AM Best Affirms Credit Rating of Hanoi Reinsurance Joint-Stock Corporation

AM Best has affirmed the Financial Strength Rating (FSR) of B++ (Good), the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” (Good) and the Vietnam National Scale Rating (NSR) of aaa.VN (Exceptional) of Hanoi Reinsurance Joint-Stock Corporation (Hanoi Re). The outlook of the FSR and NSR are stable, while the Long-Term ICR is positive.

The Credit Ratings (ratings) reflect Hanoi Re’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management. The ratings also factor in rating enhancement from Hanoi Re’s ultimate parent, HDI Haftpflichtverband der Deutschen Industrie V.a.G.

The positive outlook of the Long-Term ICR reflects the improving trend in Hanoi Re’s balance sheet fundamentals in recent years. The company’s capital adequacy has shown a material improvement following a capital injection in 2023, despite being volatile historically due to high dividend payouts and capital requirements from business growth. The company’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), was at the strongest level as at year end 2024, and is expected to remain at this level over the medium term. The company’s investment portfolio is of moderate-to-high risk, with investments mainly allocated toward cash and term deposits, and the remainder held in non-rated corporate bonds and affiliated private equity investments. Furthermore, the company’s exposure to catastrophe modelling risk is an offsetting factor to its balance sheet strength assessment, for which inadequate retrocession protection for Typhoon Yagi was observed.

AM Best assesses the company’s operating performance as strong, supported by its five-year average return-on-equity ratio of 14.2% (2020-2024). Hanoi Re generated an underwriting loss in 2024, with this primarily driven by Typhoon Yagi losses. Notwithstanding, the company continues to report operating profits in 2024, largely supported by favourable investment income. Technical margins have thinned in recent years, driven by increases in net commission expenses, with the expense ratio expected to remain elevated over the medium term. Investment returns, consisting mainly of interest and dividend income, are expected to remain as a key contributor to the company’s overall earnings.

Hanoi Re is one of the two domestic reinsurers in Vietnam, with a significant volume of business sourced from its affiliated company, PVI Insurance Corporation. The company has a moderate underwriting risk given its sizeable exposure to catastrophe-exposed property and engineering lines, although potential losses are mitigated partially by catastrophe retrocession.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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

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