SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Bao Minh Insurance Corporation (BMI) (Vietnam). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect BMI’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
BMI’s balance sheet strength assessment is underpinned by risk-adjusted capitalization that remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite the company’s moderate dividend payout ratio, which has limited the company’s capital growth, retained earnings have remained sufficient to bolster shareholders’ equity and support business growth. Offsetting balance sheet considerations include the company’s simplistic asset liability management framework for the management of long-duration products.
AM Best views the company’s operating performance as adequate, as evidenced by a five-year average return-on-equity ratio of 6.8% (2014-2018). BMI’s underwriting performance has operated consistently at a close to a break-even position, with a five-year average combined ratio of 98.1% (2014-2018). BMI’s technical performance remains constrained partially by its elevated operating expense ratio. Despite this, the company’s overall earnings remain supported by robust investment returns arising mainly from interest income on term deposits. AM Best expects the organization to continue to focus on underwriting profitability despite rising competitive pressures. However, there are concerns that the long-duration health and personal accident products may exhibit higher loss ratios in later policy years.
AM Best assesses BMI’s business profile as neutral. In 2018, the company reported gross written premiums (GWP) of VND 4.0 trillion (USD 174 million), ranking it fourth by market share among non-life insurers in Vietnam. BMI continues to benefit from the business referrals through its major shareholder. The company’s premium is well-diversified by product. The main lines of businesses are personal accident and health, motor, and property and engineering, which collectively accounted for approximately 76% of GWP in 2018.
AM Best considers the company’s ERM framework as appropriate given the size and complexity of its operations. Risk management capabilities are aligned typically with the profile of its key risks.
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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