AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of bbb+ (Good) for Vietnam National Reinsurance Corporation (VINARE), based in Vietnam.
The credit agency also provided a stable outlook for these credit ratings, with a Vietnam National Scale Rating (NSR) of aaa.VN (Exceptional) to VINARE, also with a stable outlook.
According to AM Best, these ratings reflect VINARE’s balance sheet strength, which the agency considers very strong, alongside its strong operating performance, neutral business profile, and appropriate enterprise risk management (ERM).
VINARE’s balance sheet strength is supported by its risk-adjusted capitalization, which is expected to stay at the strongest level over the medium term.
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Factors offsetting balance sheet strength include moderate investment risk due to equity holdings and a high dividend payout ratio. VINARE also relies moderately on retrocession to underwrite large commercial risks but AM Best noted that this risk is partially mitigated by the good credit quality of its retrocession panel.
VINARE’s operating performance was also regarded as strong, highlighted by a five-year average return on equity ratio of 10.2% from 2019 to 2023. The company reported a combined ratio of 98% in 2023, supported by favorable underwriting results in its core property and engineering lines. Investment income remains a key earnings contributor, with a net investment yield of 10.1% in 2023, up from 5.8% in 2022.
In the first quarter of 2024, VINARE continued to achieve technical profitability, driven by a robust loss ratio and improving expense ratio. AM Best anticipates continued strong operating performance, supported by favorable underwriting and robust investment income.
VINARE’s business profile is considered neutral. As Vietnam’s national reinsurer, VINARE has long-standing relationships with local cedants, strengthening its position in the domestic insurance market where it generates most of its premiums.
The company maintains a diversified underwriting portfolio across various lines of business, balancing commercial and retail risks. However, AM Best noted that VINARE faces elevated product risk due to its significant exposure to commercial and industrial risks.
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