A.M. Best Affirms Ratings of PVI Insurance Corporation

HONG KONG--(BUSINESS WIRE)-- A.M. Besthas affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of PVI Insurance Corporation (PVI Insurance) (Vietnam). The outlook for both ratings is stable.

The ratings reflect PVI Insurance’s favorable risk-adjusted capitalization, profitable operating performance and strong presence in the Vietnam non-life insurance market.

PVI Insurance continued to strengthen its chartered capital in 2014, according to its business plan. The company maintained its promising operating performance due to its positive underwriting results and stable investment performance. In the near to midterm, the company’s projected profitability and chartered capital increases are expected to support its business growth.

With financial and operational support from PVI Holdings, Vietnam National Oil & Gas Group and Talanx AG, PVI Insurance’s revenue continues to grow beyond the market. In fiscal year 2014, PVI Insurance ranked first in Vietnam’s non-life market, as measured by its gross premium written. The company remains dominant over energy, marine, property and engineering business in the market.

Offsetting rating factors are the large dividend payout to shareholders, Vietnam’s high economic risk and the challenging retail segment.

According to PVI Insurance’s projection, a large part of the after-tax profit is expected to be transferred to the shareholders in future fiscal years. This dividend policy will pose an impact to the growth of capital.

In addition, the challenging economic environment in Vietnam, including high dependence on imports and high credit growth, could place pressure on PVI Insurance’s profitability. Investment profitability will be limited due to the bad debt issues in the banking system and the downward trend of interest rates.

In recent years, PVI Insurance has grown revenue by expanding its retail segment. However, the higher loss ratio of its retail business lines (especially motor and personal accident) can deteriorate the overall profitability of the company.

Negative rating actions could occur if the company’s risk-adjusted capitalization declines to a level below A.M. Best’s expectations due to material deterioration in operating performance or aggressive business growth.

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.

Key insurance criteria reports utilized:

• Catastrophe Analysis in A.M. Best Ratings
• Evaluating Country Risk
• Measuring Transfer and Convertibility Risk
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding BCAR for Property/Casualty Insurers

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best’s </b>Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

Roy Lee

Financial Analyst

+852-2827-3418

[email protected]

or

Jeff Yeung

Associate Director, Analytics

+852-2827-3413

[email protected]

or

Christopher Sharkey

Manager, Public Relations

+(1) 908 439 2200, ext. 5159

[email protected]

or

Jim Peavy

Assistant Vice President, Public Relations

+(1) 908 439 2200, ext. 5644

[email protected]

Source: A.M. Best Company