AM Best Affirms Credit Ratings of Bao Minh Insurance Corporation

SINGAPORE--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good), the Long-Term Issuer Credit Rating of “bbb” (Good) and the Vietnam National Scale Rating (NSR) of aaa.VN (Exceptional) of Bao Minh Insurance Corporation (BMI). 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. 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, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to remain at the strongest level over the near to medium term. AM Best views BMI’s investment portfolio to be of moderate risk, with the majority of investments allocated toward term deposits and the remainder held in non-rated corporate bonds, equity investments including a joint venture, and real estate. In addition, the company maintains a moderate reinsurance dependence to support the underwriting of large limit risks and to manage its catastrophe exposure accumulation, although reinsurance counterparty risk is mitigated partially by its reinsurance panel of good credit quality.

AM Best assesses the company’s operating performance as adequate, supported by its five-year average return-on-equity ratio of 11.1% (2019-2023). BMI has generated underwriting profits consistently in recent years, although its high expense ratio remains an offsetting factor to the company’s underwriting performance. Underwriting results remained profitable in 2023, notwithstanding a slight deterioration, due to thinner margins from health lines. In the first nine months of 2024, BMI continued to generate operating profits despite being impacted negatively by underwriting losses arising from unfavourable loss experience, in part due to Typhoon Yagi. Investment returns remain a stable contributor to overall earnings.

AM Best assesses BMI’s business profile as neutral. BMI is ranked as the third-largest non-life insurer in Vietnam based on 2023 direct premiums. The company’s underwriting portfolio is diversified by line of business and distribution channels. BMI’s business profile continues to benefit from business referrals from its majority shareholder, SCIC.

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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