HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of Hanwha General Insurance Company Limited (Hanwha General) (South Korea). The outlook for both ratings is stable.
The ratings reflect Hanwha General’s adequate risk-adjusted capitalization, improvement in overall operating result in 2014 and the first half of 2015 and prudent investment strategy.
Hanwha General’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remained adequate to support its current ratings. Moreover, the company reported net profit of KRW 59.0 billion for the first half of 2015, which improved materially year-on-year compared with 2013 and 2014, during which the company was negatively impacted by one-off losses arising from the write-off of some reinsurance recoverables and made additional claims provisions due to changes in the reserving methodology. In terms of investments, the company gradually increased the portfolio allocation to low-risk, long-term fixed income securities, such as government bonds and loans, in order to enhance the investment returns and maintain a close match of asset and liability durations.
Partially offsetting factors include the company’s low underwriting profitability in the long-term and auto lines. Both the auto combined ratio and the long-term risk loss ratio trended above the industry average over the past five years. Although Hanwha General continues to implement various managerial initiatives to enhance its underwriting profitability A.M. Best expects the company to take some time for the effects to sustainably transform into higher profitability.
Positive rating actions could occur if Hanwha General can demonstrate sustainable improvement in its underwriting profitability according to its business forecast and a strengthening trend in capital and surplus on an absolute and risk-adjusted basis. Conversely, negative rating actions could occur if the company’s operating performance or risk-adjusted capitalization were to significantly deteriorate.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
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