AM Best revises outlook to stable for Hanwha General Insurance Company Limited | Business Insurance

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HONG KONG–(COMMERCIAL WIRE)–I am better revised the outlook from negative to stable and 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 credit ratings (ratings) reflect the strength of HGI’s balance sheet, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and adequate enterprise risk management. The ratings also reflect various forms of implicit and explicit support the company receives from its parent, Hanwha Life Insurance Co., Ltd. (Hanwha Life).

The revised to stable outlook primarily reflects HGI’s improved operating performance as a result of continued execution of various underwriting measures over the last two years, in addition to the positive impact of COVID-19 on claims losses, especially in the insurance line. Of automobiles. In the largest long-term insurance line of business, AM Best expects the loss ratio to gradually improve over the medium term, as a large portion of its unprofitable legacy medical indemnity policy renewal cycles culminate between 2022 and 2024, which reflects the cumulative effect of rate hikes in recent years. AM Best also expects the negative impact of its new subsidiary, Carrot General Insurance Company Limited (Carrot Insurance), on HGI’s consolidated results to gradually diminish over the next few years as Carrot Insurance continues to generate economies of scale.

Despite strong retained earnings growth due to improved operating performance, its capital base declined in 2021 and more sharply in the first quarter of 2022, driven by unrealized available-for-sale bond losses due to the rapid pace unprecedented increase in the market interest rate. in 2022.

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However, AM Best is of the view that the recent capital pressure from the interest rate increase does not necessarily indicate an immediate and material deterioration in HGI’s balance sheet fundamentals. His increased focus on asset-liability management in the past two years has led to an expansion of long-term bond assets and a much narrower asset-liability duration gap. This will help the company better manage capital volatility once IFRS 17 and K-ICS (a new and stricter solvency regime) come into effect in 2023, under which assets and liabilities are considered based on of the market value. Nonetheless, AM Best will continue to closely monitor HGI’s risk-adjusted capitalization and interest rate environment.

HGI is the sixth largest non-life insurance company in South Korea, with a market share of approximately 7% in terms of gross written premiums in 2021. The company receives various forms of implicit and explicit support from its parent company , Hanwha Life, the nation’s second-largest life insurer in terms of premium income, including co-branding to increase operational synergy, product distribution and capital support.

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

Ratings are communicated to rated entities prior to publication. Unless otherwise noted, ratings have not changed since that communication.

This news release relates to credit ratings that have been posted on AM Best’s website. For full rating information related 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 on the use and limitations of credit rating opinions, see Best Credit Score Guide. For information on the proper use of Best’s Credit Ratings, Best’s Performance Reviews, Best’s Preliminary Credit Reviews, and AM Best’s press releases, see Guide to the proper use of Best ratings and evaluations.

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AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company operates in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information visit www.ambest.com.

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