Market Overview

A.M. Best Upgrades Credit Ratings of Hanwha General Insurance Company Limited


A.M. Best has upgraded the Financial Strength Rating to A
(Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating
to "a" from "a-" 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 A.M. Best
categorizes as strong, as well as its adequate operating performance,
neutral business profile and appropriate enterprise risk management.
HGI's ratings also consider the strategic importance to its parent
company, Hanwha Life Insurance Co., Ltd. (Hanwha Life).

HGI's strong balance sheet strength is supported by its risk-adjusted
capitalization, as measured by Best's Capital Adequacy Ratio (BCAR),
being at the very strong level after the issuance of hybrid bonds in
July 2018. HGI has high but declining asset leverage and premium
leverage ratios, as well as a relatively more aggressive investment
strategy. The rating upgrades are based on HGI's improved risk-adjusted
capitalization in 2018 due to the issuance of hybrid bonds and an
expected high net profit retention for the full fiscal year. The company
reclassified a large part of its bond portfolio from available for sale
to held-to-maturity in 2018, reducing the potential volatility that a
rise in interest rates could bring to its capital and surplus.

HGI's operating performance has improved over the past five years,
mainly driven by increases in net investment income. In terms of
underwriting performance, HGI's loss ratio has declined to the lower
range of the industry in 2017. However, its combined ratio remains
elevated due to a high expense ratio, reflecting its relatively small
premium base relative to its peers.

In regard to business profile, HGI is the sixth-largest non-life
insurance company in South Korea. Its market share, in terms of direct
premiums written, has slowly increased over the past five years and
reached 7% in 2017. HGI benefits from the Hanwha brand and by being a
subsidiary of Hanwha Life, South Korea's second-largest life insurer in
terms of premium income in 2017.

HGI is important to Hanwha Life in terms of business and earnings
diversification. It has received capital support from Hanwha Life and
the Hanwha Group upon issuing new shares. HGI also benefits from access
to Hanwha Life's distribution channel, and from cooperation in areas
such as information technology, asset management and risk management.

Positive rating action is unlikely in the near term. Negative rating
actions could occur if there is a significant deterioration in the
company's risk-adjusted capitalization. Negative rating actions also
could occur if there is a significant decline in the parent company's
financial strength and credit profile.

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

This press release relates to Credit Ratings that have been published
on A.M. 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 A.M. Best's
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases

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