AM Best Revises Financial Strength Rating and Issuer Credit Rating Outlooks to Stable; Affirms Credit Ratings of Post-Telecommunication Joint Stock Insurance Corporation

SINGAPORE--(BUSINESS WIRE)--AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” (Good) of Post-Telecommunication Joint Stock Insurance Corporation (PTI) (Vietnam). Concurrently, AM Best has affirmed the Vietnam National Scale Rating (NSR) of aaa.VN (Exceptional) of PTI. The outlook of the NSR is stable.

The Credit Ratings (ratings) reflect PTI’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.

The revision of the FSR and Long-Term ICR outlooks to stable from negative reflects AM Best’s view that PTI’s balance sheet strength will remain at the strong level supported by the continued execution of capital management actions. PTI’s capital adequacy was subject to negative pressure following a material capital erosion in 2022 due to COVID-19 claims and a heightened exposure to higher-risk investments. Furthermore, a capital injection that was expected in 2022 did not materialise, which led to the company operating at thinner risk-adjusted capitalisation levels. Despite which, the company’s capital adequacy has shown a gradual improvement in recent years following successful capital management actions, which included full earnings retention and other ongoing remedial measures. Along with reducing its exposure to higher-risk investments, the company’s underwriting leverage also has reduced following portfolio restructuring efforts. As a result, the company’s balance sheet strength fundamentals are viewed to have stabilised. PTI’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), has shown a gradual and consistent improvement and is projected to remain at the strongest level over the medium term.

AM Best assesses PTI’s operating performance as adequate as demonstrated by a five-year weighted average return-on-equity ratio of 7.0% (2019-2023). The company’s underwriting performance returned to profitability in 2023 and over the first nine months of 2024 following tightened underwriting guidelines and portfolio restructuring. Ongoing remedial measures are expected to support a prospective improvement in the company’s loss experience, which was impacted negatively by the deteriorating results in the medical and motor lines in 2022 and 2023. In addition, PTI’s investment returns, consisting primarily of interest income, have been a relatively stable contributor to its overall earnings over the past five years.

PTI’s market share has reduced over the past two years due to business restructuring and tighter risk selection although the company still retains a competitive market position. The company’s key product lines are mainly short-tail personal insurance, namely, motor, health and personal accident. PTI also benefits from a wide distribution network and good relationships with distribution partners.

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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AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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