SINGAPORE--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb” to Bao Minh Insurance Corporation (BMI) (Vietnam). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect BMI’s strong risk-adjusted capitalization and its business profile in Vietnam’s non-life insurance market.
BMI’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supported by its underwriting leverage, which is low at a gross and net level, the good quality of its reinsurance assets and its investment portfolio, with 70% of investments allocated to cash and deposits. As the third-largest player in Vietnam’s non-life market, as of year-end 2015, BMI has a strong presence across the countries, with offices in 54 out of 63 provinces and cities.
An offsetting rating factor is BMI’s high expense ratio, resulting partly from BMI’s high acquisition costs, especially in the company’s bancassurance channel. Despite growing premium volumes over the past five years, BMI’s expense ratio has increased and outpaced improvements in its loss ratio. As a result, BMI’s combined ratio has been on an upward trend.
A sustained improvement in its combined ratio could result in positive rating actions. 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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