Despite the significant losses, German insurer HDI Global SE continues to increase its stake in PVI, one of Vietnam's leading insurance companies, investing hundreds of billions of VND shortly after the storm.

Insurance companies in Vietnam are facing an influx of claims following Typhoon Yagi, with the total estimated losses approaching VND 10 trillion. Thousands of claims have been submitted for damages to homes, vehicles, factories, and lives. In response, insurance companies have activated their damage assessment systems and begun processing compensation requests.

Among the hardest-hit companies is PVI Holdings (HNX-PVI), which reported over VND 3 trillion in claims as of September 23, 2024, an increase of approximately VND 1 trillion from an earlier estimate on September 11.

By September 23, PVI Insurance had recorded 751 cases of property, motor vehicle, and personal insurance losses. The company has already advanced VND 15 billion in compensation to customers with property damage. However, the damage assessment process has proven challenging, particularly for non-life insurance claims, due to the widespread destruction caused by the typhoon.

Despite the extensive losses, PVI’s stock price has remained relatively stable, dropping only slightly from VND 47,000 on September 6—just before Typhoon Yagi made landfall in Vietnam - to VND 45,000 per share at present.

This stability is largely attributed to German insurance giant HDI Global SE, which registered to purchase an additional 2.95 million shares shortly after the storm (on September 12) and completed a transaction to acquire over 2.775 million shares on September 18. At the average trading price of VND 45,000 per share on September 18, HDI Global SE spent nearly VND 125 billion on this investment.

Following the transaction, HDI Global SE increased its total stake in PVI to more than 99.15 million shares, equivalent to a 42.33% ownership stake.

Additionally, a related shareholder, Funderburk Lighthouse Limited, continues to hold over 29.5 million shares, representing a 12.61% stake. Together, the group of German investors now holds nearly 128.7 million shares in PVI, accounting for 54.94% of the company’s total shares. Earlier, on September 9, HDI Global SE had also acquired 161,600 shares of PVI.

HDI Global SE is a subsidiary of the German insurance group Talanx, which owns 100% of its charter capital. The company holds a controlling stake in PVI Holdings, which in turn owns 100% of PVI Insurance.

Following a significant drop in stock prices after Typhoon Yagi, Vietnam’s insurance stocks have begun to recover, with losses narrowing to around 3-7% compared to pre-storm levels.

For instance, on September 6, shares of Bao Viet Holdings (BVH) were trading at VND 44,800, and by September 26, they had only dropped to VND 43,300, a modest 3.3% decrease. Bao Viet estimates that as of September 18, claims resulting from Typhoon Yagi totaled VND 955 billion.

Shares of Post and Telecommunication Insurance Corporation (PTI) have also seen a strong recovery, with five increases and three flat sessions in the past 10 trading days. As of September 26, PTI shares were trading at VND 32,500, up from VND 30,600 on September 6.

While the damage from Typhoon Yagi has been substantial, insurance companies have significant reserves. As of the end of Q2 2024, PVI had set aside nearly VND 15.9 trillion in reserves, including over VND 6.9 trillion for claims and VND 8.5 trillion for unearned expenses.

PTI estimates that its compensation payments related to the typhoon will total VND 200 billion by September 12, a relatively small figure compared to its reserves, which stood at over VND 4.08 trillion at the end of Q2 2024, including VND 1.42 trillion in claims reserves.

Over the past 18 months, Vietnam’s insurance industry has faced numerous challenges. Life insurance companies have seen a decline in profits due to lower sales, as investment-linked insurance products are no longer as popular. The Insurance Business Law, which took effect at the beginning of 2023, along with Circular 67 from late last year, has introduced stricter policies aimed at protecting policyholders' rights.

Non-life insurance has also been slow to recover, as the industry has been grappling with negative public perceptions following a series of controversies in the life insurance sector over the past year.

Nevertheless, some insurance companies have reported a positive recovery in Q2 2024. PVI’s profits in the first half of the year increased by more than 40% year-over-year, while Bao Viet Insurance Corporation (BIC) also posted similar growth. PTI recorded an 8% increase in profits in Q2 2024.

Vietnam’s insurance market continues to show strong potential and is attracting substantial foreign investment. While insurance markets in countries like Germany have reached saturation, Vietnam’s insurance sector still offers significant growth opportunities due to the country’s early-stage economic development.

At PVI, foreign investors currently hold a dominant 56% stake. Meanwhile, at Bao Viet, Sumitomo Life owns more than 22%, with several other funds holding around 1.6%.

Manh Ha