return icon Vietnamnet.vn

Insurance groups latching onto Vietnam’s market potential

International insurance groups have reaffirmed their appetite in Vietnam’s landscape, citing favourable demographics, an improved regulatory corridor, and a foreign ownership ratio lift contributing to the market’s appeal.

Insurance groups latching onto Vietnam’s market potential

 

Kyobo Life Insurance, South Korea’s third-largest insurer, stated that it is negotiating the purchase of shares with Bao Long Insurance and BIDV Metlife as one of its initial moves penetrating Vietnam’s insurance landscape.

Kyobo Group chairman and general director Pyun Jung Bum expressed the group’s interest to invest in healthcare and startups to contribute to Vietnam’s digital transformation on the official visit of Vietnam’s National Assembly Chairman Vuong Dinh Hue to South Korea in December.

Chairman Hue praised the group’s decision to invest in Vietnam and stated that the Vietnamese life insurance industry has enormous potential, but the competition is increasingly harsh.

The South Korean insurer has been reportedly restarting its initial public offering (IPO) drive despite a lengthy legal fight with key financial backers over the exercising of option rights, according to Ked Global, a digital media platform from South Korea.

Earlier last month, the firm said that it would file a review request for its IPO with the Korea Exchange, to go public on the major exchange in the first half of 2022.

Meanwhile, the State Securities Commission of Vietnam lifted the foreign ownership ratio of Post and Telecommunications Insurance Corporation (PTI) to 100 per cent in mid-December. This is in line with Vietnam’s forthcoming revised Law on Insurance Business initiatives.

PTI currently boasts three major shareholders namely Vietnam Post Corporation (holding 22.67 per cent), VNDIRECT Securities (18 per cent), and DB Insurance (37 per cent) – the South Korea-backed insurer.

Vietnam Post Corporation will reportedly sell its capital in PTI to ensure legal compliance. This provides an opportunity for DB Insurance and other investors to enhance their ownership ratio in PTI.

Aside from PTI, other firms such as Bao Minh Insurance (BMI) and PVI have plans to raise the room fee to 100 per cent.

BMI is a firm on the Ministry of Finance’s list that needs State Capital Investment Corporation (SCIC) to dispose of its capital as soon as possible to pay the state budget. It presently holds around 51 per cent of Bao Minh’s capital.

The non-life insurance industry is dominated by five domestic companies, yet this is still a lucrative target for international investment.

Global credit rating agency AM Best asserted the financial strength rating of BMI on December 9 at of B++ and its long-term issuer credit rating at BBB.

“The ratings reflect BMI’s balance sheet strength, which AM Best assesses strong, as well as its adequate operating performance, neutral business profile, and appropriate enterprise risk management. The ratings also factor in a neutral impact from the company’s majority ownership by SCIC, which is the sovereign wealth fund of Vietnam,” the rating agency emphasised.

Just before the pandemic emerged, German insurance giant Allianz inked a deal with FPT Group to roll out a digital joint venture in Vietnam – a part of its footprint in Asia. FPT, as the strategic technology partner, was set to support Allianz in the fast-growing insurance market in Vietnam to develop innovative digital insurance products and services to meet the protection needs of local customers.

However, the deal turned sour due to the pandemic, but the German insurer has still signalled its intention to capture Vietnam’s market pie.

Likewise, Sumitomo Life, Bao Viet’s second-largest shareholder, simultaneously raised its stake in the local insurer from 17.48 to 22.09 per cent, thus increasing Bao Viet’s registered capital to about $319.11 million.

With Sumitomo Life’s presence, it could be difficult for other foreign partners to acquire the remaining ownership (around more than 3 per cent) since the ratio is rather minor.

The last few months of 2021 have witnessed a considerable rise in insurance-related stocks, such as shares of Bao Minh, PTI, Military Insurance, to name a few.

There are now seven non-life insurance groups on the stock exchange namely Vietnam National Reinsurance Corporation, PTI, Military Insurance Corporation, Bao Minh, Petrolimex Insurance Corporation, PVI Reinsurance JSC, and BIDV Insurance Corporation.

Two other stocks are BVH of Bao Viet Group and PVI of PVI JSC, both of which have long been regarded as insurance stocks by many investors but are financial investment stocks in the finance sub-sector. The primary concern is insurance – BVH owns all the capital in Bao Viet Insurance Corporation, whereas PVI owns all the capital in PVI Insurance Corporation.

Expert Tran Nguyen Dan stated that investors are more interested in insurance equities, particularly those on the list of state divestments. “However, investors must evaluate the company’s performance and future potential,” Dan said.

AM Best in November maintained its stable market segment outlook on Vietnam’s non-life insurance industry, backed by favourable demographics, ongoing digital transformation, and an improving regulatory framework. Accordingly, AM Best expected Vietnam’s non-life insurance segment to continue expanding, albeit at a modest pace given the challenging economic backdrop over the short term.

Health and personal accident insurances are likely to remain the primary growth drivers as the pandemic raises public awareness of health and mortality risks.

However, this could be offset by a deceleration in group health insurance as domestic industries and businesses implement cost-cutting measures.

Source: VNA

MORE NEWS

French Development Agency pledges more support for projects in Vietnam

The French Development Agency (AFD) will increase its support and donations for projects funded by French non-governmental organisations and associations in Vietnam.

Vietnam seeks stronger education partnership with US

Minister of Education Nguyen Kim Son on September 25 concluded his US working trip that aimed to strengthen education partnership between the two countries.

VIETNAM NEWS HEADLINES SEPTEMBER 25

Central localities likely to be hit by typhoon Noru

AI integration the inevitable path ahead

Big Data and AI will be the optimal tools to run factories in the future and digital transition will help firms optimise costs and cut emissions.

Ministry to scrutinise VietGap certifications after fake labels found on vegetables

The Ministry of Agriculture and Rural Development is investigating reports of vegetables sold in supermarkets being marked with fake Vietnamese Good Agricultural Practices (VietGap) labels.

E-commerce sector in dire need of qualified candidates

The tight supply of qualified candidates in the labour market is a glaring issue facing e-commerce firms, according to insiders.

Unique green moss-covered homes of the Tay Con Linh mountain range

It is an ideal environment for plants to flourish and thrive, including thick green moss, which ethnic people use to cover the palm-leaf roofs of their homes.

Farmers save wild birds and the environment

Farmers in different provinces throughout Việt Nam have for years spent time and effort to save wild birds, giving them a home to nest and lay eggs.

Deputy PM highlights significance of int'l solidarity, cooperation at UN session

The strengthening of international solidarity and cooperation is key to addressing interlocking global challenges, affirmed Permanent Deputy PM Pham Binh Minh while addressing the general debate of the 77th Session of the UN General Assembly.

Huge potential for luxury real estate in Vietnam

The branded residence market is gaining a stronger foothold in the Vietnamese market with potential to further develop, shaping the lifestyle of the country’s elite, according to experts.

VIETNAM BUSINESS NEWS SEPTEMBER 25

Action plan to promote green growth in agriculture

Vietnam’s economic growth counts on high-tech FDI

Vietnam’s economic growth has been accelerating in 2022, with experts considering high-tech foreign investments as a driver.

The “seven-star” islands in Quang Ninh

Along with crystal blue sea and beaches, the 7 Sao (seven star) islands also have caves and primeval forests.

Customs you only see in Vietnam

The travel site Culture Trip has listed a number of Vietnamese customs that often surprise foreign tourists:

Investors and buyers play waiting game in credit switch

The State Bank of Vietnam finally created extra credit room for some banks on September 7. However, the extension is deemed low and may not help real estate businesses and homebuyers access feasible capital sources for their projects.
back_to_top