HONG KONG, June 13 (Bernama-BUSINESS WIRE) -- A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a” of Hyundai Marine & Fire Insurance Co., Ltd. (HMF) (South Korea). The outlook for each rating remains stable.

The ratings reflect HMF’s strong risk-adjusted capitalization and business profile.

HMF’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains supportive of the current rating despite a decline driven by an increase in underwriting risk in 2015. Nevertheless, shareholders’ equity increased year-on-year mainly driven by an increase in retained earnings. HMF continues to maintain a conservative investment strategy, with the majority of its investment portfolio allocated in fixed income securities. Going forward, HMF will further diversify its investment portfolio by continuously adding higher-yield investments such as foreign securities, loans and alternative investments, which A.M. Best expects to have little impact on the company’s risk-adjusted capitalization.

HMF has a well-established market presence in South Korea as the second-largest non-life insurer in terms of direct premiums written. The company also has over 60 years of operating history and the strong brand name, Hyundai.

An offsetting factor is the company’s relatively weak operating performance. HMF’s long-term risk-loss ratio further deteriorated in fiscal-year 2015 due to increased claims in medical indemnity. The auto line loss ratio also deteriorated further owing to an increase in claims and costs inflation. Moreover, despite commercial lines remaining profitable, its loss ratio remains quite volatile and increased in fiscal-year 2015 due to several sizable loss events and a consequent increase in reinstatement costs. Nevertheless, A.M. Best expects the premium re-pricing in the auto and long-term insurance lines to stabilize the loss ratio going forward.

While positive rating actions are not likely, negative rating actions could occur if there is a substantial deterioration in the company’s underwriting performance that would materially impact its risk-adjusted capitalization.

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 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.

Copyright © 2016 by A.M. Best Rating Services, Inc. ALL RIGHTS RESERVED.

Contacts
A.M. Best
Sergio Agena, +852 2827 3407
Associate Financial Analyst
sergio.agena@ambest.com
or
Seewon Oh, +852 2827 3404
Associate Director, Analytics
seewon.oh@ambest.com
or
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com
 
Source: A.M. Best

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--BERNAMA