Vietnam National Reinsurance Corporation (VINARE) has posted a strong operating performance, supported by its five-year average return-on-equity ratio of 10.6% (2020-2024), notes AM Best.
Prospectively, the global credit rating agency expects the company to continue delivering strong operating performance, supported by favourable underwriting performance from its core commercial lines and robust investment income.
VINARE’s underwriting results improved in 2024 compared with the prior year, and it reported a combined ratio of 96.8%. This result was driven by a lower expense ratio, although this was partially offset by a higher loss ratio due to the Typhoon Yagi losses, which occurred in September 2024.
Investment income remains the key contributor to the company’s overall earnings, with a net investment yield of 7.8% in 2024.
Ratings affirmed
AM Best has affirmed VINARE’s Financial Strength Rating of ‘B++’ (Good), the Long-Term Issuer Credit Rating of “bbb+” (Good), and Vietnam National Scale Rating (NSR) of ‘aaa.VN’ (Exceptional). The outlook of these credit ratings is ‘Stable’.
The ratings reflect VINARE’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Balance sheet strength
VINARE’s is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to remain at the strongest level over the medium term. The company’s regulatory solvency position remains comfortably above the minimum requirement.
Offsetting balance sheet strength factors include the company’s moderate investment risk, due to its holdings of equity investments, and high dividend payout ratio. Additionally, VINARE exhibits a moderate reliance on retrocession to support its underwriting of large commercial risks; however, the risk associated with this dependence is partly mitigated by the good credit quality of the retrocession panel.
Business profile
AM Best considers VINARE’s business profile as neutral. As the national reinsurer of Vietnam, VINARE has established long-standing relationships with local cedants, supporting its position in its domestic market, where it generates the majority of its premium. The company has a well-diversified underwriting portfolio by lines of business, with a good balance between commercial and retail risks. VINARE is exposed to elevated product risk given its sizeable exposure to commercial and industrial risks.
AM Best views the company’s ERM as appropriate given the developed reporting system and prudent risk management approach. VINARE’s risk management framework and risk modelling capabilities have benefited and are expected to continue developing under the technical support and expertise provided by the company’s second-largest shareholder, Swiss Re.