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FOR IMMEDIATE RELEASE
HONG KONG - JUNE 07, 2018 12:35 PM (EDT)
A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Hyundai Insurance (China) Co., Ltd. (HIC) (China). The outlook of these Credit Ratings (ratings) remains negative.
The ratings reflect HIC’s balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, neutral business profile and marginal enterprise risk management.
HIC’s strong balance sheet strength is supported by its risk-adjusted capitalization being at the strongest level. The company occupies a niche market by focusing on servicing Korean interests abroad and has a competitive advantage in this market due to its long-term client relationships. Since 2016, HIC has diversified its portfolio by expanding into the personal accident line through partnerships with brokers and online platforms.
Offsetting rating factors include the company’s historical negative and volatile operating results, which have exerted pressure to its risk-adjusted capitalization. In the absence of catastrophe losses in past two years, the company’s operating performance has improved, but underwriting profit remains marginal due to its high cost structure. In addition, HIC’s gross leverage and high dependence on reinsurance in its commercial lines expose the company to reinsurer credit risk and liquidity pressure in the event of large losses.
The negative outlooks reflect HIC’s continued exposure to potential large-scale reinsurer credit and liquidity risks and volatility in its risk-adjusted capitalization from fronting large sums of risks relative to the company’s capital.
While positive rating actions are unlikely to occur in the near term, negative rating actions could occur if there is material deterioration in the company’s risk-adjusted capitalization or a reduced level of support from its parent, Hyundai Marine & Fire Insurance Co., Ltd.
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 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 Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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