Hanwha Life Insurance Co., Ltd. — Moody’s assigns Baa1 rating to Hanwha Life’s USD subordinated capital securities

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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

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
For further specification of Moody’s key rating assumptions and sensitivity analysis, see

the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure

form. Moody’s Rating Symbols and Definitions can be found at:

https://www.moodys.com/

researchdocumentcontentpage.aspx?docid=PBC_79004

.

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person primarily responsible for approving this Credit Rating.
Young Kim

Analyst

Financial Institutions Group

Moody’s Investors Service Hong Kong Ltd.

24/F One Pacific Place

88 Queensway

Hong Kong

China (Hong Kong S.A.R.)

JOURNALISTS: 852 3758 1350

Client Service: 852 3551 3077
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

88 Queensway

Hong Kong

China (Hong Kong S.A.R.)

JOURNALISTS: 852 3758 1350

Client Service: 852 3551 3077

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