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AM Best Assigns Credit Ratings to Post-Telecommunication Joint Stock Insurance Corporation

January 28, 2020 GMT


AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb” to Post-Telecommunication Joint Stock Insurance Corporation (PTI) (Vietnam). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect PTI’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). AM Best notes that PTI benefits from various forms of support from its largest single shareholder, DB Insurance Co., Ltd. (DB Insurance).

PTI’s balance sheet strength assessment is underpinned by its risk-adjusted capitalization that is projected to be at least at the very strong level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). PTI’s risk-adjusted capitalization benefits from moderate underwriting leverage and a reinsurance program of good credit quality. AM Best views the company’s investment portfolio to be of moderate risk, characterized by exposures to investments in subsidiaries, affiliates, equities and unrated bonds, notwithstanding that the majority of these are allocated to term deposits. Favorable balance sheet considerations include prudent liquidity management, which benefits from a liquid asset mix, low debt leverage and pre-arranged credit facilities to support working capital needs. Offsetting balance sheet factors include a recent decline in risk-adjusted capitalization, as the growth of capital and surplus has been constrained by lower income and a moderate dividend payout ratio, while capital requirements increased due to business growth.

AM Best views the company’s operating performance as adequate, as evidenced by a five-year average return-on-equity ratio of 7.3% (2014-2018). The company has maintained consistent underwriting profitability on the back of an increasing market share despite competitive market conditions in Vietnam, reflecting the company’s prudent underwriting, risk selection and claims control. AM Best expects prospective underwriting performance to remain adequate, driven mainly by the company’s ability to control its performance in these lines. While overall earnings remain supported by investment returns mainly from interest income on term deposits, investment income has shown some volatility historically as a result of fair value movements in equity. In 2018, the company recorded sizeable losses on its equity portfolio leading to overall income and profitability ratios dropping to the lowest level in the past five years. Nonetheless, prospective investment income should stabilize with the expectation toward portfolio de-risking.

AM Best assesses PTI’s business profile as neutral. The company is ranked third among non-life insurers in Vietnam by market share in 2018 and through September 2019, supported by sustained strong business growth over recent years. Distribution channels are diversified, and AM Best views a comprehensive sales and customer network, arising from its shareholder, Vietnam Post Corporation, as a further benefit to its business profile. The competitive advantage gained through a focus on service quality, valued-added services, and partnerships with motor workshops and hospitals has strengthened the company’s market position in its two largest lines of businesses, motor and health care insurance.

AM Best considers the company’s ERM framework as appropriate given the size and complexity of its operations, supported by well-documented policies and procedures, underwriting and investment guidelines and a clear governance structure. Risk management capabilities are viewed typically as appropriate relative to the profile of its key risks, and are expected to be augmented further, prospectively by knowledge transfer from strategic shareholder, DB Insurance.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com:https://www.businesswire.com/news/home/20200128005522/en/

CONTACT: Chris Lim

Financial Analyst

+65 6303 5018

chris.lim@ambest.comDoniella Pliss

Director, Analytics

+65 6303 5024

doniella.pliss@ambest.comChristopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.comJim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644





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PUB: 01/28/2020 09:34 AM/DISC: 01/28/2020 09:34 AM