SINGAPORE--(BUSINESS WIRE)--A.M. Best has revised the outlook to stable from positive for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb” of PVI Insurance Corporation (PVI Insurance) (Vietnam). The outlook of the FSR remains stable.
PVI Insurance’s overall profit margin has declined due to intensifying competition in its retail business, while business from the Vietnam National Oil & Gas Group, which has been an important source of profits, also has declined. PVI Insurance’s combined ratio increased to the high 90s in 2016 from the high 80s in 2014. The revision of PVI Insurance’s Long-Term ICR outlook to stable from positive reflects this trend of a reduced profit margin.
PVI Insurance’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains strong and is supported by a large proportion of investments in cash and deposits, as well as the high quality of its reinsurance panel. PVI Insurance is one of the largest non-life insurers in Vietnam and remains dominant in the energy, marine, property and engineering market segments. In addition, A.M. Best expects PVI Insurance to continue to receive financial and operational support from parent firm, PVI Holdings, and from Vietnam National Oil & Gas Group, the largest state-owned enterprise in Vietnam, as well as Talanx AG, one of the leading insurance groups in Europe.
Positive Credit Rating (rating) actions could occur if PVI Insurance is able to demonstrate stability in its risk-based capitalization, supported by an effective capital management policy, while improving its operating performance. Conversely, negative rating actions could occur if the company’s risk-adjusted capitalization declines to a level below A.M. Best’s expectation.
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