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 Petrolimex Insurance Corporation (PJICO) (Vietnam). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect PJICO’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).
PJICO’s balance sheet strength assessment 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 medium term. The company’s balance sheet strength assessment is supported by the stability of its capital adequacy and moderate net underwriting leverage. The company also maintains a generally conservative investment strategy, with the majority of investments held in cash and term deposits. The company has a moderate reliance on reinsurance to support its underwriting capacity for large property and engineering risks, as well as to manage accumulation risks and catastrophe exposure. The reinsurance panel is viewed to be of typically good credit quality although with some exposure to non-rated counterparties.
AM Best assesses PJICO’s operating performance as adequate, as evidenced by a five-year average combined ratio of 97.7% and return-on-equity ratio of 12.2% (2017-2021). Underwriting margins for commercial lines including property and marine cargo insurance have benefited typically from low net loss ratios and good reinsurance commission income. PJICO’s underwriting performance improved in 2021 compared with the prior year, in part driven by lower claims experience given COVID-19-related mobility restriction measures in Vietnam and higher net earned premiums from premiums reserve release. The first nine months of 2022 showed a profit after tax of VND 162 billion as compared with VND 260 billion for the same period in 2021, primarily driven by lower underwriting profit based on the company’s unaudited financial statements. In addition, claims frequency normalisation may constrain underwriting margins over the near term. PJICO’s investment income is viewed to be stable and expected to continue to be an important contributor to overall earnings.
AM Best views PJICO’s business profile as neutral. In 2021, PJICO ranked as the fifth-largest non-life insurer in Vietnam, with a market share of approximately 6% of gross premium written. The company’s business profile benefits from its common branding and preferential access to cargo business arising from its largest non-majority shareholder, Vietnam National Petroleum Group (Petrolimex). Premium mix is moderately diversified, with key business lines being motor, property, health and marine cargo insurance. PJICO sources business directly and through a wide agency network.
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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