A.M. Best Removes From Under Review and Upgrades Ratings of Hanwha General Insurance Company Limited

HONG KONG--()--A.M. Best has removed from under review with developing implications and upgraded the financial strength rating to A- (Excellent) from B++ (Good) and the issuer credit rating to “a-” from “bbb” of Hanwha General Insurance Company Limited (HGI) (South Korea). The outlook assigned to each rating is stable.

The rating upgrades reflect HGI’s improved risk-adjusted capitalization and operating results, with positive growth momentum in premium revenue. HGI also benefits from the implicit support provided by its parent company, Hanwha Life Insurance Co., Ltd. (Hanwha Life). In June 2016, Hanwha Life increased its ownership stake in HGI to more than 50% of issued shares from approximately 34%.

HGI’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), has improved over the past three years mainly driven by the company’s effort to tightly control the required risk capital amount through a conservative reinsurance scheme in the major line of long-term insurance.

Operating performance has steadily improved over the same period driven by the recovery in underwriting performance and the gradual increase in investment income. Since fiscal-year 2013, HGI implemented a wide range of measures to improve profitability, particularly in long-term insurance, leading to a decline in the long-term risk loss ratio. HGI also has achieved stronger investment yields than the industry over the period, primarily through the higher proportion of investments in fixed income assets such as social overhead capital projects that offer high and stable returns.

Partially offsetting these positive rating factors are the persistently low interest rates in the domestic market, which put pressure on the investment margin and could negatively impact risk-adjusted capitalization after new tighter regulations take effect.

While positive rating actions are unlikely, negative rating actions could occur if there is considerable deterioration or significant volatility in operating performance that materially affects the company’s risk-adjusted capitalization.

The action follows an accepted appeal from HGI, in which new information was provided that enhanced A.M. Best’s opinion of the company’s level of risk-adjusted capitalization.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2016 by A.M. Best Rating Services, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Sergio Agena, +852 2827 3407
Associate Financial Analyst
sergio.agena@ambest.com
or
Seewon Oh, +852 2827 3404
Associate Director, Analytics
seewon.oh@ambest.com
or
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best
Sergio Agena, +852 2827 3407
Associate Financial Analyst
sergio.agena@ambest.com
or
Seewon Oh, +852 2827 3404
Associate Director, Analytics
seewon.oh@ambest.com
or
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com