The Ministry of Finance (MoF) previously granted approval to plans of the Canada-based financial services group Manulife to increase the charter capital of its Vietnam operations’ by 38 per cent to VND1.35 trillion ($61.6 million).

According to an announcement from Manulife Vietnam on July 12, the increase demonstrates the company’s long-term commitment to the country’s life insurance market.

The increase, which was made at the end of the second quarter, is the second time in eight months Manulife Vietnam has increased its chartered capital, following an increase of VND175 billion ($7.9 million) in the fourth quarter of last year.

“This will help Manulife serve customers more effectively and allow the company to provide customers with more financial solutions,” said Mr. Paul Nguyen, General Manger of Manulife Vietnam.

The company plans to diversify its distribution channels while applying the latest modern technology in its operations, he added.

The government introduced Decree No. 73/2016/ND-CP on July 1, guiding the implementation of the Law on Insurance, which states that foreign firms can now only reinsure up to 90 per cent of their total insurance liability.

This adjustment was proposed by the Insurance Supervisory Authority (ISA) under the Ministry of Finance (MoF) due to “certain issues with overseas reinsurance”, including the amount of foreign currency that local insurers transfer to their partners abroad in such contracts.

According to the Association of Vietnam Insurance (AVI), overseas reinsurance in 2015 was equal to one-third of the domestic market’s total revenue, meaning that one-third of all insurance revenue was sent outside of Vietnam.

“The move is to control enterprises reinsuring up to 99.5 per cent of their insurance liability with their overseas-based parent companies,” AVI’s General Secretary Phung Dac Loc told local media.

He pointed out that except for life and motor vehicle insurance policies, enterprises re-insured an average of over 50 per cent of contract value overseas.

Mr. Loc further noted that MoF aims to keep financial resources within the country’s borders for reinvestment in the economy, while at the same time preventing its foreign currency reserves from being sent overseas.

He praised the ISA initiative to control overseas reinsurance, adding that the capacity of domestic insurers should be utilized to the utmost before finding reinsurers abroad.

“The financial capacity of locally-based companies is sufficient to take over reinsurance contracts that used to be dominated by overseas insurers,” he said.

“The market’s total equity and insurance reserves increased significantly in 2015, by 9 per cent and 21 per cent, to VND45 trillion ($2.06 billion) and VND130 trillion ($5.96 billion), respectively.”

The decree also stipulates the requirements for foreign and domestic insurance companies who wish to set up shop in Vietnam.

Foreign insurers must have been authorized by their home country, have at least ten years experience in the fields registered and at least $2 billion in total assets in the year before applying for a Vietnam license.

Foreign insurance organizations and subsidiaries must not have had any serious legal violations in the insurance sector in the three years prior to their application.

Vietnamese organizations need to meet only two requirements: be operating in the banking and finance sector and having total assets of at least VND2 trillion ($90 million) the year before applying for a license.

Manulife Vietnam was founded in June 1999 and has headquarters at Manulife Plaza in District 7, Ho Chi Minh City.

It was the first 100 per cent foreign-owned insurer in Vietnam and offers a wide range of insurance products, including life, health, education, investment and pension solutions.

As at the end of May it had 49 offices nationwide with 500 employees and more than 20,000 agents in 35 cities and provinces.

It plans to open ten more offices this year.

In 2015 it reported total insurance premiums of VND4.5 trillion ($204.5 million), a 39 per cent increase compared to 2014.

Revenue from asset management was reported at VND13.2 trillion ($600 million), up 24 per cent against 2014.