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 decreased moderately at year-end 2024, mainly due to the movement of accumulated other comprehensive income following the regulator’s discount rate cuts and the decline in market interest rates. Despite the impact of the regulatory change on HGI’s capital and surplus, AM Best notes that the effect was partially offset by the company’s effective asset-liability management structure. Moreover, HGI has taken various initiatives, such as issuing subordinated bonds and using reinsurance, to mitigate the downward pressure on its regulatory 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.

With a consolidated return on equity of 10.0% and a combined ratio (net/net, IFRS 17 basis) of 94.2% in 2024, as calculated by AM Best, HGI’s operating performance assessment remains at an adequate level. HGI’s long-term insurance profitability continued to improve in 2024, driven by improving profitability of the legacy medical indemnity policies and ongoing portfolio restructuring efforts. The company’s investment income has continued to support its bottom line with an expanding investment asset base.

HGI is the sixth-largest non-life insurance company in South Korea, with a market share of approximately 6% in terms of gross insurance service revenue in 2024, with a strategic focus on the long-term insurance segment. The company is expected to achieve business growth through affiliated general agent partners including Hanwha Life Financial Services, which is the sales-specialised subsidiary of Hanwha Life, the second-largest life insurer in the country based on gross insurance service revenue. 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.

Positive rating actions could occur if the balance sheet strength fundamentals of both HGI and Hanwha Life demonstrate sustained improvement. Negative rating actions could occur if there is a reduced level of support from Hanwha Life or deterioration in its credit profile, which no longer enables it to provide rating lift to HGI.

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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