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A.M. Best Affirms Ratings of PVI Reinsurance Joint-stock Corporation

A.M. Best has affirmed the financial strength rating of B+ (Good) and issuer credit rating of “bbb-” of PVI Reinsurance Joint-stock Corporation (PVI Re) (Vietnam). The outlook for both ratings is positive.

The ratings reflect PVI Re’s solid risk-adjusted capitalization, favorable operating results and the support from major shareholders of PVI Holdings. The ratings also acknowledge PVI Re’s well-established profile in the Vietnamese reinsurance market as one of the only two local reinsurers in Vietnam.

In October 2013, PVI Re increased its charter capital to VND 668 billion from VND 460 billion, in line with its business plan. PVI Re’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), was solid as at the end of 2013 and supportive of its current ratings. Given the capital injection plan in the next three years, it is expected that the company’s capital level will be sufficient to support its forecasted business growth in the near term. With an operating history of fewer than three years, PVI Re recorded an operating profit every year since inception. The major shareholders of PVI Holdings—Vietnam National Oil & Gas Group (PetroVietnam or PVN), Talanx AG (Talanx) and Oman Investment Fund (OIF)—support PVI Holdings and its subsidiaries in various areas. PVN provides branding awareness and a client network. Talanx and OIF provide support through accessing into international markets and transferring technical knowledge.

Offsetting rating factors include PVI Re’s small capital size as compared to other peer reinsurers in the Asia Pacific region, as well as the competitive landscape of the Vietnamese and regional reinsurance markets.

Future upward rating actions could occur if PVI Re continues to increase its capital level according to its business plan, strengthen its presence in the Vietnamese reinsurance market and demonstrate the capability to achieve consistently favorable operating performance. Conversely, negative rating actions could occur if the company’s risk-adjusted capitalization declines materially resulting from significant deterioration in operating performance.

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. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts:

A.M. Best Co.
Yanwei You, +852-2827-3421
Financial Analyst
yanwei.you@ambest.com
or
Jeff Yeung, +852-2827-3413
Associate Director
jeff.yeung@ambest.com
or
Rachelle Morrow, +(1) 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

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