CONTACTS:
FOR IMMEDIATE RELEASE
HONG KONG - APRIL 17, 2014 11:37 AM (EDT)
A.M. Best has upgraded the financial strength rating to B++ (Good) from B+ (Good) and issuer credit rating to "bbb" from "bbb-" of PVI Insurance Corporation (PVI Insurance) (Vietnam). The outlook for both ratings has been revised to stable from positive.
The upgrade reflects PVI Insurance's improved risk-based capitalization, continuously favorable operating performance, strong presence in the Vietnam non-life insurance market and the support from its shareholders.
PVI Insurance continued to strengthen its chartered capital in 2013 according to its business plan, resulting in improvement in its risk-adjusted capitalization. PVI Insurance's operating performance continues to improve due to its favorable underwriting results and stable investment results. In the near to midterm, the company's projected profitability and chartered capital increases are expected to support its business growth.
PVI Insurance is ranked the second-largest direct insurer in Vietnam in terms of gross premium written, with leading market positions in the energy, hull and P&I and property - engineering sectors.
Aside from the financial support from PVI Holdings, key shareholders of PVI Holdings--namely Vietnam National Oil & Gas Group (PetroVietnam) and Talanx AG--have allocated experienced experts and provide knowledge transfer, business development and corporate governance support to the management of PVI Insurance.
Offsetting rating factors are the large dividend payout to PVI Holdings and Vietnam's slowing economic growth.
A large part of PVI Insurance's profit is expected to be transferred to PVI Holdings in the next few years, although PVI Insurance is expected to continue receiving additional contributions of share capital from PVI Holdings. Therefore, it is crucial for PVI Insurance to maintain its strong profitability in order to support the growth of its capital base. In addition, the challenging economic environment in Vietnam could place pressure on PVI Insurance's profitability and business growth.
PVI Insurance is well positioned at its current rating level. Negative rating actions could occur if the company's risk-adjusted capitalization declines to a level below A.M. Best's expectations or if its operating performance deteriorates significantly.
The methodology used in determining these interactive ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.