AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Vietnam National Reinsurance Corporation (VINARE) (Vietnam). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect VINARE’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The company’s balance sheet strength assessment reflects its risk-adjusted capitalisation at the strongest level at year end 2022, as measured by Best’s Capital Adequacy Ratio (BCAR). This capital adequacy ratio is underpinned by the company’s low net underwriting leverage and high quality panel of retrocessionaires. VINARE’s regulatory solvency exceeds the minimum requirement by a wide margin and improved during 2022 with a reduction in the company’s personal accident premiums. Offsetting factors to the company’s balance sheet strength include its moderate investment risk, high dividend payout ratio and exposure to catastrophe risk.
AM Best views VINARE’s operating performance as strong, with the company recording a five-year weighted average return-on-equity ratio of 9.9% (fiscal years 2018-2022). The company’s strong operating performance is supported by the favourable performance of its commercial risks and stable investment income. Underwriting results improved in 2022, driven by favourable attritional and catastrophe loss experience, and a reduced expense ratio. VINARE’s overall earnings are driven predominantly by investment income, despite lower deposit yields in 2022 compared with 2021. Prospectively, AM Best expects the company to maintain its strong level of operating performance, supported by controlled underwriting growth and improved pricing conditions in its core lines of business.
AM Best considers VINARE’s business profile as neutral. Benefiting from strong shareholders’ support and the company’s status as a national reinsurer, VINARE has established long-standing relationships with local cedants and government. Although VINARE’s geographic spread is largely concentrated in its domestic market, the company has a well-diversified underwriting portfolio by lines of business, with a good balance between commercial and retail risks.
AM Best views the company’s ERM as appropriate given the developed reporting system and prudent risk management approach. Risk management framework and risk modelling capabilities have benefited and are expected to continue developing with the technical support provided by 25% shareholder Swiss Reinsurance Company Ltd.
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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Xin Ya Ong
Associate Financial Analyst
+65 6303 5024
Associate Director, Public Relations
+1 908 439 2200, ext. 5159
Michael Dunckley, CFA
+65 6303 5020
Senior Public Relations Specialist
+1 908 439 2200, ext. 5098