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AM Best affirms credit ratings of BIC
AM Best has affirmed the Financial Strength Rating of B++ (Good) and the LongTerm Issuer Credit Rating of “bbb” (Good) of BIDV Insurance Corporation (BIC). The outlook of the credit ratings is stable.
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he 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 (ERM). The ratings also factor in a neutral impact from the company’s ultimate corporate parent, the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV). BIC’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which AM
Best expects to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite the company’s moderate dividend payout ratio over the past three years, retained earnings have remained sufficient to bolster its shareholders’ equity and support new business growth. The company maintains a conservative investment strategy with over 90 percent of investments held in cash, term deposits and fixed-income securities. Other balance sheet considerations include the company’s reliance on reinsurance to support its underwriting capacity for large property and engineering risks, as well as to manage accumulation risks and catastrophe exposure. AM Best assesses the company’s operating performance as adequate, with a five-year average return-onequity ratio of 8.9 percent (2016-2020). BIC’s combined ratio has trended lower in recent years, with a five-year average of 98.2 percent (2016-2020), partially driven by tightened underwriting
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B I D V review
guidelines. The company’s operating expense ratio has increased over recent years in part driven by the significant growth in BIC’s personal accident and health insurance through its bancassurance channel, which exhibits high distribution costs but low loss experience. Despite this, AM Best expects BIC’s combined ratio to remain at a profitable level prospectively. The company’s overall earnings have been supported by robust investment
