AM Best has affirmed the Financial Strength Rating of B++ (Good), the Long-Term Issuer Credit Rating of “bbb” (Good), and the Vietnam National Scale Rating (NSR) of aaa.VN (Exceptional) of Petrolimex Insurance Corporation (PJICO) (Vietnam). 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 over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s prospective risk-adjusted capitalisation is expected to be supported by good internal capital generation, taking into account its planned business growth. 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. The credit risk associated with this dependence is partly mitigated 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 and combined ratios of 12.7% and 96.9% (2019-2023), respectively, as calculated by AM Best. The company’s overall earnings remain driven by a stable stream of investment income. PJICO posted thinner underwriting margins in 2023, mainly due to higher loss ratio in the health insurance business. Underwriting profits from commercial lines including property and marine cargo businesses have typically benefited 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. The net impact of Typhoon Yagi, which hit Vietnam in the third quarter of 2024, may lead to greater volatility in PJICO’s underwriting performance over the near term. Nonetheless, the impact is expected to be mitigated by the company’s reinsurance programme.

AM Best assesses PJICO’s business profile as neutral. PJICO is a non-life insurer based in Vietnam, with gross premiums written of VND 4.2 trillion (USD 168.6 million) in 2023, equating to approximately 6% of the domestic market share. The company’s premium mix is moderately diversified with key business lines being motor, accident and health, property, and marine cargo. PJICO has a vast distribution network, including agency and direct channels. The company’s business 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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