SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of �bbb� of BIDV Insurance Corporation (BIC) (Vietnam). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect BIC�s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also factor in a neutral impact from the company�s ultimate parent, the state of Vietnam.
BIC�s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best�s Capital Adequacy Ratio (BCAR), which AM Best expects to remain at the strongest level over the medium term. Despite the company�s moderate dividend payout ratio over the past three years, retained earnings have remained sufficient to bolster shareholders� equity and support business growth. The company maintains a conservative investment strategy with approximately 95% of investments held in cash, term deposits and fixed income securities. Other balance sheet considerations include the company�s reliance on reinsurance to support its underwriting capacity for large property and engineering risks, as well as to manage accumulation risks and catastrophe exposure.
AM Best assesses the company�s operating performance as adequate, as evidenced by a five-year average return-on-equity ratio of 8.0% (2015-2019). BIC�s combined ratio has trended lower over recent years, with a five-year average of 99% (2015-2019). BIC�s technical performance remains partially constrained by its high operating expense ratio. Despite this, the company�s overall earnings remain supported by robust investment earnings, emanating mainly from interest income on term deposits. AM Best expects prospective operating performance to remain at an adequate level; however, if the company�s underwriting performance deteriorates below a break-even position, or if robust investment returns are no longer achieved, pressure on this assessment could arise.
AM Best views BIC�s business profile as neutral. In 2019, the company reported gross written premium (GWP) of VND 2.4 trillion (USD 105 million), with approximately 90% of business sourced from Vietnam and the remaining from Laos. BIC�s common branding and business distribution arising from its intermediate parent, Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV Bank), is viewed as a benefit to its business profile. The company�s main lines of business are motor, commercial property and engineering, personal accident and medical, which collectively accounted for approximately 80% of GWP in 2019. On a net premium basis, the company�s portfolio is focused more on motor, personal accident and medical. Prospectively, AM Best expects growth in BIC�s portfolio to be driven by personal accident and medical business arising from its bancassurance distribution channel.
AM Best considers BIC�s ERM framework as appropriate given the size and complexity of its operations. The company�s risk management framework and capabilities benefit from a level of technical support, expertise and oversight provided by BIDV Bank, as well as from a strategic relationship with a minority interest shareholder; Fairfax Asia Limited.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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Contacts
Susan Tan
Financial Analyst
+65 6303 5023
[email protected]
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]
Yuan Tian
Senior Financial Analyst
+65 6303 5016
[email protected]
Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
[email protected]
