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PVI Insurance, Vietnam’s second largest non-life insurer, will continue to maintain underwriting profitability with a combined net ratio of around a low 90% in the medium term, said AM Best.
The insurance’s strong underwriting performance is supported by a profitable commercial and industrial business.
PVI Insurance has reported consistent technical profitability and a five-year average return on equity ratio of 17% (2017-2021). The company reports strong premium growth (17%) in 2022. Returns on investment, mainly from interest income and dividends, have consistently supported operating income.
Rating improved
AM Best has upgraded its PVI Insurance Financial Strength Rating to A- (Very Good) from B++ (Good) and its Long-Term Issuer Credit Rating to “a-” (Very Good) from “bbb+” (Good). The outlook for this credit rating has been revised to ‘Stable’ from ‘Positive’.
The rating upgrade reflects consistently profitable underwriting performance and outstanding overall profitability, said AM Best.
The rating also reflects the strength of PVI Insurance’s balance sheet, which AM Best assesses as very strong, as well as its strong operational performance, neutral business profile and appropriate enterprise risk management (ERM). The rating also takes into account the upgrade of PVI’s main parent, HDI Haftpflichtverband der Deutschen Industrie (HDI).
Capitalization
PVI Insurance’s risk-adjusted capitalization is expected to decline, although it remains at its strongest level in the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). This decrease was mainly due to the growth of the insurance business, higher investment exposure and high dividend payout ratio.
The Company maintains a medium-risk investment portfolio, with increased allocations to unrated corporate bonds and affiliated private equity investments, although the majority of investment remains allocated to cash and time deposits. Key balancing factors include its high reinsurance dependency.
Business profile
PVI Insurance is the second largest insurer in Vietnam’s non-life market in terms of written gross premiums in 2021 and continues to increase its market share. The company has strong market positions in commercial and industrial business lines, including energy, property, engineering, aviation and marine insurance, supported by its affiliation with the PetroVietnam (PVN) group, one of the largest state-owned oil and gas companies. corporations in Vietnam. The company also received support from HDI to enhance its technical expertise and service offerings.
AM Best found the company’s ERM approach to be appropriate given the size and complexity of its current operations. PVI Insurance benefits from risk management and governance support from HDI.
