Hanwha General Insurance to weather interest rates, start-up woes: report

Hanwha General Insurance also showed a strong balance sheet performance.

South Korea’s Hanwha General Insurance (HGI) faced high-interest rates which affected its 2022 capital, AM Best said.

Despite facing capital pressure due to rising interest rates in 2022, AM Best expects that the impact of interest rate sensitivity on capital and solvency ratio will be largely limited under the new accounting and solvency regimes (IFRS 17 and K-ICS). 

HGI's standing reflected its strong balance sheet, adequate operating performance, neutral business profile, and appropriate enterprise risk management, according to AM Best. The company also received support from its parent, Hanwha Life Insurance.

This is further strengthened by HGI's improved asset-liability durations in recent years.

HGI's operating performance is assessed as adequate, with a five-year average consolidated return on equity of 5.5% (2018-2022). 

The profitability of its long-term insurance line improved significantly in 2022 due to rate hikes implemented in prior years for unprofitable legacy medical indemnity policies. 

ALSO READ: Mitsui Sumitomo Insurance's strategic initiatives to drive performance: AM Best

AM Best expects that the negative impact of HGI's start-up subsidiary, Carrot General Insurance Company, on its consolidated results will gradually decrease as the digital insurer achieves economies of scale.

As the sixth-largest non-life insurance company in South Korea, HGI holds a market share of approximately 7% in terms of gross premiums written in 2022. 

The company primarily focuses on long-term insurance. 

The rating upgrade to “excellent” takes into account the various forms of implicit and explicit support from Hanwha Life, the country's second-largest life insurer in terms of premium income. 

This support includes co-branding initiatives to enhance operational synergy, product distribution, and capital assistance.