SINGAPORE, Nov 23 (Bernama-BUSINESS WIRE) -- AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of Petrolimex Insurance Corporation (PJICO) (Vietnam). Additionally, AM Best has assigned the Vietnam National Scale Rating (NSR) of aaa.VN (Exceptional) to PJICO. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect PJICO’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
PJICO’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which is expected to remain at the strongest level prospectively, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s BCAR decreased in 2022, albeit still remained at the strongest level, mainly attributed to higher capital requirements due to robust business growth and higher investment exposure. At the same time, PJICO’s capital and surplus reported a slight decrease as a result of substantial dividend payments. AM Best expects that future dividend payouts will be moderated over the medium term. The company maintains a conservative investment strategy, with a majority of its investments held in cash and term deposits. The company has a moderate reliance on reinsurance to support its underwriting capacity for large property and engineering risks, as well as to manage accumulation risks and catastrophe exposure.However, the credit risk associated with this dependence is mitigated partly by the good credit quality of the reinsurance panel.
AM Best assesses PJICO’s operating performance as adequate, evidenced by a five-year weighted average return-on-equity ratio and combined ratio of 12.2% and 97.1% (2018-2022), respectively. The company’s overall earnings remain driven by a stable stream of investment income. PJICO posted thinner underwriting margins in 2022 following normalisation of post-pandemic claims trend. Underwriting profits from commercial lines including property and marine cargo businesses have benefited typically from low net loss ratios and good reinsurance commission income. The elevated expense ratio continues to be an offsetting factor in the company’s operating performance assessment.
AM Best assesses PJICO’s business profile as neutral. PJICO is a non-life insurer based in Vietnam, with gross premiums written of VND 3.9 trillion (USD 167 million) in 2022, equating to approximately 5% of the domestic market. The company’s premium mix is diversified moderately with key business lines being motor, accident and health, property, and marine cargo. PJICO has a wide distribution network, whereby its business is mainly sourced directly and through agencies. The company’s profile benefits from its common branding and preferential access to cargo business arising from its largest non-majority shareholder, Vietnam National Petroleum Group.
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