Hanwha Life Insurance Co., Ltd. — Moody’s assigns Baa1 rating to Hanwha Life’s USD subordinated capital securities – Yahoo Finance
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Rating Action:
Moody’s assigns Baa1 rating to Hanwha Life’s USD
subordinated capital securities
19 January 2022
Hong Kong, January 19, 2022 — Moody’s Investors Service has assigned a Baa1 rating to the
proposed issuance of USD-denominated 10-year fixed-rate subordinated capital securities of
Hanwha Life Insurance Co., Ltd. (Hanwha Life). The securities are being issued as “sustainability
bonds” and the net proceeds will be used to finance or refinance new and existing eligible projects in
accordance with Hanwha Life’s Sustainability Bond Framework.
The rating on the securities is subject to the receipt of final documentation, the terms and conditions
of which are not expected to change in any material way from the draft documents that Moody’s has
reviewed.
RATINGS RATIONALE
The Baa1 rating on the subordinated capital securities is two notches below Hanwha Life’s A2
insurance financial strength rating (IFSR), reflecting the fact that these securities will constitute
direct, unsecured and subordinated obligations of Hanwha Life. It ranks behind the company’s
policyholder claims and senior debt obligations and in priority to the claims of the holders of the
junior obligations, preferred and common shares of the issuer. This is in line with Moody’s standard
notching guidance for subordinated capital securities issued by operating insurance companies.
The subordinated capital securities issuance will strengthen Hanwha Life’s regulatory solvency
position and create a buffer against higher capital requirements stemming from the adoption of
Korea Insurance Capital Standard (K-ICS) and the International Financial Reporting Standards 17
(IFRS 17).
Hanwha Life’s capitalization is moderate, as reflected by its adjusted capital-to-assets ratio of
6.1% as of the end of 2020, and its local risk-based capital (RBC) ratio of 193.5% as of the end of
September 2021.
Following the issuance of the subordinated capital securities, Moody’s expects Hanwha Life’s
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pro forma adjusted financial leverage and earnings coverage to remain within the rating agency’s
expectation for the company’s rating level.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Moody’s could upgrade Hanwha Life’s ratings if there is a (1) substantial increase in the insurer’s
profitability, with its return on average capital exceeding 6% on a sustained basis, or through a
significant reduction in negative spreads; (2) further improvement in its capital position without a
significant increase in leverage.
On the other hand, Moody’s could downgrade Hanwha Life’s ratings if there is a (1) significant
deterioration in its profitability, with a return on capital below 2% on a sustained basis; (2) substantial
reduction in its capital adequacy, with the Moody’s-adjusted capital/assets below 6%; (3) increase in
Moody’s-adjusted leverage above 25%; and/or (4) increase in high-risk asset leverage above 200%
on a sustained basis.
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RATING METHODOLOGY
The principal methodology used in this rating was Life Insurers Methodology published in
September 2021 and available at
https://www.moodys.com/researchdocumentcontentpage.aspx?
docid=PBC_1254133
. Alternatively, please see the Rating Methodologies page on
www.moodys.com for a copy of this methodology.
Hanwha Life Insurance Co., Ltd., headquartered in Seoul, Korea, is one of the top three life insurers
in Korea by premium at the end of June 2021. As of 30 September 2021, Hanwha Life’s total assets
and shareholders’ equity amounted to KRW161.6 trillion and KRW13.3 trillion, respectively, on a
consolidated basis.
REGULATORY DISCLOSURES
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researchdocumentcontentpage.aspx?docid=PBC_79004
.
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Young Kim
Analyst
Financial Institutions Group
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24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
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Chen Huang
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody’s Investors Service Hong Kong Ltd.
24/F One Pacific Place
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