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. HGI’s capital and surplus significantly increased at year-end 2023, under the IFRS 17 accounting standard with the market-based valuation of liability, although its balance sheet fundamentals are not deemed to be affected materially. The company has appropriate asset-liability management and has a good financial flexibility with wide access to capital markets.

With a consolidated return on equity of 6.5% and a combined ratio (net/net, IFRS 17 basis) of 95.9% in 2023, as calculated by AM Best, HGI’s operating performance assessment remains as adequate. HGI’s long-term insurance profitability remained stable in 2023, as the accumulated effects of the past rate hikes for its unprofitable legacy medical indemnity policies gradually materialised. AM Best also expects various initiatives to be underway to improve the profitability and accelerate building economies of scale of HGI’s digital non-life subsidiary, Carrot General Insurance Company Limited.

HGI is the sixth-largest non-life insurance company in South Korea with a market share of approximately 6% in terms of insurance service revenue in 2023, with a focus on the long-term insurance segment. The rating lift considers various forms of implicit and explicit support from Hanwha Life, the second-largest life insurer in the country based on insurance service revenue, including co-branding to increase operational synergy, product distribution and capital support.

Negative rating actions 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. Positive rating actions could occur if the balance sheet strength fundamentals of both HGI and Hanwha Life demonstrate sustained improvement.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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