Press Release - NOVEMBER 29, 2018
A.M. Best Affirms Credit Ratings of Bao Minh Insurance Corporation
FOR IMMEDIATE RELEASE
SINGAPORE - NOVEMBER 29, 2018
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.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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