Vietnamese Insurers: Upbeat with Earnings Prospects

The Vietnamese Ministry of Finance said Vietnam is now home to nearly 50 insurance companies operating in the fields of life insurance, non-life insurance, insurance brokerage, and reinsurance. Despite potential difficulties, insurers are showing no sign of worry, given satisfactory profits.

Positive profit

Several insurers have reported very good earnings in the first six months of 2010.

BIDV Insurance Corporation (BIC) said its total assets reached VND3,270.071 billion as of June 30, 2010, up by 175 % over the same period of 2009, and up by 80 % from the start of 2010. Its turnover totalled VND346.146 billion in the first six months, up by 62 % over the same period of 2009, of which premiums were VND238.512 billion, up by 69 % over the same period of 2009.

BIC reported a pre-tax profit of VND36.298 billion in the January – June period, up 81 % year on year, of which insurance business made up VND8.889 billion and financial investments contributed VND27.046 billion.

Dai-ichi Life Vietnam reported a year-on-year increase of some 48 % in new premiums to over VND120 billion (US$6.28 million) in the first six months of 2010. Revenue, profit and financial safety indicators are better than expected. Remarkably, in the first six months 2010, Dai-ichi Life Vietnam signed an insurance contract worth of VND15 billion – a record of the company to date.

Huge potential and last-half plans

The Business Monitor International (BMI) has released a report on Vietnamese insurance market in the second quarter of 2010 on its affiliated website www.researchandmarkets.com, predicting that premiums will rapidly soar from VND24,610 billion in 2010 to VND58,451 billion in 2014., predicting that premiums will rapidly soar from VND24,610 billion in 2010 to VND58,451 billion in 2014.

According to BMI, in 2009, non-life premiums were VND13,500 billion and life premiums were VND11,110 billion. In 2014, the corresponding figures should be VND27,450 billion and VND31,000 billion, respectively. BMI said for the time being, it continues to expect that the most rapid growth will take place in countries such as Vietnam and the Philippines – where organised savings are at an embryonic state of development.

According to BMI, the three largest non-life companies in the first half of 2009, in terms of gross written premiums, were Baoviet Holdings, PetroVietnam Insurance (PVI) and Bao Minh Insurance (BMI), whose market shares were 42 %, 12 % and 12 % respectively. In the life segment, the leaders in the six-month period were Prudential Vietnam, Baoviet Holdings and Manulife, with market shares of 40 %, 33 % and 10 % respectively.

To be more competitive in Vietnam, Dai-ichi Life Vietnam has continuously improved its utilities and quality customer services by expanding operating networks, introducing new products and services to meet growing and diversified demand of customers. As of May 2010, Dai-ichi Life Vietnam put into operation six agent offices and expected to continue expanding its network from now till the end of 2010. The insurer has an investment of US$72 million, 54 transaction offices nationwide, 14,500 employees and 510,000 customers.

BIDV Insurance said it has completed preparatory steps for an initial public offering, or IPO. The insurer expects to obtain approvals from the State Securities Commission (SSC) and the Hanoi Stock Exchange (HNX) to launch the IPO in the third quarter of 2010 as planned. BIC will be transformed into a joint stock company in the fourth quarter and will be listed on the local stock exchange in early 2011. As regards international presence, LVI – a BIC joint venture in Laos, is now the second largest insurer in Laos while CVI has gone into stable operation in Cambodia.

With its distribution channel diversification strategy, apart from its direct distribution channel in 66 member companies and over 300 insurance offices nationwide, Bao Viet Insurance has also expanded its bancassurance channel – to be precise, selling insurance policies through banks. The company has also developed new distribution channels such as e-commerce and telesales in 2010, setting up customer service operator of call centre with the purposes of improving the quality of customer care services and meeting the customers’ demands through providing best services.

In 2010, the insurer targets to reach total revenue of over VND4,800 billion, of which premiums will be more than VND4,200 billion, up 15 % against 2009. It expects a total profit of nearly VND300 billion.

Recently, the Ministry of Finance granted the Amended Certificate No. 45/GPDDC3/KDBH allowing Bao Viet Insurance Corp to increase its registered capital to VND1,500 billion in order to meet the development demands in the near future. – VCCI

Tags: Vietnam insurance, Vietnam insurance industry, Vietnam insurance market