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The financial ratings with stable outlook assigned have been released after the insurance firm, an affiliate of the Vietnam National Oil and Gas Group (PetroVietnam), restructured its organisation from a non-life operating entity to a holding company in June 2011.
Effective June 28, 2011, PVI JSC has been renamed PVI Holdings and the corporate structure has been changed to a holding company from a non-life operating entity.
Under the restructuring, PVI Holdings has direct interest in a non-life insurer (PVI Insurance), a reinsurer (PVI Reinsurance - PVI Re), a hospital (PVI Hospital JSC), an investment company (PVI Investment and Development JSC) and a media company (PVI Media).
The A.M.Best's evaluation reflected the Hanoi-based corporation's business results and strong position in Vietnam's non-life insurance markets.
It also reflects the planned financial support from its immediate parent company, expected improvement and adequate risk-based capitalization, and expected technical supports from the strategic partner of PVI Holdings.
In related news, PVI would pour VND700 billion in subsidiaries. A part of sum is to be infused to PVI Insurance by end of the year 2011 to strengthen the company's risk-based capitalisation and to support the ongoing business expansion.
After this capital injection, combined with reduced risk retention in 2012, PVI Insurance's risk-based capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), is expected to be adequate to support its overall risk profile.
HDI-Gerling Industrie Versicherung AG (HDI-Gerling), the insurer's strategic investor has also committed to provide technical support for PVI Holdings.
HDI-Gerling Co, the member company of Germany-based Talanx Group, has become PVI Holdings' strategic shareholders after signing the cooperation contract worth over VND1.916 trillion, or 25 per cent of total stake in PVI, with the insurance firm.
HDI-Gerling has also pledged to provide full support for the corporation's member companies in such sectors of life insurance, non-life insurance and reinsurance.
PVI revealed to use the raised capital this time for supplementing chartered capital for PVI Insurance one-member Co Ltd in late 2011 so as to strengthe its financial capacity and competition position of the company in the market.
Up to June 2011, PVI Insurance has kept about 24 per cent of total market shares, taking the leading position in terms of energy insurance, technical insurance and maritime insurance sectors.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed.
Additional key criteria utilized include: "Understanding Universal BCAR"; "Natural Catastrophe Stress Test Methodology"; "Rating Members of Insurance Groups"; "Risk Management and the Rating Process for Insurance Companies"; and "Assessing Country Risk."
Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.