of fixed income assets at approximately 79%. According to LIG's investment outlook, it is expected to maintain balances among the different asset classes during fiscal year 2008 as well.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.