AM Best has affirmed Hanwha General Insurance Company Limited (HGI)’s Financial Strength Rating of A (Excellent) and its Long-Term Issuer Credit Rating of “a” (Excellent). The outlook for both Credit Ratings (ratings) is stable.
South Korea’s sixth-largest non-life insurer, HGI has approximately 6% insurance service revenue market share for 2023. It also focusses on providing long-term insurance for clients.
According to AM Best, other than HGI’s operating performance and balance sheet, the ratings reflect the support the company gets from Hanwha Life Insurance Co. Ltd. (Hanwha Life), its parent company, which is also the second-largest life insurer in South Korea based on insurance service revenue.
Key Rating Drivers
HGI recorded a 6.5% consolidated return-on-equity and a 95.9% combined ratio on an IFRS 17 basis in 2023, according to AM Best’s calculations. Based on these, the rating agency assessed the South Korean insurer’s operating performance as ‘adequate.”
The long-term insurance profitability of the company also remained stable in 2023, following the gradual materialisation of the accumulated effects of HGI’s rate hikes in the past, which were intended for its unprofitable legacy medical indemnity policies, AM Best said.
The rating agency added that it expects numerous initiatives to be undertaken to enhance profitability and speed up the building economies of scale for Carrot General Insurance Company Limited, which is HGI’s digital non-life subsidiary.
Based on Best’s Capital Adequacy Ratio (BCAR), the South Korean insurer’s risk-adjusted capitalisation is at the strongest level. Its capital and surplus experienced a surge at the end of 2023 under the IFRS 17 accounting standard with a liability valuation based on the market. However, AM Best also notes that its balance sheet fundamentals are not affected materially. With wide access to capital markets, HGI also has ‘appropriate’ asset-liability management and good financial flexibility.
