AM Best Revises Issuer Credit Rating Outlook to Positive and Assigns National Scale Rating to Hanoi Reinsurance Joint Stock Corporation
29 March 2024 - 1:06AM
Business Wire
AM Best has revised the outlook to positive from stable
for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed
the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term
ICR of “bbb” (Good) of Hanoi Reinsurance Joint Stock Corporation
(Hanoi Re) – formerly known as PVI Reinsurance Joint Stock
Corporation (PVI Re) (Vietnam). The outlook of the FSR is stable.
Additionally, AM Best has assigned a Vietnam National Scale Rating
(NSR) of aaa.VN (Exceptional) to Hanoi Re with a stable
outlook.
The Credit Ratings (ratings) reflect Hanoi Re’s balance sheet
strength, which AM Best assesses as strong, as well as its strong
operating performance, limited business profile and appropriate
enterprise risk management (ERM). The ratings also factor in rating
enhancement from Hanoi Re’s ultimate parent, HDI Haftpflichtverband
der Deutschen Industrie V.a.G. (HDI V.a.G.).
The revised Long-Term ICR outlook reflects an improving trend in
Hanoi Re’s balance sheet strength fundamentals. Capital adequacy
improved following a capital injection that increased total
shareholders' equity from VND 1,085 billion in 2022, to VND 1,786
billion in 2023. Correspondingly, the company’s risk-adjusted
capitalisation, as measured by Best’s Capital Adequacy Ratio
(BCAR), improved to the strongest level in fiscal-year 2023 from a
very strong level in fiscal-year 2022. Notwithstanding,
risk-adjusted capitalisation has shown moderate volatility in
recent years driven by high dividend payouts and increasing capital
requirements arising from business growth and investments.
Furthermore, AM Best views the company’s investment portfolio to be
of moderate-to-high risk. Although most investment assets are
allocated toward cash and term deposits, the remainder is held in
non-rated corporate bonds and affiliated private equity
investments. Overall, AM Best expects Hanoi Re’s risk-adjusted
capitalization to remain at the strongest level over the medium
term, supported by controlled growth and sustained capital
generation.
AM Best views Hanoi Re’s operating performance as strong,
supported by its five-year average return-on-equity ratio of 16.6%
(2019-2023). Underwriting results remained favourable in 2023,
benefiting from profitable domestic business, which included
business sourced from its sister company, PVI Insurance
Corporation. Despite favourable underwriting performance, technical
margins have thinned in recent years, driven by increases in net
commission expenses, with the expense ratio expected to remain
elevated over the medium term. Investment returns, consisting
mainly of interest and dividend income, is expected to remain as a
key contributor to the company’s overall earnings.
Hanoi Re is one of the two domestic reinsurers in Vietnam, with
a significant volume of business sourced from PVI Insurance
Corporation. Hanoi Re has a moderate underwriting risk given its
sizeable exposure to catastrophe-exposed property and engineering
lines, although potential losses are partially mitigated by
catastrophe retrocession.
Ratings are communicated to rated entities prior to
publication. Unless stated otherwise, the ratings were not amended
subsequent to that communication.
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please
view Guide to Best’s Credit Ratings. For information
on the proper use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specialising in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
Copyright © 2024 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240328900782/en/
Ong Xin Ya Associate Financial Analyst +65 6303 5024
xinya.ong@ambest.com Chris Lim, FCII, CFA Associate Director,
Analytics +65 6303 5018 chris.lim@ambest.com Christopher
Sharkey Associate Director, Public Relations +1 908 882 2310
christopher.sharkey@ambest.com Al Slavin Senior Public Relations
Specialist +1 908 882 2318 al.slavin@ambest.com