A.M. BEST UPGRADES CREDIT RATINGS OF HANWHA GENERAL INSURANCE COMPANY LIMITED

HONG KONG, Aug 24 (Bernama-BUSINESS WIRE) -- A.M. Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to “a” from “a-” 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 A.M. Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. HGI’s ratings also consider the strategic importance to its parent company, Hanwha Life Insurance Co., Ltd. (Hanwha Life).

HGI’s strong balance sheet strength is supported by its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), being at the very strong level after the issuance of hybrid bonds in July 2018. HGI has high but declining asset leverage and premium leverage ratios, as well as a relatively more aggressive investment strategy. The rating upgrades are based on HGI’s improved risk-adjusted capitalization in 2018 due to the issuance of hybrid bonds and an expected high net profit retention for the full fiscal year. The company reclassified a large part of its bond portfolio from available for sale to held-to-maturity in 2018, reducing the potential volatility that a rise in interest rates could bring to its capital and surplus.

HGI’s operating performance has improved over the past five years, mainly driven by increases in net investment income. In terms of underwriting performance, HGI’s loss ratio has declined to the lower range of the industry in 2017. However, its combined ratio remains elevated due to a high expense ratio, reflecting its relatively small premium base relative to its peers.

In regard to business profile, HGI is the sixth-largest non-life insurance company in South Korea. Its market share, in terms of direct premiums written, has slowly increased over the past five years and reached 7% in 2017. HGI benefits from the Hanwha brand and by being a subsidiary of Hanwha Life, South Korea’s second-largest life insurer in terms of premium income in 2017.

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