Hyundai Marine & Fire maintains strong balance sheet

It had a 7.8% return-on-equity ratio and a 96.0% combined ratio for 2023.

Hyundai Marine & Fire Insurance Co. (HMF) has maintained a strong balance sheet strength, as well as an adequate operating performance, favourable business profile and appropriate enterprise risk management, AM Best assessed.

The South Korea insurer’s risk-adjsuted capitalisation looked solid, as measured by Best’s Capital Adequacy Ratio (BCAR). 

The company’s capital and surplus saw significant increases at year-end 2023 due to market-based liability valuation and higher interest rates, although its balance sheet fundamentals remain stable. 

HMF has demonstrated strong financial flexibility through successful hybrid bond and subordinated debt issuances, whilst maintaining healthy debt leverage and coverage ratios. 

Its investment strategy focuses on asset-liability management, with a large portion of its portfolio in high-quality fixed-income assets.

HMF’s operating performance is rated as adequate, with a 7.8% return-on-equity ratio and a 96.0% combined ratio (net/net, IFRS 17 basis) for 2023. 

Underwriting profits benefited from the release of the contractual service margin from long-term insurance products, though these were partially offset by increased medical claims and significant onerous contract provisions. 

AM Best anticipates improvements in long-term insurance results due to premium rate increases and efforts to improve the medical indemnity loss ratio, while auto and general lines are expected to remain stable. 

Investment profits are mainly derived from interest income, with additional volatility under IFRS 9 deemed manageable.

As one of South Korea’s leading non-life insurers, HMF holds a stable market share of about 18% in insurance service revenue for 2023. 

The company benefits from strong ties with Hyundai conglomerates, including Hyundai Motor Group, ensuring a steady flow of business. 

HMF maintains a diversified portfolio with a focus on general agency channels for long-term insurance and online channels for auto insurance to drive growth and profitability.