The net impact on BIDV Insurance Joint Stock Corporation (BIC) of Typhoon Yagi, which occurred in the third quarter of 2024, is expected to lead to greater volatility in underwriting performance over the near term, says AM Best. Nonetheless, the impact is expected to be mitigated by the company's reinsurance programme.
BIC’s operating performance is adequate, according to an assessment by AM Best. The insurer has a five-year average return-on-equity ratio of 13.8% and a combined ratio of 94.3% (2019-2023).
The company has generated consistent underwriting margins over recent years, supported in part by significant business expansion in personal accident and health insurance business, which is sourced through bancassurance.
Furthermore, the company’s stable stream of interest income from term deposits and fixed-income holdings is expected to remain as an important contributor to its overall earnings.
Ratings affirmed
AM Best has affirmed BIC’s Financial Strength Rating of ‘B++’ (Good), Long-Term Issuer Credit Rating of ‘bbb’ (Good), and Vietnam National Scale Rating of ‘aaa.VN’ (Exceptional). The outlook of these credit ratings is ‘Stable’.
The ratings reflect BIC’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. The ratings also factor in a neutral impact from the company’s ultimate corporate parent, Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV).
Balance sheet strength
BIC’s balance sheet strength assessment is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). Prospective risk-adjusted capitalization is expected to be supported by good internal capital generation that is sufficient to absorb the company’s strategic plans.
BIC’s balance sheet strength assessment also factors in the company’s conservative investment strategy, with the majority of investments held in cash, term deposits, and fixed-income securities. The company partially mitigates volatility in risk-adjusted adjusted capitalisation by managing peak exposures from large risks and natural catastrophes through its reinsurance programme. Reinsurance counterparties are generally of good credit quality.
Business profile
AM Best assesses BIC’s business profile as neutral. The company’s market share has grown steadily in recent periods, supported by robust growth via its bancassurance channel, thanks to strong support from its banking parent, BIDV. The majority of the company’s gross premium written was sourced from Vietnam, with a small portion of premiums generated by its subsidiary in Laos. The company’s key lines of business are personal accident and health, property and fire, and motor insurance.
BIC’s risk management framework and capabilities benefit from a level of technical support, expertise, and oversight provided by BIDV, as well as from a strategic relationship with its minority interest shareholder, Fairfax Asia.