AM Best anticipates Hanwha General Insurance (HGI) to achieve business growth through affiliated general agent partners, including Hanwha Life Financial Services, the sales-specialised subsidiary of Hanwha Life, the business’s parent company.
AM Best made the comments while affirming HGI’s Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Rating of “a” (Excellent), both with a stable outlook.
The ratings came even as HGI’s capital and surplus moderately declined at year-end 2024 due to the movement of accumulated other comprehensive income, underpinned by cuts to discount rates and market interest rates.
Despite the shifts, HGI – the country’s sixth-largest non-life insurer – recorded a consolidated return on equity of 10% and a combined ratio (net/net, IFRS 17 basis) of 94.2% in 2024, as calculated by AM Best.
AM Best stated that the firm maintained its long-term insurance profitability, driven by legacy medical indemnity policies, ongoing portfolio restructuring initiatives, and an expanding investment asset base.
In addition, the ratings agency noted HGI’s effective asset-liability management structure as a partial offsetting factor to the regulatory change. The company’s issuance of subordinated bonds and use of reinsurance also helped mitigate the downward pressure on its solvency ratio.
“While HGI’s adjusted debt leverage has increased moderately following recent issuance of subordinated bonds, AM Best views that move as supportive of the company’s current balance sheet strength assessment,” it added.
The agency also noted that HGI demonstrates a strong balance sheet, with a risk-adjusted capitalisation “at the strongest level” based on AM Best’s Capital Adequacy Ratio.
This is reinforced by the support from its parent company, Hanwha Life Insurance, the second-largest life insurer in South Korea, which received upgraded financial strength ratings from both Moody’s and Fitch Ratings in May.
“The rating lift considers various forms of implicit and explicit support from Hanwha Life, including co-branding to increase operational synergy, product distribution, and capital support,” according to the agency.
HGI is the sixth-largest non-life insurance company in South Korea, holding a 6% market share in terms of gross insurance service revenue in 2024, with a focus on long-term insurance. Its business profile is viewed as neutral and has appropriate enterprise risk management.
