AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of BIDV Insurance Corporation (BIC) (Vietnam). Additionally, AM Best has assigned the Vietnam National Scale Rating (NSR) of aaa.VN (Exceptional) to BIC. The outlooks of these Credit Ratings (ratings) are stable.
The ratings reflect BIC’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 ratings also factor in the neutral impact from the company’s ultimate corporate parent, Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV).
BIC’s balance sheet strength assessment is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). The BCAR has exhibited a decreasing trend driven by higher capital requirements from net catastrophe risk and robust business growth, but AM Best expects it to remain at the strongest level over the medium term. BIC maintains a conservative investment strategy with the bulk of investments held in cash, term deposits and fixed-income securities; however, the company maintains a concentration in term deposits held with its majority shareholder, BIDV. The company is diversifying its investment portfolio by investing in more public equities. BIC’s moderate use of reinsurance helps to support its underwriting capacity for large property and engineering risks, as well as to manage accumulation risks and catastrophe exposure. The reinsurance panel has good credit quality in general.
AM Best assesses BIC’s operating performance as adequate, with a five-year average return-on-equity ratio of 11.9% and combined ratio of 95.5% (2018-2022). The company’s stable stream of interest income from term deposits and fixed-income holdings remains an important contributor to its overall earnings. BIC has significantly expanded its medical and personal accident insurances via bancassurance in recent years, which leads to higher expense ratios, but lower loss ratios.
AM Best views BIC’s business profile as neutral. The company reported notable growth in its bancassurance channel in recent years, thanks to strong support from its banking parent, BIDV. Its gross premiums written (GPW) reached VND 4.0 trillion in 2022, representing a 5% share of the domestic market. The majority of GPW was sourced from Vietnam with approximately 5% of GPW from Laos. The company’s main lines of business are personal accident and health, motor, as well as property and engineering insurance.
BIC’s risk management framework and capabilities benefit from a level of technical support, expertise and oversight provided by BIDV, as well as from a strategic relationship with its minority interest shareholder, Fairfax Asia Limited.
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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