The rating actions reflect material deterioration in HIC’s risk-adjusted capitalization following the recent large scale losses caused by the Tianjin Port explosions on Aug. 12, 2015 and the full write-off of the significant reinsurance recoverable related to the loss from the Hynix factory fire in 2013. Although HIC maintains low underwriting leverage and a conservative investment portfolio, the large scale losses in recent years led to the substantial decrease in capital and surplus and widening operating losses. In addition, the ratings also consider the wide range of support HIC receives from its parent company, Hyundai Marine & Fire Insurance Co., Ltd. (South Korea), which is currently working on a recapitalization plan for HIC.

A.M. Best expects to continue regular discussions with HIC’s management to review its efforts to improve its capitalization, after which A.M. Best expects to resolve the under review status.

Positive rating action could occur if there is a material increase in risk-adjusted capitalization through the successful recapitalization by the parent company. Negative rating action could occur if there is a continued deterioration in risk-adjusted capitalization or a sustained deterioration in operating performance.

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

This press release relates to rating(s) 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.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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