The S&P Global building in New York’s financial district is shown in this photo taken on Feb. 5, 2013. (Reuters)
Global credit rating agency S&P Global Ratings said Wednesday it raised the credit outlook of Hanwha General Insurance from negative to stable, citing its prospects for future high earnings.
The agency kept the insurance company’s credit rating at A, the same as estimates from last year.
“We project Hanwha General Insurance, together with Hanwha Life Insurance, to strengthen their abilities to pay off debt through high earnings in the next two years. The affiliates will be able to maintain the current capital adequacy based on stable distribution of asset investment and moderate growth in business,” S&P said in a report.
S&P also mentioned the recent hike in the nation’s benchmark interest rate is positive to Hanwha Insurance Group.
“Korea’s base interest rate is expected to go up by 0.75 percentage point to 1.5 percent by the end of 2022 amid gradual economic recovery. The rate hike will improve the investment earnings of the insurance group and lower their pressure to draw up additional reserve funds,” said S&P.
Hanwha Insurance Group has raised reserve funds worth 240 billion won ($205 million) last year and 340 billion won in 2019.
But S&P warned that it could lower Hanwha General Insurance’s credit rating if the company takes a hit in capital adequacy or ability to pay debt by taking aggressive investment strategies such as high-risk alternative investment, taking out loans or investing in stocks.
S&P added Hanwha General Insurance might receive a negative rating if the company’s position in the group is weakened.
By Byun Hye-jin (email@example.com