SINGAPORE–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of B++ (Good)
and the Long-Term Issuer Credit Rating of “bbb+” of Vietnam National
Reinsurance Corporation (VINARE) (Vietnam). The outlook of these Credit
Ratings (ratings) is stable.
The ratings reflect VINARE’s balance sheet strength, which AM Best
categorizes as very strong, as well as its strong operating performance,
neutral business profile and appropriate enterprise risk management
VINARE’s balance sheet strength assessment is underpinned by
risk-adjusted capitalization that remains at the strongest level, as
measured by Best’s Capital Adequacy Ratio (BCAR). Capital adequacy is
supported by the company’s low net underwriting leverage, albeit
partially offset by a moderate risk investment strategy that includes
holdings of listed and unlisted domestic equities. While the company has
exhibited a high dividend payout ratio over the past five years,
retained earnings have remained robust and sufficient to support
business growth. Other balance sheet considerations include the
company’s high dependence on retrocession to manage its exposure to
catastrophe events, accumulations and large single risks.
AM Best views the company’s operating performance as strong, as
evidenced by a five-year average combined ratio of 89.8% and a
return-on-equity ratio of 9.7% (2014-2018). Performance fundamentals for
underwriting and investment activities have been stable over the past
five years, as well as favorable when compared with regional reinsurance
peers. Prospectively, AM Best expects the company’s operating
performance to remain at a strong level, despite anticipation of a
slight deterioration in the combined ratio over the medium term. This is
expected to result from continued competitive market conditions, as well
as the company’s planned shift in its portfolio mix to include a greater
allocation to personal accident business.
VINARE’s business profile is assessed as neutral. The company is the
larger of two domestic reinsurers in Vietnam, with gross written premium
(GWP) of VND 1.8 trillion (USD 78 million) in 2018. The company benefits
from long-standing relationships with a number of local cedants,
including some insurers that hold a minority stake in VINARE. The
company’s underwriting portfolio is moderately diversified by line of
business, but with over 70% of GWP emanating from Vietnam.
The company’s ERM framework is considered appropriate given the size and
complexity of its operations. Both the company’s risk management
framework and capabilities are viewed to have benefited from technical
support and expertise provided over a number of years by Swiss
Reinsurance Company Ltd, VINARE’s second-largest shareholder.
Ratings are communicated to rated entities prior to publication.
Unless stated otherwise, the ratings were not amended subsequent to that
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
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