AM Best Revises Outlooks to Negative for Hyundai Insurance (China) Co., Ltd.
2024年8月2日 - 10:05PM
ビジネスワイヤ(英語)
AM Best has revised the outlooks to negative from stable
and affirmed the Financial Strength Rating of B++ (Good) and the
Long-Term Issuer Credit Rating of “bbb” (Good) of Hyundai Insurance
(China) Co., Ltd. (HIC) (China).
The Credit Ratings (ratings) reflect HIC’s balance sheet
strength, which AM Best assesses as very strong, as well as its
marginal operating performance, limited business profile and
appropriate enterprise risk management (ERM).
The negative outlooks reflect the projected fast deteriorating
trend in HIC’s risk-adjusted capitalisation, as measured by Best’s
Capital Adequacy Ratio (BCAR), due to the combined effect of
elevating underwriting risk and expected capital erosion from
cumulative operating losses over the short to intermediate
term.
HIC’s risk-adjusted capitalisation remained at the strongest
level at year-end 2023, as measured by BCAR. The company received a
capital injection from strategic investors in 2020, bolstering its
paid-in capital to RMB 1.7 billion. Its shareholding structure
changed from being a solely owned subsidiary of Hyundai Marine
& Fire Insurance Co., Ltd. to a joint venture between local
Chinese and Korean shareholders. Leveraging the broad customer base
and technological advantages of its shareholders, HIC continues to
diversify its underwriting portfolio to personal lines products. In
its latest three-year business plan, the company targets to promote
tailored products to ride-hailing drivers and report fast growth in
motor insurance premium revenue. However, the company’s operating
loss is expected to sustain over this period. Based on this
business plan, AM Best expects HIC’s risk-adjusted capitalisation
to weaken and become less supportive to the current balance sheet
strength assessment.
AM Best assesses HIC’s operating performance as marginal. While
generating steady investment income from its cash and deposit
driven invested assets, the company’s bottom line has stayed
negative since 2021 due to its widening underwriting loss. The fast
expansion in ride-hailing motor insurance, predominantly new energy
vehicles, may give rise to heightened pricing risk and underwriting
volatility. On the other hand, AM Best expects more time is
required for HIC to demonstrate better economies of scale and have
meaningful reduction in its elevated expense ratio. The company
does not expect to break even in the short term.
Despite achieving significant growth in its top line, AM Best
expects HIC to remain as a minor player in China’s non-life
insurance market in the intermediate term, given the high
concentration of market premiums and underwriting profit among a
few top players, while the operating environment remains highly
competitive for small to medium-sized entities.
Negative rating actions could occur if there is significant and
adverse deviation in HIC’s business execution compared with its
business plan, leading to material deterioration in its
risk-adjusted capitalisation. Negative rating actions also could
arise if the company’s operating performance materially deviates
from its business plan and resulting in prolonged operating loss
beyond AM Best’s expectations. Positive rating actions could occur
if HIC demonstrates successful execution of its business plan; for
example, achieving faster-than-expected turnaround and sustained
improvement in its operating performance, while maintaining a
supportive level of risk-adjusted capitalisation. AM Best will
continue to monitor HIC’s business execution.
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 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
Recent Rating Activity web page. For additional
information regarding the use and limitations of Credit Rating
opinions, please view Guide to Best’s Credit Ratings.
For information on the proper use of Best’s Credit Ratings, Best’s
Performance Assessments, Best’s Preliminary Credit Assessments and
AM Best press releases, please view Guide to Proper Use of
Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specialising in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
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Lucie Huang Senior Financial Analyst +852 2827
3414 lucie.huang@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
James Chan Director, Analytics +852 2827
3418 james.chan@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com