AM Best Affirms Credit Ratings and Assigns National Scale Rating to Bao Minh Insurance Corporation

SINGAPORE–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of Bao Minh Insurance Corporation (BMI). Additionally, AM Best has assigned the Vietnam National Scale Rating (NSR) of aaa.VN (Exceptional) to BMI. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect BMI’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor in a neutral impact from the company’s majority ownership by the State Capital Investment Corporation (SCIC), which is the sovereign wealth fund of Vietnam.

BMI’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to remain at the strongest level over the near to medium term. Notwithstanding, the company’s regulatory solvency ratio has shown a decreasing trend in recent years due to business growth that exceeded the rate of capital generation. AM Best views BMI’s investment portfolio to be of moderate risk, with the majority of investments allocated toward term deposits and the remainder held in non-rated corporate bonds, equity investments including a joint venture and real estate. Further offsetting factors include BMI’s basic approach to asset liability management, despite some exposure to longer-duration products within its business mix, as well as its moderate dependence on reinsurance to support the underwriting of large limit risks, which helps to manage catastrophe exposure accumulation.

AM Best views the company’s operating performance as adequate, supported by its five-year average return-on-equity ratio of 10.1% (2018-2022). BMI has consistently generated underwriting profits in recent years, although its high expense ratio remains an offsetting factor to its underwriting performance. Underwriting performance improved in fiscal-year 2022, benefitting from more favourable loss experience in the company’s fire, property and casualty lines of business. BMI continued to achieve technical profitability in the first nine months of 2023, albeit with thinner margins given the increased losses from health and motor insurance. Investment returns remain a stable contributor to overall earnings with a five-year average net investment return (including gains/losses) of 5.5% (2018-2022).

AM Best views BMI’s business profile as neutral. BMI is ranked as the fourth-largest non-life insurer in Vietnam based on 2022 direct premiums. The company’s underwriting portfolio is diversified by lines of business, although the company has a single-market concentration in Vietnam. BMI’s business profile continues to benefit from business referrals from its majority shareholder, SCIC.

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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Contacts

Ong Xin Ya
Associate Financial Analyst
+65 6303 5024
xinya.ong@ambest.com

Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310
christopher.sharkey@ambest.com

Chris Lim, CFA
Associate Director
+65 6303 5018
chris.lim@ambest.com

Al Slavin
Senior Public Relations Specialist
+1 908 882 2318
al.slavin@ambest.com