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FOR IMMEDIATE RELEASE
SINGAPORE - NOVEMBER 29, 2018 12:25 PM (EST)
A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Bao Minh Insurance Corporation (Bao Minh) (Vietnam). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Bao Minh’s balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supported by a low underwriting leverage at the gross and net levels, a good quality of reinsurance assets and a liquid investment portfolio, with a majority of investments allocated to cash and deposits.
Bao Minh was the third-largest non-life insurer in Vietnam based on gross premium written in 2017. The company underwrites a diversified portfolio of business with the majority being short-tail businesses such as motor, health and personal accidents. Prospectively, the company will continue with a low growth strategy in view of the intense market competition, especially in the motor line.
An offsetting rating factor is the declining trend in Bao Minh’s underwriting margins. Despite continued annual net premium growth of 11% over the past five years, the company’s expense ratio has increased over the same period and remains higher than its peers. While Bao Minh’s capitalization remains solid in risk-adjusted terms, its capital position has declined slightly over the past five years as a result of high dividend payouts.
The company rating is well-positioned at the current rating. Downward rating pressure could result from deterioration in the company’s operating performance.
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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