AM Best Affirms Credit Ratings of Hyundai Marine & Fire Insurance Co., Ltd.

AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Hyundai Marine & Fire Insurance Co., Ltd. (HMF) (South Korea). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect HMF’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management.

HMF’s risk-adjusted capitalisation is assessed at the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite considerable pressure on HMF’s capital due to the valuation loss of available-for-sales securities from rising interest rates in 2022, AM Best expects the company’s risk-adjusted capitalisation to remain supportive of the current balance sheet strength assessment and the capital sensitivity to interest rates movement to be largely resolved with the implementation of IFRS 17 in 2023. HMF’s balance sheet assessment is also underpinned by its good financial flexibility, which was proven by a track record of successful issuance of hybrid and subordinated bonds over the last years, as well as a prudent investment strategy with a focus on asset-liability management.

AM Best views HMF’s operating performance as adequate, with its five-year average return-on-equity ratio and combined ratio (2018-2022) being in line with its domestic industry’s average. HMF’s underwriting performance remained favourable in 2022, underpinned by a low auto combined ratio as a result of reduced claims frequency amid the Omicron outbreak and improved long-term insurance profitability. The company’s long-term insurance line of business is expected to improve further as more legacy medical indemnity policies will reach the renewal cycle in 2023-2024 with increased premium rates.

HMF is the second-largest non-life insurer in South Korea, with a stable market share of approximately 17% in terms of gross premiums written in 2022. The company benefits from its solid business relationships with Hyundai conglomerates, including Hyundai Motor Group, which provide a steady source of business for its general insurance line. HMF maintains a diversified network of distribution channels to provide stable business growth. General agency in the long-term insurance line and the online channel in auto insurance have shown considerable expansions over the past five years.

Negative rating actions could occur if HMF’s risk-adjusted capitalisation declines to a level that no longer supports the current balance sheet strength assessment, or if there is a sustained deteriorating trend in the company’s operating performance.

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 www.ambest.com.

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