Non-life insurers report business results for first three months

The non-life insurance firms have recently released the Q1 business reports. Despite positive results, many insurance companies found it hard to fulfil the 2011 targeted year plan because of the unfavourable macroeconomic situations.

The PetroVietnam Insurance Joint Stock Corp’s audited financial reports showed that the company gained total revenue of 1.465 trillion dong, increasing by 30.5 percent year-on-year, pre-tax profit of 111 billion dong, up 13.2 percent.

According to the statistics released by Bao Viet Holdings (coded BVH), the group’s total revenue was posted at 3.354 trillion dong after the first three months of this year, a year-on-year surge of 21 percent, of which insurance premium counted for 2.181 trillion dong or up 13 percent. The positive business results came from strong growth in revenue from non-insurance premium of 18 percent and life insurance sector at 20 percent. The group’s insurance activities contributed 69 percent out of total pre-tax profit in Q1 of 2011.

Another insurance firm that has currently prepared for listing shares on the stock market namely BIDV Insurance Joint Stock Corp (BIC) revealed to reach total revenue in Jan-March period of 255.505 billion dong, surging by 96 percent over the same period last year, of which insurance premium counted for 154.634 billion dong, up 64 percent, revenue from financial activities of 74.634 billion dong, up 210 percent. The company’s pre-tax profit was posted at 26.235 billion dong, fulfilling 26 percent of the year plan, of which profit from insurance sector of 2.331 trillion dong and profit from financial investment activities of 23.963 billion dong.

In the first three months, the Post and Telecommunication Insurance Joint Stock Co (coded PTI) estimated to reach net revenue from insurance activities of 173.1 billion dong, revenue from sales and services of 42 billion dong and after tax profit of 15.6 billion dong. This year, PTI targeted to reach total net profit of over 89 billion dong.

The Q1 business results from the fore-mentioned insurance firms showed that the growth rate of the life insurance companies stayed at high level. However, the profit from insurance channels remained low. PTI gained modest net profit due to high costs. In details, the company reported gaining combined profit of 72.8 billion dong in the first three months, but after tax profit was posted at 15.6 billion dong, after deducting the sales cost and enterprise management costs. Another insurer, BIC reported gaining profit mainly from financial investment activities.

In early 2011, up to 50 percent of non-life insurance providers and over 80 percent of the branches in insurance firms suffered from loss in terms of offering insurance services. Many non-life insurers have chosen to focus on increasing revenue from new insurance premium, and avoiding loss. However, the profit to be brought in from insurance services hasn’t played major role in the company’s current business sectors.

Many experts in insurance and other sectors expressed that the Q1 business results released by insurance companies haven’t showed the difficulty in the market due to bad effects from inflation, after the increasing trends in prices of essential commodity groups. If the state set limitation on those funded projects, the private enterprises cannot expand production scale due to high lending rates.

Phung Dac Loc, general secretary of Vietnam Insurance Association stated that the government has decided to reduce inflation by cutting down public investment, and lowering the credit growth by 20 percent. That decision will cause bad effects on non-life insurance providers that offer insurance services for construction and installation projects, as well as financial lease. In the past few years, the growth rate in non-life insurance sector stood at three times higher than GDP growth rate. When GDP rate lowers, it’s obvious that growth rate in non-life insurance sector will decline.

By the end of April, the non-life insurance firms have already held 2011 annual general meetings and approved the 2011 business plan. However, these companies will have to focus on risk management, launching new products and services and cutting down operation costs so as to realise the targeted year plan. – Dau tu chung khoan

Tags: Vietnam insurance, Vietnam insurance industry, Vietnam insurance market, Vietnam non-life insurance