Tuesday, February 1, 2022

POST-TELECOMMUNICATION JOINT STOCK INSURANCE CORPORATION CREDIT RATINGS AFFIRMED - AM BEST

KUALA LUMPUR, Jan 31 (Bernama) -- Global credit rating agency, AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of ‘bbb’ (Good) of Post-Telecommunication Joint Stock Insurance Corporation (PTI) Vietnam, with the outlook of these Credit Ratings (ratings) described as stable.

The ratings reflect PTI’s balance sheet strength, which the United States-headquartered AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The company’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), remained at the strongest level in 2020, with its investment portfolio conservative with a significant allocation to cash and deposits, albeit there are some exposures to non-rated fixed-income instruments.

The company’s capital adequacy continues to be under pressure from an increase in underwriting risk, which has outpaced the company’s capital generation for some time.

Prospectively, underwriting and investment risks are forecast to grow moderately over the medium term, which could reduce the company’s risk-adjusted capitalisation, based on a statement.

Over the past five years, PTI reported a satisfactory average combined ratio of 97.3 per cent (2016-2020) and an average return-on-equity ratio of 8.1 per cent. Whilst the company recorded a favourable loss ratio in the low forties, its operating expense ratio was high due to acquisition costs and material operational expenses.

As a result of the COVID-19 pandemic, PTI, Vietnam’s third-largest non-life insurer’s business development has been hampered as shown by the marked decline in the growth rates of its gross written premium. Nonetheless, investment results arising from interest income and dividends continued to contribute adequately to the company’s net profits.

PTI, with a market share of approximately 11 per cent in terms direct written premium in 2020, and led the market in several key segments, having been ranked first in motor insurance and second in health insurance in 2020.

Although PTI continues to face intense price competition in motor insurance, it differentiates from other insurers on high quality services instead of relying on discounting.

The company has a strategic partnership with Vietnam Post Corporation, which provides PTI with exclusive access to the corporation’s extensive network.

For more information, visit www.ambest.com.

-- BERNAMA

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