AM BEST ASSIGNS 'EXCEPTIONAL' NATIONAL SCALE RATING TO VIETNAM NATIONAL REINSURANCE CORPORATION

KUALA LUMPUR, June 4 (Bernama) -- AM Best has affirmed the financial strength rating of B++ (Good) and the long-term issuer credit rating of bbb+ (Good) of Vietnam National Reinsurance Corporation (VINARE) with a stable outlook of these credit ratings (ratings).

Additionally, the global credit rating agency in a statement also assigned the Vietnam National Scale Rating (NSR) of aaa.VN (Exceptional) to VINARE with a stable outlook.

The ratings reflect VINARE’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

VINARE’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, which is expected to remain at the strongest level over the medium term.

The company’s regulatory solvency position remains comfortably above the minimum requirement by a wide margin, while offsetting balance sheet strength factors include its moderate investment risk, due to its holdings of equity investments, and high dividend payout ratio.

Additionally, VINARE exhibits a moderate reliance on retrocession to support its underwriting of large commercial risks; however, the risk associated with this dependence is mitigated partly by the good credit quality of the retrocession panel.

The credit rating agency views the company’s operating performance as strong, supported by its five-year average return-on-equity ratio of 10.2 per cent (2019-2023).

Investment income remains as the key contributor to VINARE’s overall earnings, with net investment yield of 10.1 per cent in 2023 and it continued to achieve technical profitability in the first three months of this year, supported by robust loss ratio and improving expense ratio.

As the national reinsurer of Vietnam, VINARE has established long-standing relationships with local cedants, supporting its position in the country’s insurance market, where it generates the majority of its premium.

-- BERNAMA