SINGAPORE--(BUSINESS WIRE)--A.M. Best has upgraded the Financial Strength Rating to B++ (Good) from B+ (Good) and the Long-Term Issuer Credit Rating to “bbb” from “bbb-” of BIDV Insurance Corporation (BIC) (Vietnam). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings reflect BIC’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 rating upgrades reflect the stability of BIC’s capitalization, along with the company’s low underwriting leverage and conservative investment portfolio. Plans to redistribute capital across the company’s corporate structure also have been postponed indefinitely. BIC’s underwriting leverage is low compared with its peers in Vietnam’s non-life market, and the company’s premium growth remains modest. BIC’s investment portfolio consists mostly of cash and deposits.
The company’s underwriting performance remains generally in line with the market, which has been experiencing worsening underwriting margins due to intense competition. The company has a relatively better loss ratio, though this is offset by a higher expense ratio. BIC’s combined ratio is high and has been on a gradual upward trend.
BIC is majority owned by the Bank for Investment and Development of Vietnam JSC, one of the largest banks in Vietnam, and benefits from this affiliation in terms of customer outreach. Fairfax Financial Holdings Limited, the company’s second-largest shareholder, provides BIC with technical support in areas such as information technology and product development.
An offsetting rating factor is the above-mentioned high expense ratio. BIC remains a small player in Vietnam’s non-life market and has yet to experience economies of scale. Competition in the market remains fierce, and underwriting margins will continue to be under pressure.
BIC is unlikely to see further positive rating actions in the near term. Negative rating actions could result from continued deterioration in the company’s operating performance or from a material decline in 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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