SINGAPORE--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating (FSR) of B++ (Good) and the issuer credit rating (ICR) of “bbb” of PVI Insurance Corporation (PVI Insurance) (Vietnam). The outlook for the FSR remains stable, while the outlook for the ICR remains positive.
The rating affirmations reflect PVI Insurance’s strong risk-adjusted capitalization, favorable business profile in Vietnam’s non-life insurance market and good operating performance.
PVI Insurance’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supported by a large proportion of assets invested in cash and deposits, and the good quality of its reinsurance panel. Currently, PVI Insurance is the largest non-life insurer in Vietnam and remains dominant in the energy, marine, property and engineering market segments. In addition, PVI Insurance continues to receive financial and operational support from PVI Holdings and Vietnam Oil & Gas Group, the largest state-owned enterprise in Vietnam, as well as Talanx AG, one of the leading insurance groups in Europe.
Offsetting rating factors include the company’s low earnings retention, which leaves the company’s BCAR dependent on ongoing capital injections. The company’s profitability ratios, while remaining at a good level with an operating ratio of 87% in 2015, have been on a weakening trend, especially in the competitive motor and personal accident segments, which PVI Insurance has been growing rapidly.
Positive rating actions could occur if PVI Insurance is able to demonstrate stability in its BCAR and operating performance.
Negative rating actions could occur if higher-than-expected underwriting leverage results in a significant decline in the company’s BCAR. Continued deterioration in PVI Insurance’s operating performance could also result in negative rating pressure.
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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