SINGAPORE--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” to Petrolimex Insurance Corporation (PJICO) (Vietnam). The outlook assigned to these Credit Ratings (ratings) is stable.
PJICO’s two largest shareholders are Vietnam National Petroleum Corporation (Petrolimex) (41% ownership) and Samsung Fire & Marine Insurance Co, Ltd. (20% ownership) (SFM). Petrolimex is the biggest domestic petro-oil distributor in Vietnam and one of the largest state-owned enterprises there. SFM is the leading non-life insurer in South Korea.
The ratings reflect PJICO’s balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
PJICO’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supported by a conservative and highly liquid investment portfolio, which is composed of mainly cash and bank deposits. Prospectively, A.M. Best expects PJICO’s BCAR ratios to remain supportive of its strong balance sheet assessment, despite being on a declining trend.
PJICO was the fifth-largest player in Vietnam’s non-life market in 2017 with a 6.5% market share. The affiliation with Petrolimex has provided PJICO with access to favorable cargo business, which has contributed significantly to the company’s underwriting performance. In addition, PJICO is leveraging Petrolimex’s countrywide network of more than 2,500 petrol stations to distribute retail insurance products.
An offsetting rating factor is a trend of reduced underwriting margins as a result of intensifying market competition in the motor and health segments. The company has achieved overall profitability for five years, but it has relied largely on the cargo business (10% of group premium written) and interest income to offset the weakening performance in other major lines of business.
The company is well-positioned at the current rating. Negative rating actions could occur if the operating performance weakens materially.
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 A.M. 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 A.M. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
