Non-life insurance expects to hit the growth target

24-Nov-2016 Intellasia | Dau Tu Chung Khoan | 6:00 AM Print This Post

For the group of non-life insurance companies, it is not easy to complete the high growth target of 15 percent although it is very close and the business results in the first 10 months of non-life insurers were very positive.

Information from Bao Minh Insurance showed that in the first 10 months of 2016, the company’s revenue developed by nearly six percent compared to the same period of 2015. In the first three quarters of the year, Bao Minh stepped up to the third position in the market with revenue of 2.253 trillion dong, accounting for 8.38 percent of the market share.

Meanwhile, general director of Bao Viet Insurance Nguyen Quang Hung said that by the end of September 2016, the company recorded a total revenue of more than 5.4 trillion dong and estimated pre-tax profit of nearly 300 billion dong. Hung added that based on the revenue growth and the leading position in key insurance products such as motor vehicle insurance and health insurance, etc. Bao Viet Insurance expected to complete the revenue and profit targets set in 2016. It is reported that the goals of Bao Viet Insurance in 2016 are to generate a total revenue of 7.2 trillion dong and pre-tax profit of 375 billion dong.

For the entire non-life insurance market, in the first three quarters of 2016, the total revenue of direct premiums rose by 12.48 percent, reaching 26.883 trillion dong. In particular, PetroVietnam Insurance (PVI) maintained its first position with direct premium revenue of 5.262 trillion dong, accounting for 19.57 percent of the market share. The second position belongs to Bao Viet Insurance with direct premium revenue of 4.714 trillion dong, accounting for 17.53 percent of the market share; followed by Bao Minh Insurance with 2.253 trillion dong revenue, accounting for 8.38 percent of the market share), Post and Telecommunication Insurance (PTI) with revenue of 2.188 trillion dong, accounting for 8.14 percent of the market share), and Petrolimex Insurance (PJICO) with revenue of 1.782 trillion dong.

It should be noted that in the first eight months of 2016, with growth rate of about 27 percent against the same period of 2015, PTI jumped to the third position with revenue of 1.909 trillion dong, accounting for 8.14 percent of the market share; followed by Bao Minh Insurance with estimated revenue of 1.895 trillion dong, up by 8.46 percent compared to the same period of 2015, accounting for 8.08 percent of the market share.

In 2016, PTI aimed to achieve three trillion dong of direct premium revenue, up by 22 percent; and pre-tax profit of nearly 171 billion dong.

Some insurers recorded more than 50 percent growth in direct premium revenue compared to the previous year, such as Phu Hung Insurance (67 billion dong, up by 80.4 percent), Cathay Insurance Vietnam (134 billion dong, up by 78.2 percent), etc. VBI achieved a breakthrough progress in the first nine months of the year with direct premium revenue increasing by 46 percent, reaching 460 billion dong. Vietinbank Insurance (VBI) recorded an accumulated profit of 48 percent. According to VBI, in 2016, the company’s premium revenue target was set at more than 800 billion dong, up by 50 percent against 2015.

At the shareholders meetings in the beginning of the year, some other insurers have also set fairly high growth targets in 2016. However, their results have not been announced. For example, Vietnam National Aviation Insurance (VNI) aimed to achieve total revenue of 518.66 billion dong, up by 48 percent compared to the realised figure in 2015 (more than 350 billion dong); and attain pre-tax profit of 11.27 billion dong. In 2015, VNI completed 94 percent of the revenue plan and 31 percent of the profit plan.

Saigon-Hanoi Insurance (BSH), in 2016, planned to attain direct premium revenue of 687.9 billion dong and profit of 34.2 billion dong, respectively increased by 169 percent and 136 percent compared to the realised figures in 2015. Last year, the total direct premium revenue and reinsurance revenue of BSH reached 408 billion dong and the pre-tax profit was 15 billion dong, respectively completed just 56 percent and 44 percent of the revenue and profit plans.

The financial year will end in just over a month. With the current situation, most insurers are focusing efforts on the retail segment which contains various risks. Many people argued that the growth target of 15 percent of the entire non-life insurance sector is not feasible as insurers are still facing numerous difficulties in the near future, such as the large compensations from the continuous fire incidents in the recent time. These cases have made insurers to be hesitant with big-risk services (which often bring high premiums). Meanwhile, insurers are still under fierce competition (in lowering cost or extending insurance terms, etc.); not to mention that the difficulties in accounting of debts brought by the new regulations will affect the revenue.

It is undeniable that the investment in developing new products has facilitated insurers to develop revenue and market share. However, the fact showed that sometimes it is just a form of sacrificing revenues generated by similar products in the past. Furthermore, there is usually a certain delay for the efforts of the management authorities (such as building rules and terms for new products such as domestic and international travel insurance, civil liabilities of owners of inland waterway transport, or insurance of some sectors involving natural disasters, etc.) to be realised in products and begin to generate revenue.


Category: Finance

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