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HONG KONG–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A
(Excellent) and the Long-Term Issuer Credit Rating of “a” 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
categorizes as strong, as well as its adequate operating performance,
favorable business profile and appropriate enterprise risk management.

HMF’s risk-adjusted capitalization, as measured by Best’s Capital
Adequacy Ratio (BCAR), is assessed as very strong, supported by the
issuance of hybrid bonds worth KRW 500 billion (approximately USD 450
million) in August 2018. Aside from the impact of hybrid bond issuance,
the company benefited from further enhancement in its capitalization due
to an increase in unrealized gains on its substantial holding of
available-for-sale bonds, following the recent downward trend of market
interest rates in South Korea.

Historically, HMF has reported a higher underwriting and asset leverage
than the industry average; however, this is now in line with the overall
industry level, due to the company’s recently improved capitalization.
An offsetting factor is a declining interest coverage ratio, which AM
Best expects to further drop in 2019, with the full-year dividend
payment for its newly issued hybrid bonds.

Overall operating performance is assessed as adequate, as demonstrated
by HMF’s stable earnings stream, as well as its combined ratio, which is
in line with the industry average. Although underwriting performance
deteriorated in 2018, owing to increasing losses in the auto insurance
line, the insurer’s strong investment earnings backed by growing
investment assets helped to support its overall performance.

With a market share of 17% in terms of direct premium written in 2018,
HMF is the second-largest non-life insurer in South Korea, a position
that the company has maintained for a long time amid increasing
competition. The company has a widely recognized brand in its domestic
market and a solid business relationship with Hyundai Motor Group, which
is a stable source of business for its general insurance line. In
addition, HMF has a diversified distribution channel strategy that
supports its favorable business profile assessment.

Negative rating actions could occur if the company’s operating
performance or risk-adjusted capitalization deteriorates significantly.

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 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
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 AM Best press releases, please view
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases

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Chanyoung Lee
Senior Financial Analyst
2827 3404

Christie Lee
Director, Analytics
+852 2827

Christopher Sharkey
Manager, Public Relations
908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644