AM Best Affirms Credit Ratings of Hanwha General Insurance Company Limited

HONG KONG--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Hanwha General Insurance Company Limited (HGI) (South Korea). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect HGI’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also reflect the support that the company receives from its parent, Hanwha Life Insurance Co., Ltd. (Hanwha Life).

HGI’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), is assessed at the strongest level, underpinned by various capital replenishment actions undertaken by the company in 2022. Although the company faced pressure on its reported capital from rising interest rates in 2022, AM Best expects the interest rate sensitivity of capital and solvency ratio to be largely subdued under the new accounting and solvency regimes (IFRS 17 and K-ICS), further supported by HGI’s improved asset-liability durations in recent years.

With a five-year average consolidated return on equity of 5.5% (2018-2022), HGI’s operating performance assessment remains as adequate. Profitability of its long-term insurance line improved materially in 2022 as the accumulated effect of the rate hikes in prior years for unprofitable legacy medical indemnity policies started to materialise. AM Best also expects that the negative impact of HGI’s start-up subsidiary, Carrot General Insurance Company Limited, on HGI’s consolidated results will decrease gradually as the digital insurer continues to build economies of scale.

HGI is the sixth-largest non-life insurance company in South Korea, with a market share of approximately 7% in terms of gross premiums written in 2022, as well as a business focus on long-term insurance. The rating lift considers various forms of implicit and explicit support from Hanwha Life, the second-largest life insurer in the country in terms of premium income, including co-branding to increase operational synergy, product distribution and capital support.

Negative rating actions could occur if HGI’s risk-adjusted capitalisation declines to a level that no longer supports the current balance sheet strength assessment. Negative rating actions also could occur if there is a reduced level of support from Hanwha Life or deterioration in its credit profile that no longer enables it to provide rating lift to HGI.

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 AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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