SINGAPORE--(BUSINESS WIRE)--A.M. 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 A.M. Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
VINARE’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supported by its low net and gross underwriting leverage. The company’s investment portfolio is conservative, with a majority of its assets invested in cash and deposits.
VINARE has maintained good operating performance throughout the past five years, driven by underwriting and investment activities. The company achieved an average combined ratio of approximately 87% from 2013 to 2017, lower than many direct insurers in Vietnam and its peers across the region.
In terms of business profile, VINARE continues to receive support from its shareholders, namely the State Capital Investment Corporation, Swiss Reinsurance Company Ltd (Swiss Re) and other direct insurers in Vietnam, which are also its cedants. Swiss Re, VINARE’s second-largest shareholder, provides the company with technical support and modeling capabilities.
An offsetting rating factor is the company’s low earnings retention. This could impede capital growth relative to its cedants, which are experiencing capital increases from organic growth and foreign investment. In addition, Vietnam continues to attract international and regional reinsurance capacity.
While VINARE is well-positioned at its current rating level, negative rating actions may arise from material deterioration in its operating performance or risk-adjusted capitalization.
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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