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 Petrolimex Insurance Corporation (PJICO) (Vietnam). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect PJICOs balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
PJICOs balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Bests Capital Adequacy Ratio (BCAR), which is expected to remain at the strongest level over the medium term. The companys balance sheet strength assessment is supported by the stability of its capital adequacy and moderate net underwriting leverage. The company also maintains a generally conservative investment strategy, with the majority of investments held in cash and term deposits. The company has a moderate reliance on reinsurance to support its underwriting capacity for large property and engineering risks, as well as to manage accumulation risks and catastrophe exposure. The reinsurance panel is viewed to be of typically good credit quality although with some exposure to non-rated counterparties.
AM Best assesses PJICOs operating performance as adequate, as evidenced by a five-year average combined ratio of 97.7% and return-on-equity ratio of 12.2% (2017-2021). Underwriting margins for commercial lines including property and marine cargo insurance have benefited typically from low net loss ratios and good reinsurance commission income. PJICOs underwriting performance improved in 2021 compared with the prior year, in part driven by lower claims experience given COVID-19-related mobility restriction measures in Vietnam and higher net earned premiums from premiums reserve release. The first nine months of 2022 showed a profit after tax of VND 162 billion as compared with VND 260 billion for the same period in 2021, primarily driven by lower underwriting profit based on the companys unaudited financial statements. In addition, claims frequency normalisation may constrain underwriting margins over the near term. PJICOs investment income is viewed to be stable and expected to continue to be an important contributor to overall earnings.
AM Best views PJICOs business profile as neutral. In 2021, PJICO ranked as the fifth-largest non-life insurer in Vietnam, with a market share of approximately 6% of gross premium written. The companys business profile benefits from its common branding and preferential access to cargo business arising from its largest non-majority shareholder, Vietnam National Petroleum Group (Petrolimex). Premium mix is moderately diversified, with key business lines being motor, property, health and marine cargo insurance. PJICO sources business directly and through a wide agency network.
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 Bests 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 Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Bests Credit Ratings. For information on the proper use of Bests Credit Ratings, Bests Performance Assessments, Bests Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Bests 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
Susan Tan
Financial Analyst
+65 6303 5023
susan.tan@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Chris Lim
Senior Financial Analyst
+65 6303 5018
chris.lim@ambest.com
Al Slavin
Communications Specialist
+1 908 439 2200, ext. 5098
al.slavin@ambest.com
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