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Best’s News & Research Service - December 13, 2019 09:07 AM (EST)

AM Best Affirms Credit Ratings of Bao Minh Insurance Corporation

  • December 13, 2019 09:07 AM (EST)
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Singapore //BestWire// - 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.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.



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