Insurance companies hope to expand with increases chartered capital

Insurance companies have set up plan to increase their chartered capital in 2010, which will allow them to expand.

According to the Vietnam Insurance Association, in the first quarter of 2010, life insurance companies obtained the growth rate of 18 percent, while non-life insurance companies had the growth rate of 26 percent, the relatively high growth rates in comparison with the same period of the previous year.

The noteworthy thing is that many insurance companies plan to increase their chartered capital to expand their business.

As for life insurers, two companies have got the approval from the Ministry of Finance to increase chartered capital, including AIA Vietnam, which plans to increase capital to one trillion dong, and ACE Life to nearly one trillion dong.

Increasing chartered capital is not the urgent matter for life insurance companies at all, because their chartered capital is well higher than the required level of 600 billion dong.

Meanwhile, many non-life insurance companies are making efforts to increase capital to have 300 billion dong as required by law, including Bao Long, Bao Tin and Hung Vuong.

According to experts, it is necessary to increase chartered capital not only to meet the requirements set by law, but also to have more opportunities to obtain greater market share. The experts said that the non-life insurance sector, in the next many years, would obtain the growth rates which are 3-4 times higher than the GDP growth rates.

Many non-life insurance companies have targeted the over 10 percent growth rate in 2010. Especially, foreign invested enterprises and even newly established companies also hope to see high growth rates this year.

After two years of operation, Liberty has increased its chartered capital to $40 million in March. Liberty’s representative said that the healthy financial capability will allow Liberty to expand the business network, and make heavier investments in information which allows it to become more competitive.

Meanwhile, the board of directors of PJICO, which has the ambitious plan to expand its business to other fields, is going to submit to the shareholders’ meeting to be held in late April 2010 the plan to increase chartered capital by two folds to 700 billion dong.

The shareholders’ meeting of Bao Viet, the biggest Vietnamese insurer, has also approved the plan to increase the chartered capital by 500 billion to 6800 billion dong. BIC has planned to increase its chartered capital by 100 billion dong to 650 billion dong, while PVI has successfully fulfilled the plan to increase chartered capital to 1600 billion dong. Especially, PVI has an ambitious plan of listing its shares on international stock exchanges, possibly New York or London.

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Tags: Vietnam insurance industry, Vietnam insurance market