Hanoi Re faces elevated expense ratio challenges – AM Best

As one of the two domestic reinsurers in Vietnam, Hanoi Re has a moderate underwriting risk.

Hanoi Re’s risk-adjusted capitalisation should remain at the strongest level over the medium term, supported by controlled growth and sustained capital generation, AM Best said.

Hanoi Re’s operating performance is considered strong, with favourable underwriting results and a five-year average return-on-equity ratio of 16.6%. 

However, technical margins have slightly thinned due to increased net commission expenses, with the expense ratio expected to remain elevated. Investment returns are anticipated to remain a key contributor to earnings.

As one of the two domestic reinsurers in Vietnam, Hanoi Re has a moderate underwriting risk, with significant business sourced from PVI Insurance Corporation. 

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Its exposure to catastrophe-exposed property and engineering lines is partially mitigated by catastrophe retrocession.

Hanoi Re, formerly PVI Reinsurance Joint Stock Corporation (PVI Re), operates in Vietnam. 

The improved ratings reflect Hanoi Re’s strong balance sheet strength, robust operating performance, limited business profile, and effective enterprise risk management (ERM). The ratings also benefit from the support of its ultimate parent, HDI Haftpflichtverband der Deutschen Industrie V.a.G. (HDI V.a.G.).

The positive outlook for the Long-Term ICR reflects improving trends in Hanoi Re’s balance sheet strength, with increased total shareholders' equity and improved risk-adjusted capitalization.