A.M. Best Affirms Credit Ratings of Hyundai Marine & Fire Insurance Co., Ltd.

HONG KONG--()--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Hyundai Marine & Fire Insurance Co., Ltd. (HMF) (South Korea). The outlook of these Credit Ratings (ratings) is negative.

The ratings reflect HMF’s balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

Risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is at the strong level. The outlooks remain negative due to HMF’s high asset leverage and premium leverage ratios. However, the company's management expects that the announced intention to issue a sizeable hybrid security in 2018 will improve its risk-adjusted capitalization.

Operating performance has improved since 2015, following the industry trend. Underwriting performance is improving due to premium rate hikes over the aforementioned period in the company’s major business lines, including auto insurance and long-term insurance. Nevertheless, HMF’s five-year average combined ratio still trails its major peers.

In regard to business profile, HMF is the second largest non-life insurer in South Korea in terms of direct premiums written. The company has been able to defend its market share over the past five years despite strong competition, benefiting from a well-recognized brand in its domestic market and a long-standing business relationship with the Hyundai Motor group. However, an offsetting rating factor is that HMF is geographically concentrated in its highly competitive domestic market.

HMF’s ERM is appropriate for its risk profile. The company is continuously improving its ERM, in addition to preparing for the upcoming changes from IFRS 17 ad K-ICS. HMF is developing a new internal system, improving its asset and liability management strategy, and preparing the Own Risk and Solvency Assessment.

Positive rating actions are unlikely in the near future. Negative rating actions could occur if the issuance of the hybrid securities in 2018 does not take place as announced, or if the issuance is significantly lower than the announced amount.

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 Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Sergio Hidenori Agena, +852 2827 3407
Associate Financial Analyst
sergio.agena@ambest.com
or
Christopher Sharkey, +1 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Christie Lee, +852 2827 3413
Director, Analytics
christie.lee@ambest.com
or
Jim Peavy, +1 908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best
Sergio Hidenori Agena, +852 2827 3407
Associate Financial Analyst
sergio.agena@ambest.com
or
Christopher Sharkey, +1 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Christie Lee, +852 2827 3413
Director, Analytics
christie.lee@ambest.com
or
Jim Peavy, +1 908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com