KUALA LUMPUR, March 24 (Bernama) -- AM Best has upgraded Hanoi Reinsurance Joint Stock Corporation (Hanoi Re) long-term issuer credit rating (Long-Term ICR) to “bbb+” (Good) from “bbb” (Good) and affirmed the financial strength rating (FSR) of B++ (Good) and the Vietnam National Scale Rating (NSR) of aaa.VN (Exceptional).
In a statement, the global credit rating agency said the outlook for the Long-Term ICR has been revised to stable from positive, while the outlook of the FSR and the NSR is stable.
The credit ratings (ratings) reflect Hanoi Re’s strong balance sheet, strong operating performance, limited business profile, and appropriate enterprise risk management. The ratings also incorporate support from the company’s ultimate parent, HDI Haftpflichtverband der Deutschen Industrie V.a.G.
The Long-Term ICR upgrade reflects Hanoi Re’s strengthened balance sheet fundamentals. Risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, is expected to remain at the strongest level over the medium term.
Capital requirements have increased in fiscal year (FY) 2025 following strong business growth and higher investment risk, though the company’s capital adequacy remains robust, nonetheless.
The company’s investment portfolio is moderate risk, primarily cash and term deposits, supplemented by non-rated corporate bonds and affiliated private equity. High retrocession dependence offsets some strengths but is partly mitigated by a quality panel of retrocession counterparties.
Operating performance is strong, with a five-year average return on equity of 14.4 per cent (FY 2021 to FY2025). FY 2025 earnings improved due to favourable underwriting performance, loss reserve development, reduced management expenses, and premium rate increases. Investment income, mainly interest and dividends, remains a key contributor to overall earnings.
Hanoi Re is one of Vietnam’s two domestic reinsurers, with a significant portion of business sourced from its affiliated company, PVI Insurance Corporation. The company maintains moderate underwriting risk, including exposure to catastrophe-prone property and engineering lines, with potential losses partially mitigated through catastrophe retrocession.
-- BERNAMA
