A.M. Best Releases Country Risk Report on Republic of Korea.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 15, 2001

A slowdown in economic reform is potentially the most significant threat to the economy of South Korea, according to a country risk report issued by A.M. Best Co.

The bursting of the technology bubble and

great extent by a booming market for technology exports.

The government of South Korea, with the help of the corporate sector, has devised creative methods of dealing with bad corporate debt and a lack of liquidity in the capital markets. The Ministry of Finance and Economy has unveiled a package of measures that would free financial institutions from limits on their equity holdings as long as they were acquired through "debt for equity" swaps.

Korea's insurance market is experiencing a major transformation as it responds to reforms, which are driving consolidation and creating a more competitive market for both domestic and foreign insurers seeking to gain and maintain market share. Korea's insurance market is the second largest in the Asia-Pacific region. The industry continues to undergo significant restructuring in the aftermath of the regional financial crisis, which ended in 1998.

A.M. Best contends that the current economic stability is fragile, and continued strong regulatory leadership is needed. However, Korea's market is still attractive to foreign investors who are willing to invest in this economy and its younger enterprises. A.M. Best also believes that change, including strong involvement by major foreign reinsurers, is expected to continue. In the primary market, the liberalization of the insurance industry, which has allowed foreign insurers to introduce new concepts and products to the market, is also expected to enhance profitability over the long term.

The complete A.M. Best country risk profile on the Republic of Korea insurance market can be accessed at http://www.ambest.com/ratings/cr/korea.pdf.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.