According to the Insurance Management and Supervision Department (Ministry of Finance), the non-life insurance premium has maintained an annual double-digit growth rate of 11 percent from 2013 until now. With a young population, about 50 percent people of working-age and enhanced people’s qualification and income, non-life insurance sector is expected to maintain a double-digit growth in the period of 2019-2020. In 2018, the total gross premium revenue of non-life insurers was estimate at 45.694 trillion dong.
That is just one of the fulcrums for the development of non-life insurance sector in 2019 and the coming time. BIDV Securities Company (BSC) forecasted that the investment profit improvement is thanks to the increase in interest rate level in 2018-2019 period. “We forecasted that the interest rate level in the first half of 2019 will be fairly stable and go up in the second half of the year by about 0.5-one percent per annum. For non-life insurers, with about 70 percent of the investment structure are deposits, the increase of one percent in interest rates will raise their estimated pre-tax profit by about 10-13 percent.”
The application of technology helps insurers reduce sales costs and management costs, improving the insurance performance. However, BSC noted that the growth rate of the sector has not seen much change, and the sector will only see strong improvements when the divestment and room loosening deals take place.
The business results of PetroVietnam Insurance (PVI) and Bao Minh Insurance (BMI) in 2018 further demonstrated that prospect of the sector. PVI continued to maintain the first position in industrial insurance and business performance. It is one of the few businesses that always have insurance business profits.
In 2018, the company for the first time recorded total consolidated revenue exceeding 10 trillion dong (estimated at 10.250 trillion dong), completing 113.02 percent of the plan. In particular, the revenue from original insurance premium reached more than eight trillion dong, consolidated pre-tax profit was estimated at 725 billion dong, completing 123.39 percent of the plan.
Year 2018 was the fourth consecutive year PVI maintained a high dividend payment rate which exceeded the target assigned by the shareholders committee. The dividend payment in 2018 of PVI is expected to be at least 19 percent, higher than the plan of 12 percent in 2018.
For BMI, after a long period having slower growth than the market, BMI has found a new growth motivation since 2017, through cooperating with financial institutions to exploit human accident insurance and credit insurance. Closing the year 2018, BMI generated a total revenue of 4.010,39 trillion dong, up by 2.17 percent compared to the same period of 2017. In particular, the company’s original premium revenue was nearly 3.529 trillion dong, and revenue from reinsurance fee was nearly 480.77 billion dong.
Notably, in 2018, BMI recorded strong rise of asset insurance services with revenue of 1.312,81 trillion dong, completing 115.55 percent of the plan, up by more than 24 percent against the same period of 2017. Its after-tax profit reached more than 175.8 billion dong, up by more than 7.76 percent over the 163 billion dong recorded in 2017, completing 102.2 percent of the plan (172 billion dong). The company’s basic earnings on shares were 1.925 trillion dong, higher than the 1.786 trillion dong recorded in 2017.
The CPTPP agreement is also opening doors for domestic and foreign asset insurance and travel insurance. The plan to continue implementing divestments in insurance companies in 2019 also brings great expectations for the development of the sector from having more powerful investors both in financial capacity and business management in this field.
For example, PVI is included in the divestment roadmap of PetroVietnam Corporation in 2018, but the divestment has not been carried out. For BMI, BSC expected that after being transferred to the Super Committee from State Capital Investment Corporation (SCIC), the company will also be in the state’s list for divestment in 2019.
“As non-life insurance sector has maintained a high growth rate and much room for development, the divestment in non-life insurers is forecasted to attract great attention of investors”, BSC analysed.
