A.M. Best has assigned a financial strength rating of B+ (Good) and the issuer credit rating of "bbb-" to BIDV Insurance Corporation (BIC) (Vietnam). The outlook assigned to both ratings is stable.
The ratings reflect BIC's strong risk-based capitalization, support from its major shareholder – Bank for Investment and Development of Vietnam (BIDV) – positive underwriting results and the company’s diversified business portfolio in the Indochina region.
BIC continued to strengthen its risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR). In addition, BIDV supports BIC with the bank brand name, network and customer base for business growth. BIDV also provides resources for BIC’s corporate governance and risk management. Moreover, BIC has a proven track record of favorable operating and underwriting results in the past five years. Also, the company has well-developed business in Laos and Cambodia in support of revenue growth and diversification.
Offsetting rating factors are the potential impact on capital from natural catastrophes, a high expense ratio, Vietnam's slowing economic growth and the credit quality of investment assets.
Although BIC purchases catastrophe excess of loss reinsurance protection and holds catastrophe reserves as buffer, any major natural catastrophe events can impact the company’s capitalization level considerably, according to BIC’s catastrophe-modeled results. Also, the expense ratio of BIC was relatively higher than its peers due to business growth and operating strategy. Furthermore, the challenging economic environment in Vietnam could place pressure on BIC’s profitability and business growth. Additionally, more than 80% of BIC investments were non-investment grade bonds and time deposits.
Positive rating actions are unlikely in the near future. Negative rating actions could occur if the company's risk-adjusted capitalization declines to a level below A.M. Best’s expectations due to unexpected major catastrophe events, deterioration in operating performance or aggressive business growth.
The methodology used in determining these interactive ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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