AM Best Affirms Credit Ratings of Bao Minh Insurance Corporation

SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) 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 assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also factor in a neutral impact from the company’s majority ownership by the State Capital Investment Corporation (SCIC), which is the sovereign wealth fund of Vietnam.

BMI’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level at year-end 2021 and is expected to remain at this level over the near to medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). Capital adequacy remains sufficient to support planned business growth despite limited capital generation over recent years. AM Best views BMI’s investment portfolio to be of moderate risk with the majority of it allocated toward term deposits and the remainder held in non-rated corporate bonds, equity investments including a joint venture, and real estate. BMI maintains a basic approach to asset liability management despite some exposure to longer-duration products within its business mix. AM Best views the company as having moderate reinsurance dependence to support its underwriting of large limit risks and help manage catastrophe exposure accumulation. Reinsurance counterparty risk is mitigated by the use of a reinsurance panel of good credit quality.

AM Best assesses the company’s operating performance as adequate, as demonstrated by its five-year average return-on-equity ratio of 8.9% and combined ratio of 97.8% (2017-2021). During the year-to-date period ending 30 September 2022, the company reported a combined ratio of approximately 96%. BMI has generated underwriting profits consistently in recent years, although its high expense ratio remains an offsetting factor to the company’s underwriting performance. Claims experience continued to be favourable in 2021 and 2022, supported by a lower loss ratio in motor, personal accident and health insurance. BMI’s investment returns remain a stable contributor to overall earnings with a five-year average net investment return (including gains/losses) of 5.8% (2017-2021).

AM Best views BMI’s business profile as neutral. BMI is ranked as the fourth-largest non-life insurer in Vietnam based on 2021 direct premiums. The company’s underwriting portfolio is diversified by line of business, although the company has a single-market concentration to Vietnam. BMI’s business profile benefits from business referred by its majority shareholder, SCIC, notwithstanding a divestiture by this shareholder over the near to medium term that is under consideration.

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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