SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of �bbb� of Post-Telecommunication Joint Stock Insurance Corporation (PTI) (Vietnam). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect PTI�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).

PTI�s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best�s Capital Adequacy Ratio (BCAR), which was at the strongest level in 2019 and is expected to remain at least at a very strong level over the medium term. Whilst planned business growth is expected to be a key driver of future capital adequacy, this is expected to be managed in conjunction with the company�s capital management plans and financial flexibility from existing shareholders, as required. AM Best views the company�s investment portfolio to be of moderate risk. The portfolio is allocated largely to term deposits, albeit with a portion of higher risk assets including unrated bonds, as well as private and public equity holdings. In addition, PTI�s reinsurance assets are considered to be of good credit quality overall, although there is a moderate level of credit risk arising from exposure to lower rated and non-rated reinsurance counterparties.

AM Best views PTI�s operating performance as adequate, as demonstrated by a five-year average return-on-equity ratio of 7.6% (2015-2019). The company�s combined ratio improved to 96.9% in 2019 from 98.5% in 2018, in part driven by more favourable profit margins in its motor portfolio. In addition, during the first nine months of 2020, the company�s underwriting operations remained profitable. Over recent years, low loss ratios in the motor and health lines of business have been offset partially by higher expenses, resulting from distribution costs and investments in operational enhancements to build appropriate scale and service capabilities. To address its elevated expense ratio, the company has taken measures recently to withdraw from business segments with excessive acquisition costs. Overall earnings are supported by investment returns mainly from interest income on term deposits. Investment income has shown moderate volatility over recent years as a result of fair value movements in equity investments; however, is expected to stabilise, as the company has sought to partially de-risk its investment portfolio.

AM Best assesses PTI�s business profile as neutral. PTI is the third-largest non-life insurer in Vietnam, based on 2019 direct premium written. Distribution channels are diversified, and AM Best views a comprehensive sales and customer network, arising from its shareholder, Vietnam Post Corporation, as a further benefit to its business profile. The competitive advantage gained through a focus on service quality, valued-added services, and strategic partnerships with motor workshops, hospitals and other value chain partners has strengthened the company�s market position in its two largest lines of businesses, motor and health care insurance.

AM Best considers PTI�s ERM framework as appropriate given the size and complexity of its operations. Risk management capabilities are aligned typically with the profile of its key risks and are expected to be enhanced further over time by knowledge transfer from one of its shareholders; DB Insurance Co., Ltd.

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 media use of Best�s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best�s Credit Ratings and AM Best Rating Action Press Releases.

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Contacts

Chris Lim
Financial Analyst
+65 6303 5018
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]

Myles Gould
Director, Analytics
+65 6303 5020
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Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
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