What is new in the 2018 AGM season of insurance businesses?

31-Mar-2018 Intellasia | DTCK | 6:00 AM Print This Post

Information from a number of insurers that have finalised their 2018 Annual general Meetings (AGMs) show that many boosting plans will be submitted to shareholders.

On the domestic bourse, there are currently nine insurers listed and registered for trading shares, including PVI Holdings (PVI), Bao Viet Holdings (BVH), Bao Minh Insurance Corporation (BMI), Post and Telecommunications Joint Stock Insurance (PTI), Petrolimex Insurance Corporation (PGI), BIDV Insurance Corporation (BIC), Bao Long Insurance Corporation (BLI), Military Insurance Company (MIG), and Agribank Insurance Corporation (ABI). Some of these insurers are in the process of closing the list of shareholders attending the AGMs, such as PVI, BMI, PTI, and BIC.

As expected, there will not be much drama in this AGM season. This also comes from the stability in business of insurance sector. Although the profit growth in 2017 was not as expected for non-life insurance group, because the profit from investment, which accounted for the majority in the profit structure of insurance was affected by the sharp decline of deposit interest rates and government bond yields. However, this has been forecasted for several years.

Certainly, for those that recorded positive business results in 2017, shareholders can hardly be unsatisfied. For example, at BVH, the non-life insurance segment reached the top position in terms of market share, thanks to its own efforts and also the slowdown of PVI.

Although PVI dropped to the second position in market share, its profit from non-life segment has been the highest in the market over the years and it is one of the few insurers to be profitable in 2017. In 2017, the profit from insurance business also helped the pre-tax profit of PVI reach over 451 billion dong, more than three times larger than 2016, in which the profit from insurance business was 167 billion dong, up by 55 percent. The efforts to increase profit of PVI exceeded the expectation of shareholders.

Similarly, at BIC, the profit of the parent company alone reached 213.2 billion dong in 2017, equivalent to 55 percent growth compared to 2016. The surge in profit of the parent company mainly came from the dividends paid by Laos-Viet Insurance Joint Venture.

In 2018, insurance companies such as BVI, BMI, MIC and ABI said that in addition to the plan to increase revenue, the target to increase efficiency via improving profit over the year is always the top priority. This is what shareholders are expecting.

Talking to reporter, Uong Dong Hung, Chair of MIC said that in 2018, the company will focus on investment in information technology (IT) system, promoting the business in effective activities. Along with that, MIC will seek shareholders’ opinions about the listing on Hochiminh city Stock Exchange (HOSE) and inviting strategic partners to increase charter capital to 1.3 trillion dong in order to enhance its business capacity. MIC targets to reach Return on Equity (ROE) of 13 percent.

Meanwhile, BIC is working with Fairfax to seek a consulting agency for finding the most suitable IT solutions in the next five to 10 years. In 2017, BIC carried out survey of IT system at Fairfax’s subsidiaries (developed and provided by NTT DATA).

Insurance companies having banks as their big shareholders such as BIC, MIC, and ABI continue to consider deeply developing bancassurance channel as a superior advantage in competition. In 2017, the revenue from bancassurance channel of BIC grew by up to 60 percent.

“With thorough investment in IT, vigorous development of bancassurance channel, and the seek for new customers via cross-selling products based on the strength of major shareholders, we hope to have more good news to report to shareholders in the AGM next year”, said a leader of an insurance company.

Certainly, for those firms having no parent bank, the application of IT in cross-selling activities has also brought positive results in the insurance system. According to PVI, in 2017, the company has further exploited the cooperation with banks in non-life insurance field such as VPBank, Techcombank, Vietcombank, MaritimeBank, ACB, and HDBank, etc.

Regarding the reinsurance segment, PVI aims to complete its capital raising this year, accelerate the search for strategic partner, list the shares on the stock exchange, and control the compensation on retention rate not higher than 2017 for PVI Re (of which PVI holds nearly 70 percent).

 


Category: Finance, Vietnam

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