AM Best Revises Outlooks to Stable for Hanwha General Insurance Company Limited

HONG KONG–()–AM Best has revised the outlooks to stable from negative 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 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 various forms of implicit and explicit support that the company receives from its parent, Hanwha Life Insurance Co., Ltd. (Hanwha Life).

The revised outlooks to stable mainly reflect HGI’s improved operating performance as a result of the continued execution of various underwriting measures over the past two years, in addition to the positive impact of COVID-19 on claim losses especially in the auto insurance line. In the largest business line of long-term insurance, AM Best expects the loss ratio to improve gradually over the medium term, given that a large portion of its unprofitable legacy medical indemnity policy renewal cycles culminate between 2022 and 2024, reflecting the accumulated effect of rate hikes from recent years. AM Best also expects that the negative impact of its start-up subsidiary, Carrot General Insurance Company Limited (Carrot Insurance), on HGI’s consolidated results will decrease gradually over the coming years as Carrot Insurance continues to build economies of scale.

Despite solid growth of retained earnings from improved operating performance, its capital base decreased in 2021, and more sharply in the first quarter of 2022, driven by unrealised losses from available-for-sale bonds due to the unprecedented fast pace of market interest rate rise in 2022.

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

HGI is the sixth-largest non-life insurance company in South Korea, with a market share of approximately 7% in terms of gross premiums written in 2021. The company receives various forms of implicit and explicit support from its parent company, Hanwha Life, the second-largest life insurer in the nation 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 capitalisation declines to a level that no longer supports the current balance sheet strength assessment. Negative rating actions also 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.

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

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating 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 regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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