AM Best has upgraded its outlook on Hanoi Reinsurance Joint Stock Corporation (Hanoi Re) to reflect an improving trend in the reinsurer’s balance sheet strength fundamentals.
Previously known as PVI Reinsurance Joint Stock Corporation (PVI Re) in Vietnam, Hanoi Re now has a long-term issuer credit rating (Long-Term ICR) positive outlook from a previously stable one.
At the same time, its financial strength rating (FSR) of B++ (Good) and the long-term ICR of “bbb” (Good) have been affirmed.
Hanoi Re has also been granted a Vietnam National Scale Rating (NSR) of aaa.VN (Exceptional), with a stable outlook for the FSR.
The adjustment in the long-term ICR outlook to positive is attributed to an enhancement in Hanoi Re’s balance sheet strength, notably after a capital increase that boosted shareholders’ equity from VND 1,085 billion in 2022 to VND 1,786 billion in 2023.
Despite this improvement, AM Best noted that Hanoi Re’s risk-adjusted capitalization has experienced some volatility, influenced by significant dividend distributions and escalated capital demands driven by business expansion and investments.
The company’s investment strategy is viewed as moderately to highly risky, with a mix of cash, term deposits, non-rated corporate bonds, and equity investments in affiliated entities. Despite these factors, AM Best forecasts Hanoi Re’s risk-adjusted capitalization will persist at the strongest level in the mid-term, underpinned by prudent growth strategies and continuous capital generation.
Operating within Vietnam, Hanoi Re is one of the country’s two domestic reinsurers, deriving a substantial portion of its business from PVI Insurance Corporation. The company faces moderate underwriting risks, especially from its significant exposure to property and engineering sectors prone to catastrophes. However, the impact of potential losses is somewhat lessened by catastrophe retrocession arrangements.
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