BIDV Insurance Corporation

The 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, Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV).

BIC’s balance sheet strength assessment is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects it to remain at the strongest level over the medium term. Capital adequacy has shown moderate volatility in recent periods driven by changes in the company’s catastrophe risk management strategy. The company maintains a typically conservative investment strategy with the majority of investments held in cash, term deposits and fixed-income securities, although the company maintains a concentration in term deposits held with its majority shareholder, BIDV. Other balance sheet considerations include the company’s moderate use of and reliance on reinsurance to support its underwriting capacity for large property and engineering risks, as well as to manage accumulation risks and catastrophe exposure. Reinsurance counterparty credit risk is mitigated using a reinsurance panel of typically good credit quality.

AM Best assesses the company’s operating performance as adequate, with a five-year average return-on-equity ratio of 10.8% (2017-2021). BIC’s underwriting performance improved in 2021 compared with the prior year, in part driven by lower claims experience given COVID-19-related mobility restriction measures in Vietnam. While the company has reported technical profitability in recent periods, its high operating expense ratio is viewed as an offsetting factor to the operating performance. BIC’s interest income from term deposits and fixed-income holdings are expected to continue to be an important contributor to overall earnings.

AM Best views BIC’s business profile as neutral. The company’s common branding and business distribution through its corporate parent, BIDV, is supportive of its business profile. The majority of gross premium written (GPW) was sourced from Vietnam with approximately 10% of GPW from Laos. The company’s main lines of business are motor, personal accident and health, as well as property and engineering insurance. Prospectively, AM Best expects BIC’s portfolio to become more weighted toward personal accident and health business, driven by business growth through its bancassurance distribution channel.

AM Best assesses BIC’s ERM as appropriate given the size and complexity of its operations. The company’s risk management framework and capabilities benefit from a level of technical support, expertise and oversight provided by BIDV, as well as from a strategic relationship with its minority interest shareholder; Fairfax Asia Limited.