AM Best Affirms Credit Ratings of Fubon Insurance Vietnam Co., Ltd.

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 Fubon Insurance Vietnam Co., Ltd. (Fubon Vietnam) (Vietnam). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Fubon Vietnam’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also factor in rating enhancement from its parent company, Fubon Insurance Co., Ltd. (Fubon Insurance), a market leading non-life insurer incorporated in Taiwan.

Fubon Vietnam’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which is expected to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). High dividend payouts in 2023 and 2024 have limited internal capital generation. In addition, prospective capital adequacy is expected to decline moderately, as the company targets greater capital efficiency. Favourable balance sheet strength considerations include Fubon Vietnam’s low net underwriting leverage and conservative investment portfolio, which consists solely of cash and term deposits. In addition, Fubon Vietnam is viewed to have good financial flexibility, supported by Fubon Insurance, notwithstanding its small absolute capital base. High third-party reinsurance usage and dependence is viewed as an offsetting balance sheet factor, albeit reinsurance counterparty risks are mitigated by reinsurance assets of typically good credit quality.

AM Best assesses Fubon Vietnam’s operating performance as adequate, with a five-year average return-on-equity ratio of 7.8% and a combined ratio of 99.2% between 2019-2023. Portfolio remediation actions, which included the implementation of tighter underwriting guidelines and stricter risk selection supported the achievement of robust underwriting results in 2023. Underwriting performance was impacted by Typhoon Yagi in 2024, although operating earnings are expected to remain positive in 2024. Investment income remains a key contributor to overall earnings, with Fubon Vietnam reporting a net investment yield (including gains and losses) of 7.7% in 2023.

AM Best assesses Fubon Vietnam’s business profile as limited. Fubon Vietnam is a small-size, non-life insurer in Vietnam. The company derives a significant proportion of business from Taiwanese corporations within its domestic market, with its business profile benefiting from the brand recognition of Fubon Insurance.

Fubon Vietnam’s ratings incorporate rating enhancement from its ownership and integration with Fubon Insurance. The company benefits from its common branding and affiliation with Fubon Insurance and receives implicit and explicit support from its parent. The company is also of strategic importance in supporting the group’s regional business growth across Southeast Asia.

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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