The Bao Minh Insurance Joint Stock Company on September 4 signed an agreement with Federal Insurance Company (Labuan), a wholly owned subsidiary of US-based insurance giant – Chubb Corporation, to offer speciality liability insurance inside Viet Nam.
Under the agreement, Bao Minh, one of the country’s major insurance players will provide speciality liability insurance products for securities companies and management liability insurance products for companies listed at local bourses.
For its part, Chubb Corporation will offer technical training and cooperate in the area of reinsurance to help Bao Minh introduce the products to the market.
The two partners will also hook up to update local businesses on advanced business management skills to successfully operate within the World Trade Organisation (WTO).
The partnership will help Bao Minh diversify its liability insurance products and prevent businesses from management and financial risks, according to Tran Vinh Duc, the company’s Chief Executive Officer.
Senior Vice President and Managing Director of Chubb Corporation for Asia-Pacific Region, Michael J. Cassella, said that through the partnership, the corporation has made a firm commitment to Vietnamese businesses.
Showing posts with label Insurance. Show all posts
Showing posts with label Insurance. Show all posts
Wednesday, September 05, 2007
Thursday, August 30, 2007
Rule to tighten cap on insurance company shareholding
A draft Ministry of Finance regulation would limit individuals and organisations to holding no more than 10% and 20%, respectively, of insurance company's total equity.
The policy would apply to both domestic and foreign investors, said the ministry.
The limits would help ensure that insurance companies are not dominated by a few major shareholders and would help maintain sustainable development over the long term for newly created insurance companies, said Phung Dac Loc, general secretary of the Viet Nam Insurance Association.
The director of Ernst & Young Viet Nam's business consulting sector, Allanda McConnell, disagreed, saying that the ownership limits would make investment in domestic insurance companies less attractive to foreign investors.
Local players' capacity in terms of technology, management and business strategy is still limited,. McConnell said. The presence of strategic investors with higher stakes in these local companies was a positive solution to these shortcomings.
A 49-per-cent limit, similar to the rate stipulated for foreign individuals and organisations investing in companies listed on the stock market, would be suitable, she suggested.
Currently, there are only some 40 insurers operating on the market. Many foreign insurers are eyeing the market, and many domestic banks were also developing financial group models to expand their businesses into the insurance arena.
The issuance of stricter regulations on the insurance industry has limited the number of new insurance companies, however, with Agribank Insurance Joint Stock Co, established earlier this month, the only new player on the market.
Earlier this year, the Ministry of Finance issued Decree No 46 stipulating that non-life insurance companies have legal capital of at least VND300bil (US$18.75mil), up from the previous VND70bil. Life insurers were required to have capital of VND600bil ($37.5mil), up from VND140bil.
Source: VNE
The policy would apply to both domestic and foreign investors, said the ministry.
The limits would help ensure that insurance companies are not dominated by a few major shareholders and would help maintain sustainable development over the long term for newly created insurance companies, said Phung Dac Loc, general secretary of the Viet Nam Insurance Association.
The director of Ernst & Young Viet Nam's business consulting sector, Allanda McConnell, disagreed, saying that the ownership limits would make investment in domestic insurance companies less attractive to foreign investors.
Local players' capacity in terms of technology, management and business strategy is still limited,. McConnell said. The presence of strategic investors with higher stakes in these local companies was a positive solution to these shortcomings.
A 49-per-cent limit, similar to the rate stipulated for foreign individuals and organisations investing in companies listed on the stock market, would be suitable, she suggested.
Currently, there are only some 40 insurers operating on the market. Many foreign insurers are eyeing the market, and many domestic banks were also developing financial group models to expand their businesses into the insurance arena.
The issuance of stricter regulations on the insurance industry has limited the number of new insurance companies, however, with Agribank Insurance Joint Stock Co, established earlier this month, the only new player on the market.
Earlier this year, the Ministry of Finance issued Decree No 46 stipulating that non-life insurance companies have legal capital of at least VND300bil (US$18.75mil), up from the previous VND70bil. Life insurers were required to have capital of VND600bil ($37.5mil), up from VND140bil.
Source: VNE
Tuesday, August 14, 2007
Local insurers dominate non-life market
Vietnamese firms, led by Viet Nam Insurance Corporation (Bao Viet), have won over world giants such as France’s Prevoir and US AIG, ACE Life and New York Life to garner 80 percent of the domestic non-life insurance market.
The Viet Nam Insurers’ Association said so far 19 businesses are operating in this burgeoning sector, which enjoyed a five-year high of 20 percent growth in the first half of the year, however only seven have foreign money.
Bao Viet alone earned 1 .1 trillion VND out of the nation’s total 3.6 trillion VND in the first half premium revenue.
Other major non-life insurance suppliers include the PetroVietnam Insurance (PVI) with 980 billion VND in premium, the Bao Minh Joint-Stock Corporation, 825 billion VND, and the Petrolimex Insurance Joint-Stock Company 335 billion VND.
However, experts warn that local firms should work out strategies for market expansion immediately or risk losing their shares to foreign rivals when the nation removes all barriers under WTO commitments.
A local insurer executive said his business has prepared a plan for rural expansion once the urban market is saturated.
Source: VNA
The Viet Nam Insurers’ Association said so far 19 businesses are operating in this burgeoning sector, which enjoyed a five-year high of 20 percent growth in the first half of the year, however only seven have foreign money.
Bao Viet alone earned 1 .1 trillion VND out of the nation’s total 3.6 trillion VND in the first half premium revenue.
Other major non-life insurance suppliers include the PetroVietnam Insurance (PVI) with 980 billion VND in premium, the Bao Minh Joint-Stock Corporation, 825 billion VND, and the Petrolimex Insurance Joint-Stock Company 335 billion VND.
However, experts warn that local firms should work out strategies for market expansion immediately or risk losing their shares to foreign rivals when the nation removes all barriers under WTO commitments.
A local insurer executive said his business has prepared a plan for rural expansion once the urban market is saturated.
Source: VNA
Monday, August 13, 2007
Life insurers becoming optimistic again
The life insurance market, which has experienced two years of falling down, now is showing signs of recovery, according to the Vietnam Insurance Association (VIA).
The last two years witnessed the decline of the life insurance market with the APE (Annual Premium Equivalent) decreasing by 3-3.5% in 2005 and 2006. Big names like Prudential, AIA and Manulife all saw premiums down and lost their market shares. In 2006, the total insurance premiums of many companies saw minus growth rates, while the network of agents was narrowed by 30% compared to 2005.
However, VIA said that the market would bounce back and regain the hot development seen in 2000-2003.
The recovery of the market has been seen in the first half of the year, when most life insurers reported encouraging business results.
The total premiums gained by Bao Viet Life in the first six months of the year reached VND1,600bil, an increase of 5% compared to the same period last year, while the turnover from new policies increased by 35%. Moreover, turnover from financial investment of Bao Viet Life also increased by 20% over 2006, reaching VND600bil ($37.5mil).
AIA Vietnam has also reported satisfactory business results: the total premiums increased by 5% in the first quarter of the year over the same period last year. The business performance was even better in the second quarter with the total premiums up by 25%.
ACE Life’s business results proved to be very impressive: the total premiums increased by 300% in the first half of 2007 compared to the same period of 2006. This was a very satisfactory result if noting that the market was in the gloomy period.
Other insurers also reported increases in the real collected premiums from new policies. Prevoir, for example, saw the increase of 250%, Manulife 40% and Dai-ichi Life 22%. Total life insurance premiums grew by 9%.
Experts said that the recovery of the life insurance market was inevitable. WTO membership brings more opportunities to insurers: living standards and incomes have improved, which encourage people to take out more insurance policies.
In fact, insurers have also been trying to attract more clients. In June 2007, Prudential Vietnam announced it would give more insurance dividends worth VND521bil ($32.56mil) to eligible policyholders. The company said that this was the profit from the financial investment deals in 2006 and early months of 2007. Meanwhile, Nguyen Duc Tuan, Director General of Bao Viet Life, said that the launching of new products, which have brought new choices to clients, has helped raise the turnover of the company.
Source: VNE
The last two years witnessed the decline of the life insurance market with the APE (Annual Premium Equivalent) decreasing by 3-3.5% in 2005 and 2006. Big names like Prudential, AIA and Manulife all saw premiums down and lost their market shares. In 2006, the total insurance premiums of many companies saw minus growth rates, while the network of agents was narrowed by 30% compared to 2005.
However, VIA said that the market would bounce back and regain the hot development seen in 2000-2003.
The recovery of the market has been seen in the first half of the year, when most life insurers reported encouraging business results.
The total premiums gained by Bao Viet Life in the first six months of the year reached VND1,600bil, an increase of 5% compared to the same period last year, while the turnover from new policies increased by 35%. Moreover, turnover from financial investment of Bao Viet Life also increased by 20% over 2006, reaching VND600bil ($37.5mil).
AIA Vietnam has also reported satisfactory business results: the total premiums increased by 5% in the first quarter of the year over the same period last year. The business performance was even better in the second quarter with the total premiums up by 25%.
ACE Life’s business results proved to be very impressive: the total premiums increased by 300% in the first half of 2007 compared to the same period of 2006. This was a very satisfactory result if noting that the market was in the gloomy period.
Other insurers also reported increases in the real collected premiums from new policies. Prevoir, for example, saw the increase of 250%, Manulife 40% and Dai-ichi Life 22%. Total life insurance premiums grew by 9%.
Experts said that the recovery of the life insurance market was inevitable. WTO membership brings more opportunities to insurers: living standards and incomes have improved, which encourage people to take out more insurance policies.
In fact, insurers have also been trying to attract more clients. In June 2007, Prudential Vietnam announced it would give more insurance dividends worth VND521bil ($32.56mil) to eligible policyholders. The company said that this was the profit from the financial investment deals in 2006 and early months of 2007. Meanwhile, Nguyen Duc Tuan, Director General of Bao Viet Life, said that the launching of new products, which have brought new choices to clients, has helped raise the turnover of the company.
Source: VNE
Thursday, August 09, 2007
BIDV insurer increases capital to 500 billion VND
The Finance Ministry has given the nod to the BIDV Insurance Company (BIC) to increase its charter capital 2.5 times to 500 billion VND (31.25 million USD), the company announced.
This will be the third time BIC has boosted their charter capital since early 2006. In April 2006, it raised capital to 100 billion VND and the figure was doubled six months later.
According to BIC, the Bank for Investment and Development of Viet Nam (BIDV) made the move to capital for BIC with the aim of improving its financial capacity and competitive edge as well as meeting demand of the insurance sector, which is forecast to boom in the near future.
BIC is currently among Viet Nam's top five non-life insurance companies.
Source: VNA
This will be the third time BIC has boosted their charter capital since early 2006. In April 2006, it raised capital to 100 billion VND and the figure was doubled six months later.
According to BIC, the Bank for Investment and Development of Viet Nam (BIDV) made the move to capital for BIC with the aim of improving its financial capacity and competitive edge as well as meeting demand of the insurance sector, which is forecast to boom in the near future.
BIC is currently among Viet Nam's top five non-life insurance companies.
Source: VNA
Agribank enters non-life insurance market
The Viet Nam Bank for Agriculture and Rural Development (Agribank) took part in Viet Nam’s non-life insurance market with the opening of the Agribank Insurance Joint Stock Company (ABIC) on August 8.
The company has a chartered capital of 160 billion VND (nearly 1 million USD) and includes four founding shareholders: Agribank holding 47.81 percent of stake, the National Reinsurance Joint Stock Company (10 percent), and the Agribank Financial Leasing Companies 1 and 2 (6.56 percent each).
Besides providing common non-life insurance products, ABIC will develop new products that benefit farmers and contribute to the rural development.
The company has set a target of attaining a revenue of 150 billion VND (9.37 million USD) in the three initial years and joining the top tens of leading insurance enterprises in Viet Nam after five years of operation.
Source: VNA
The company has a chartered capital of 160 billion VND (nearly 1 million USD) and includes four founding shareholders: Agribank holding 47.81 percent of stake, the National Reinsurance Joint Stock Company (10 percent), and the Agribank Financial Leasing Companies 1 and 2 (6.56 percent each).
Besides providing common non-life insurance products, ABIC will develop new products that benefit farmers and contribute to the rural development.
The company has set a target of attaining a revenue of 150 billion VND (9.37 million USD) in the three initial years and joining the top tens of leading insurance enterprises in Viet Nam after five years of operation.
Source: VNA
Friday, August 03, 2007
Petrovietnam Insurance gets initial listing permit
Petrovietnam Insurance Corporation (PVI), Vietnam's third-largest insurer, has won initial approval to list on the over-the-counter Hanoi stock market (HASTCI), the exchange said on Thursday.
Hanoi-based PVI, the insurance arm of state oil and gas Petrovietnam group, was given approval to list all its 50 million shares, exchange director Tran Van Dung said in a statement.
Dung did not say when PVI would make its share debut.
Shares in PVI fell to 75,000-77,000 dong ($4.65-$4.77) on the unofficial markets this week from 80,000-82,000 dong early last month, valuing the firm at $235 million.
Vietnam's insurance sector has grown rapidly in recent years as domestic economic growth was more than 8 percent in 2005 and 2006. The government expects 9 percent growth in the second half of this year, up from 7.87 percent in the first half.
The Hanoi market said in another statement that PVI had raised 36.8 billion dong ($2.3 million) from selling 483,400 shares on Tuesday at an average price of 76,190 dong.
The shares sold were left from an auction in June in which investors bid but then refused to buy the stocks, the Hanoi market said without giving a reason for the refusal.
The share sale was part of PVI's plan to issue more than 35 million shares, with proceeds going to building three oil tankers, buying stakes in two financial firms and a power plant construction firm in Laos.
Last year, PVI had an 18.09 percent market share of Vietnam's non-life insurance market, making it the third biggest after Bao Viet, which had a 34.94 percent share, and Bao Minh (BMI) with 21.29 percent, industry reports said.
The Hanoi market's index, now with 88 listed firms, fell 0.57 percent to close at 258.52 points on Thursday.
Source: Reuters
Hanoi-based PVI, the insurance arm of state oil and gas Petrovietnam group, was given approval to list all its 50 million shares, exchange director Tran Van Dung said in a statement.
Dung did not say when PVI would make its share debut.
Shares in PVI fell to 75,000-77,000 dong ($4.65-$4.77) on the unofficial markets this week from 80,000-82,000 dong early last month, valuing the firm at $235 million.
Vietnam's insurance sector has grown rapidly in recent years as domestic economic growth was more than 8 percent in 2005 and 2006. The government expects 9 percent growth in the second half of this year, up from 7.87 percent in the first half.
The Hanoi market said in another statement that PVI had raised 36.8 billion dong ($2.3 million) from selling 483,400 shares on Tuesday at an average price of 76,190 dong.
The shares sold were left from an auction in June in which investors bid but then refused to buy the stocks, the Hanoi market said without giving a reason for the refusal.
The share sale was part of PVI's plan to issue more than 35 million shares, with proceeds going to building three oil tankers, buying stakes in two financial firms and a power plant construction firm in Laos.
Last year, PVI had an 18.09 percent market share of Vietnam's non-life insurance market, making it the third biggest after Bao Viet, which had a 34.94 percent share, and Bao Minh (BMI) with 21.29 percent, industry reports said.
The Hanoi market's index, now with 88 listed firms, fell 0.57 percent to close at 258.52 points on Thursday.
Source: Reuters
Friday, July 27, 2007
New non-life insurance company makes debut
The Global Insurance Company (GIC), which offers non-life insurance, reinsurance and finance investment services, made its debut in Ha Noi on July 26.
The company’s shareholders include Electricity of Viet Nam (EVN), Dong A Bank (EAB), Viet Nam National Reinsurance Cooperation (Vinare), Song Da Urban and Industrial Zone Investment and Development JSC (Sudico) and Viet Nam Air Service Corporation.
To date the company has reached a revenue of nearly 150 billion VND, providing more than 50 insurance products to its clients nationwide.
Speaking at the ceremony, chairman of the board of directors, Ho Nam Thang, said the company’s charter capital is planned to reach 1,000 trillion VND (62.7 million USD) by 2010.
If it’s successful in achieving its target revenue of 300 billion VND (18.7 million USD) this year, GIC would be one of the top five leading insurance companies in the country’s non-life insurance sector.
During the launch ceremony, Electricity of Viet Nam signed a comprehensive cooperative agreement with GIC.
Under the agreement, the two sides will promote joint-venture activities and make capital contributions in order to expand and develop other multilateral businesses activities.
GIC also inked several contracts with partners such as Bao Viet group, Vietnam Air Service Corporation, Power Transmission Company 3 and others.
Source: VNA
The company’s shareholders include Electricity of Viet Nam (EVN), Dong A Bank (EAB), Viet Nam National Reinsurance Cooperation (Vinare), Song Da Urban and Industrial Zone Investment and Development JSC (Sudico) and Viet Nam Air Service Corporation.
To date the company has reached a revenue of nearly 150 billion VND, providing more than 50 insurance products to its clients nationwide.
Speaking at the ceremony, chairman of the board of directors, Ho Nam Thang, said the company’s charter capital is planned to reach 1,000 trillion VND (62.7 million USD) by 2010.
If it’s successful in achieving its target revenue of 300 billion VND (18.7 million USD) this year, GIC would be one of the top five leading insurance companies in the country’s non-life insurance sector.
During the launch ceremony, Electricity of Viet Nam signed a comprehensive cooperative agreement with GIC.
Under the agreement, the two sides will promote joint-venture activities and make capital contributions in order to expand and develop other multilateral businesses activities.
GIC also inked several contracts with partners such as Bao Viet group, Vietnam Air Service Corporation, Power Transmission Company 3 and others.
Source: VNA
Thursday, July 26, 2007
Vinare sets share auction on Aug 24
Vietnam's top re-insurer, National Re-Insurance Corporation (Vinare), said on Thursday it would sell 12.58 million new shares at an auction on Aug. 24 to raise at least $46.8 million.
The auction held on the over-the-counter Hanoi stock market <.HASTCI> is part of Vinare's plan to issue 40.7 million new shares this year, to more than double its registered capital to 750 billion dong from the current 343 billion dong and to expand its businesses.
A statement from the Hanoi-based company said bidding for the 12.58 million shares would start at 60,000 dong ($3.7).
Vinare chairman Trinh Quang Tuyen said in May the firm needed to invest 1.6 trillion dong ($100 million) in several projects, including the formation of new banks together with top insurer Bao Viet and Vietnam's leading IT firm FPT.
Vinare also plans to spend 200 billion dong to increase its stake in five domestic insurance firms and a joint venture late this year or early 2008, and another 200 billion dong on the formation of non-life insurance firms in 2007 and 2008.
Of the 40.7 million new shares, 27.95 million will go to the public, existing shareholders and employees. Another 12.75 million shares would be sold to Vietnamese and foreign strategic investors.
Shares in Vinare lost 1.2 percent to close at 82,000 dong ($5) on Thursday, valuing the firm at $172 million.
Vietnam's insurance sector has grown rapidly in recent years as the country's economy has boomed. Growth is expected to top 8 percent for the third year running this year.
Vinare, which used to provide the sole access to international re-insurance for Vietnamese insurers, still maintains a leading role in the sector.
Source: Reuters
The auction held on the over-the-counter Hanoi stock market <.HASTCI> is part of Vinare's plan to issue 40.7 million new shares this year, to more than double its registered capital to 750 billion dong from the current 343 billion dong and to expand its businesses.
A statement from the Hanoi-based company said bidding for the 12.58 million shares would start at 60,000 dong ($3.7).
Vinare chairman Trinh Quang Tuyen said in May the firm needed to invest 1.6 trillion dong ($100 million) in several projects, including the formation of new banks together with top insurer Bao Viet and Vietnam's leading IT firm FPT.
Vinare also plans to spend 200 billion dong to increase its stake in five domestic insurance firms and a joint venture late this year or early 2008, and another 200 billion dong on the formation of non-life insurance firms in 2007 and 2008.
Of the 40.7 million new shares, 27.95 million will go to the public, existing shareholders and employees. Another 12.75 million shares would be sold to Vietnamese and foreign strategic investors.
Shares in Vinare lost 1.2 percent to close at 82,000 dong ($5) on Thursday, valuing the firm at $172 million.
Vietnam's insurance sector has grown rapidly in recent years as the country's economy has boomed. Growth is expected to top 8 percent for the third year running this year.
Vinare, which used to provide the sole access to international re-insurance for Vietnamese insurers, still maintains a leading role in the sector.
Source: Reuters
Tuesday, July 24, 2007
Vietnam insurer raises $8.8 mln in 2nd share auction
Vietnam’s biggest insurance firm Bao Viet raised VND14 billion (US$8.8 million) from a public auction of shares left over from its initial public offering last May after bidders defaulted.
However, of the 15.6 million shares remaining from the previous round, it found bidders for just 1.9 million. The amount raised was thus far below the $72 million the company hoped to raise.
The second round saw an average price of VND74,019 against VND73,910 earlier.
Foreign investors bought the lion’s share at the latest auction, snapping up 1.8 million shares.
The insurer set to raise $112 million from its IPO, having set a starting price for bids at VND30,500 each.
According to industry insiders, the giant insurer might now offer the almost 14 million unsold shares to strategic foreign partners.
The company has a registered capital of VND6.8 trillion ($422 million).
Bao Viet's IPO, followed by those of four state-run banks due later this year, is seen as a test of Vietnam's commitment to open its markets following its World Trade Organization membership in January.
Vietnam's insurance sector has grown rapidly in recent years, reflecting the country's robust growth of more than 8 percent in 2005 and 2006. Growth potential in a country of 84 million people is significant as Vietnam spent $10.10 per head on insurance in 2005, compared to $46.3 in China, industry reports show.
The insurer forecast its 2007 net profit would jump almost two-thirds to VND524 billion ($32.5 million) as it expanded into banking and real estate.
Bao Viet is the leader in Vietnam's non-life insurance market with an almost 35 percent share and ranks second in life insurance with 36.5 percent, behind Prudential's 41.6 percent share.
It set to list in Vietnam by 2009 and is considering listing on an unspecified market overseas.
Source: Thanh Nien
However, of the 15.6 million shares remaining from the previous round, it found bidders for just 1.9 million. The amount raised was thus far below the $72 million the company hoped to raise.
The second round saw an average price of VND74,019 against VND73,910 earlier.
Foreign investors bought the lion’s share at the latest auction, snapping up 1.8 million shares.
The insurer set to raise $112 million from its IPO, having set a starting price for bids at VND30,500 each.
According to industry insiders, the giant insurer might now offer the almost 14 million unsold shares to strategic foreign partners.
The company has a registered capital of VND6.8 trillion ($422 million).
Bao Viet's IPO, followed by those of four state-run banks due later this year, is seen as a test of Vietnam's commitment to open its markets following its World Trade Organization membership in January.
Vietnam's insurance sector has grown rapidly in recent years, reflecting the country's robust growth of more than 8 percent in 2005 and 2006. Growth potential in a country of 84 million people is significant as Vietnam spent $10.10 per head on insurance in 2005, compared to $46.3 in China, industry reports show.
The insurer forecast its 2007 net profit would jump almost two-thirds to VND524 billion ($32.5 million) as it expanded into banking and real estate.
Bao Viet is the leader in Vietnam's non-life insurance market with an almost 35 percent share and ranks second in life insurance with 36.5 percent, behind Prudential's 41.6 percent share.
It set to list in Vietnam by 2009 and is considering listing on an unspecified market overseas.
Source: Thanh Nien
Gov’t okays Bao Viet’s bank project
One more economic group, Bao Viet insurance, is moving ahead with its plan to set up a new bank, called Bao Viet Commercial Joint Stock Bank.
On July 23, the Government’s Office released the notice, announcing the Prime Minister’s opinion on agreeing to Bao Viet’s proposal on setting up a Bao Viet Bank, which belongs to Bao Viet Group.
The Prime Minister has assigned the Governor of the State Bank of Vietnam to consider and decide the capital contribution by Bao Viet Group into Bao Viet Bank.
In fact, Bao Viet Group mentioned the intention to establish a bank in early 2006, considering this a very important step in the development strategy of Bao Viet as the bank will support financial activities of Bao Viet.
Bao Viet initially wants to hold more than 50% of the bank’s capital. However, according to a new regulation on bank establishment and operation, every shareholder institution can hold 20% of the total capital. Experts said that the new regulation will force Bao Viet to change its initial plan.
Prior to that, the Government agreed to the proposal by the Vietnam Post and Telecommunication Group (VNPT) to establish a joint stock bank. VNPT has been assigned to draw up the project on setting up such a bank based on the existing Postal Savings Services Company. The project will be submitted to the Prime Minister for consideration and approval.
At the same time, a group of three giants in their fields, including FPT (the Corporation for Financing and Promoting Technologies), MobiFone, a telecommunication service provider, and the State Capital Investment Corporation (SCIC), the powerful corporation specializing in investing state owned capital in businesses, have decided to join forces to set up a bank, FPT Bank.
According to Hoang Minh Chau, Deputy Chairman of FPT, said that the bank would have the initial chartered capital of VND1tril ($62.5mil). Each of the three founding shareholders will contribute 15% of capital each, while the remaining capital will be sourced from individual investors.
Also on July 23, the Prime Minister requested the State Bank of Vietnam to consult with relevant ministries, institutions and individuals on the draft decree on organization, governance and operation of commercial banks. The consultation will be carried out via the government’s website before the final draft is submitted to the Government for consideration and approval.
In related news, the second auction of Bao Viet’s shares on July 23, which aimed to sell the 15mil shares left unsold from the first auction, was, once again, not as successful as expected. The total volume of shares investors registered to buy was very low, less than 2mil shares.
Only 1,917,500 shares have been sold, or 12.24% of the total shares put on sale in the second auction (15,656,286 shares).
Foreign investors could buy nearly all the offered shares, and at the average price of VND1,870,000/share.
Source: VNE
On July 23, the Government’s Office released the notice, announcing the Prime Minister’s opinion on agreeing to Bao Viet’s proposal on setting up a Bao Viet Bank, which belongs to Bao Viet Group.
The Prime Minister has assigned the Governor of the State Bank of Vietnam to consider and decide the capital contribution by Bao Viet Group into Bao Viet Bank.
In fact, Bao Viet Group mentioned the intention to establish a bank in early 2006, considering this a very important step in the development strategy of Bao Viet as the bank will support financial activities of Bao Viet.
Bao Viet initially wants to hold more than 50% of the bank’s capital. However, according to a new regulation on bank establishment and operation, every shareholder institution can hold 20% of the total capital. Experts said that the new regulation will force Bao Viet to change its initial plan.
Prior to that, the Government agreed to the proposal by the Vietnam Post and Telecommunication Group (VNPT) to establish a joint stock bank. VNPT has been assigned to draw up the project on setting up such a bank based on the existing Postal Savings Services Company. The project will be submitted to the Prime Minister for consideration and approval.
At the same time, a group of three giants in their fields, including FPT (the Corporation for Financing and Promoting Technologies), MobiFone, a telecommunication service provider, and the State Capital Investment Corporation (SCIC), the powerful corporation specializing in investing state owned capital in businesses, have decided to join forces to set up a bank, FPT Bank.
According to Hoang Minh Chau, Deputy Chairman of FPT, said that the bank would have the initial chartered capital of VND1tril ($62.5mil). Each of the three founding shareholders will contribute 15% of capital each, while the remaining capital will be sourced from individual investors.
Also on July 23, the Prime Minister requested the State Bank of Vietnam to consult with relevant ministries, institutions and individuals on the draft decree on organization, governance and operation of commercial banks. The consultation will be carried out via the government’s website before the final draft is submitted to the Government for consideration and approval.
In related news, the second auction of Bao Viet’s shares on July 23, which aimed to sell the 15mil shares left unsold from the first auction, was, once again, not as successful as expected. The total volume of shares investors registered to buy was very low, less than 2mil shares.
Only 1,917,500 shares have been sold, or 12.24% of the total shares put on sale in the second auction (15,656,286 shares).
Foreign investors could buy nearly all the offered shares, and at the average price of VND1,870,000/share.
Source: VNE
Wednesday, July 18, 2007
Vietnam insurance market sees turnaround
The Vietnamese life insurance industry is showing signs of a recovery after three lean years, with a sharp rise in premiums collected.
The Annual Premium Equivalent (APE) which measures new business in a year soared by 28 percent in the first quarter, the Vietnam Insurance Association said.
The local Bao Viet Life Insurance Company was the top performer with its APE skyrocketing 47 percent, following by Canadian insurer Manulife with 37 percent.
American insurer recorded a 29 percent rise after suffering a drop of 32 percent last year.
Total premiums collected increased by 5 percent this year, it added.
Japan’s Dai-ichi Life Insurance Group too was in positive territory, growing at 28 percent.
UK insurer Prudential Vietnam recently declared a special bonus of VND521 billion for policies bought by 2003 and remaining in force now.
Lapsed policies too qualify for the special bonus if they are reinstated by July 31.
The insiders also predicted the insurance market to boom following the country’s WTO commitments to open up the sector.
From January 1, 2008, foreign insurance companies will be allowed to sell compulsory insurance policies like vehicle insurance and insurance for oil and gas assets.
Earlier this year Japan’s Dai-ichi Life bought out the stakes owned by the US’s New York Life and Australia’s Colonial Mutual Life Assurance Society Ltd CMG in a 50:50 joint venture with the local Bao Minh Insurance Corporation.
Shigeo Tsuyuki, Dai-ichi Life’s deputy managing director, said the company saw major opportunity in Vietnam despite the recent sluggishness.
The life insurance industry depended much on the country’s economic growth rate, he added.
The Vietnamese market is growing at 29 percent a year with premiums topping 2 percent of GDP last year.
HSBC Life International Ltd., HSBC’s life insurance arm, entered the Vietnam market earlier this year, opening a representative office in Hanoi.
The office will research the market, survey customers’ needs, and draw up strategies for a full-fledged entry into the insurance market.
David Fried, director of HSBC Insurance Asia-Pacific said Vietnam’s fast-growing economy, low insurance penetration, and sound legal framework were factors for the insurance business.
Vietnam had 16 non-life insurers, eight life insurers and seven insurance brokers, both foreign and domestic, VIA said.
It added that only Bao Viet could compete with the large foreign players.
Source: Thanh Nien
The Annual Premium Equivalent (APE) which measures new business in a year soared by 28 percent in the first quarter, the Vietnam Insurance Association said.
The local Bao Viet Life Insurance Company was the top performer with its APE skyrocketing 47 percent, following by Canadian insurer Manulife with 37 percent.
American insurer recorded a 29 percent rise after suffering a drop of 32 percent last year.
Total premiums collected increased by 5 percent this year, it added.
Japan’s Dai-ichi Life Insurance Group too was in positive territory, growing at 28 percent.
UK insurer Prudential Vietnam recently declared a special bonus of VND521 billion for policies bought by 2003 and remaining in force now.
Lapsed policies too qualify for the special bonus if they are reinstated by July 31.
The insiders also predicted the insurance market to boom following the country’s WTO commitments to open up the sector.
From January 1, 2008, foreign insurance companies will be allowed to sell compulsory insurance policies like vehicle insurance and insurance for oil and gas assets.
Earlier this year Japan’s Dai-ichi Life bought out the stakes owned by the US’s New York Life and Australia’s Colonial Mutual Life Assurance Society Ltd CMG in a 50:50 joint venture with the local Bao Minh Insurance Corporation.
Shigeo Tsuyuki, Dai-ichi Life’s deputy managing director, said the company saw major opportunity in Vietnam despite the recent sluggishness.
The life insurance industry depended much on the country’s economic growth rate, he added.
The Vietnamese market is growing at 29 percent a year with premiums topping 2 percent of GDP last year.
HSBC Life International Ltd., HSBC’s life insurance arm, entered the Vietnam market earlier this year, opening a representative office in Hanoi.
The office will research the market, survey customers’ needs, and draw up strategies for a full-fledged entry into the insurance market.
David Fried, director of HSBC Insurance Asia-Pacific said Vietnam’s fast-growing economy, low insurance penetration, and sound legal framework were factors for the insurance business.
Vietnam had 16 non-life insurers, eight life insurers and seven insurance brokers, both foreign and domestic, VIA said.
It added that only Bao Viet could compete with the large foreign players.
Source: Thanh Nien
Tuesday, July 17, 2007
PVI insures offloading unit building
PetroVietnam Insurance (PVI) decided to enter a 120 million USD insurance contract for construction of the floating storage and offloading unit 5 (FSO-5) by the Viet Nam Shipbuilding Industry Corporation (Vinashin).
The contract was signed by PVI and Vinashin in Ha Noi on July 16.
FSO-5 is the biggest ever shipbuilding project in the country currently carried out by Vinashin.
According to Vinashin, FSOs are commonly used in oil fields where piplines linking the drilling platform with onshore facilities are either impossible or inefficient. The platform will transfer oil to the FSO where it will be stored until a tanker arrives.
Once completed after 14 months of construction, the FSO will be handed over to the Viet Nam-Russian Oil and Gas Joint Venture (VietsovPetro) for operation at Bach Ho (White Tiger) and Rong (Dragon) oil fields off southern coastal province of Ba Ria-Vung Tau.
PVI is an insurer that provides package insurance programmes to all projects from equipment and goods transportation to warranty and responsibility for the third party, said its General Director Nguyen Anh Tuan.
Source: VNA
The contract was signed by PVI and Vinashin in Ha Noi on July 16.
FSO-5 is the biggest ever shipbuilding project in the country currently carried out by Vinashin.
According to Vinashin, FSOs are commonly used in oil fields where piplines linking the drilling platform with onshore facilities are either impossible or inefficient. The platform will transfer oil to the FSO where it will be stored until a tanker arrives.
Once completed after 14 months of construction, the FSO will be handed over to the Viet Nam-Russian Oil and Gas Joint Venture (VietsovPetro) for operation at Bach Ho (White Tiger) and Rong (Dragon) oil fields off southern coastal province of Ba Ria-Vung Tau.
PVI is an insurer that provides package insurance programmes to all projects from equipment and goods transportation to warranty and responsibility for the third party, said its General Director Nguyen Anh Tuan.
Source: VNA
Monday, July 16, 2007
Reinsurance company to sell shares to public
The Viet Nam National Reinsurance Company has got permission from the State Securities Commission to sell 40.7 million common shares to public.
The shares, with a face value of 10,000 VND each, will be issued in two stages.
In the first stage, 13.72 million shares will be sold to the current shareholders at the par price and 1.65 million to the company employees at the price of 15,000 VND each. Another 12.58 million stocks will be auctioned at the starting price of 60,000 VND per unit.
In the second stage, 12.75 million shares will be sold to strategic shareholders.
The Ha Noi-based company reports its chartered capital of 343 billion VND.
Source: VNA
The shares, with a face value of 10,000 VND each, will be issued in two stages.
In the first stage, 13.72 million shares will be sold to the current shareholders at the par price and 1.65 million to the company employees at the price of 15,000 VND each. Another 12.58 million stocks will be auctioned at the starting price of 60,000 VND per unit.
In the second stage, 12.75 million shares will be sold to strategic shareholders.
The Ha Noi-based company reports its chartered capital of 343 billion VND.
Source: VNA
Sunday, July 15, 2007
BIDV increases capital for its insurance, securities businesses
The Bank for Investment and Development of Viet Nam (BIDV) yesterday increased charter capital for two of its major subsidiaries, BIDV Insurance Co (BIC) and BIDV Securities Co (BSC) to improve their competitiveness.
"BIC’ charter capital was raised from VND200 billion (US$12.5 million) to VND500 billion ($31.25 million) and becoming one of the biggest companies in this sector," said general director of BIDV Tran Bac Ha, "The company will be equitised at the same time as BIDV."
After equitisation, BIC will co-operate with American International Group (AIG) and operate under the parent corporation in both life and non-life insurance sectors.
Commenting on the increase of BSC’s charter capital from VND300 billion ($18.75 million) to VND700 billion ($43.75 million), the general director said. "There are over 55 securities companies, making competition increasingly fierce. I think, the increase of charter capital will be a boost for BSC and we will focus on underwriting services by supplying quality cover, beyond the capacity of many smaller companies."
For the first half of the year, BIC posted earnings of VND5.28 billion ($330,000). BSC reported a pre-tax profit of VND62 billion ($3.87 million), three times more than the same period last year, accounting for 15 per cent of its market value.
By the third quarter, BIDV plans to open a trading centre for banking, insurance and securities services in Ha Noi.
Source: VNS
"BIC’ charter capital was raised from VND200 billion (US$12.5 million) to VND500 billion ($31.25 million) and becoming one of the biggest companies in this sector," said general director of BIDV Tran Bac Ha, "The company will be equitised at the same time as BIDV."
After equitisation, BIC will co-operate with American International Group (AIG) and operate under the parent corporation in both life and non-life insurance sectors.
Commenting on the increase of BSC’s charter capital from VND300 billion ($18.75 million) to VND700 billion ($43.75 million), the general director said. "There are over 55 securities companies, making competition increasingly fierce. I think, the increase of charter capital will be a boost for BSC and we will focus on underwriting services by supplying quality cover, beyond the capacity of many smaller companies."
For the first half of the year, BIC posted earnings of VND5.28 billion ($330,000). BSC reported a pre-tax profit of VND62 billion ($3.87 million), three times more than the same period last year, accounting for 15 per cent of its market value.
By the third quarter, BIDV plans to open a trading centre for banking, insurance and securities services in Ha Noi.
Source: VNS
Friday, July 13, 2007
Bao Viet to raise $72 mln in share sale
Bao Viet, Vietnam's biggest insurer, told the Hanoi stock market on Thursday it expected to raise $72 million by selling more than 15.6 million shares later this month.
Only investors in Bao Viet's initial public offering in late May were qualified to buy the 15,656,286 shares on offer and could register between July 16 and July 18, Bao Viet said in a statement released by the Hanoi market.
They could then buy shares through negotiations on July 23 at the Hanoi market, it said.
The shares on offer were left over from the May 31 IPO by bidders who refused to complete their purchases, the exchange said in a statement without elaboration.
Hanoi-based Bao Viet, or Vietnam Insurance Corporation which raised $272 million by selling 59.44 million shares, an 8.74 percent stake, in its IPO, said the minimum price for the new shares would be 74,000 dong ($4.6).
Bao Viet also forecast its 2007 net profit would jump almost two-thirds to 524 billion dong ($32.5 million) as it expanded into banking and real estate.
Bao Viet is the leader in Vietnam's non-life insurance market with an almost 35 percent share and ranks second in life insurance with 36.5 percent, behind Prudential's 41.6 percent share.
Bao Viet Chairman Le Quang Binh has said Bao Viet would list in Vietnam by 2009 and consider listing on an unspecified market overseas.
Source: Reuters
Only investors in Bao Viet's initial public offering in late May were qualified to buy the 15,656,286 shares on offer and could register between July 16 and July 18, Bao Viet said in a statement released by the Hanoi market.
They could then buy shares through negotiations on July 23 at the Hanoi market, it said.
The shares on offer were left over from the May 31 IPO by bidders who refused to complete their purchases, the exchange said in a statement without elaboration.
Hanoi-based Bao Viet, or Vietnam Insurance Corporation which raised $272 million by selling 59.44 million shares, an 8.74 percent stake, in its IPO, said the minimum price for the new shares would be 74,000 dong ($4.6).
Bao Viet also forecast its 2007 net profit would jump almost two-thirds to 524 billion dong ($32.5 million) as it expanded into banking and real estate.
Bao Viet is the leader in Vietnam's non-life insurance market with an almost 35 percent share and ranks second in life insurance with 36.5 percent, behind Prudential's 41.6 percent share.
Bao Viet Chairman Le Quang Binh has said Bao Viet would list in Vietnam by 2009 and consider listing on an unspecified market overseas.
Source: Reuters
PVI provides risk management to Dung Quat oil refinery
PetroVietnam Insurance (PVI) will provide the Dung Quat oil refinery with risk management consultation and insurance services worth over 3 billion USD per year.
Under an agreement that was signed in central Quang Ngai province on July 12, the insurance package will cover assets, personal safety, construction, installation and transportation insurance for the refinery.
Covering 338 ha of land and 473 ha of water in Quang Ngai province’s Binh Son district, t he 2.5 billion USD Dung Quat oil refinery will be capable of processing 6.5 million tonnes of crude oil per year and refine 33 percent of the country’s entire demand for petrol and oil. Its products will include protylen, liquefied petroleum gas (LPG), lead-free petrol, diesel oil and fuel oil.
PVI is now the sole insurer for the refinery, providing insurance services from design to the refinery’s initial test run.
Source: VNA
Under an agreement that was signed in central Quang Ngai province on July 12, the insurance package will cover assets, personal safety, construction, installation and transportation insurance for the refinery.
Covering 338 ha of land and 473 ha of water in Quang Ngai province’s Binh Son district, t he 2.5 billion USD Dung Quat oil refinery will be capable of processing 6.5 million tonnes of crude oil per year and refine 33 percent of the country’s entire demand for petrol and oil. Its products will include protylen, liquefied petroleum gas (LPG), lead-free petrol, diesel oil and fuel oil.
PVI is now the sole insurer for the refinery, providing insurance services from design to the refinery’s initial test run.
Source: VNA
Petrovietnam insurance arm seeks listing licence
Petrovietnam Insurance Corporation (PVI), Vietnam's third-largest insurer, has sought to list all its 50 million shares on the over-the-counter Hanoi stock market, the exchange said on Thursday.
Hanoi-based PVI, the insurance arm of state oil and gas Petrovietnam group, needed to provide additional information to its listing application before receiving a licence, the market authority said in a statement.
Shares in PVI were 80,000 dong to 82,000 dong ($5) on the unofficial markets, valuing the firm at $250 million.
Vietnam's insurance sector has grown rapidly in recent years as economic growth was more than 8 percent in 2005 and 2006. The government expects 9 percent growth in the second half of this year, up from 7.87 percent in the first half.
The growth potential for insurance in the country of 85 million people is huge as Vietnam spent $11 per head on insurance last year, up from $10 in 2005, compared with $46.3 in China, industry figures show.
Last month, PVI raised nearly $47 million by auctioning 10 million shares at an average 75,499 dong ($4.7) each, of which foreign investors bought more than 1.9 million.
The sale was part of PVI's plan to issue more than 35 million shares, with proceeds going to building three oil tankers, buying stakes in two financial firms and a power plant construction firm in Laos.
The state now owns 76 percent of PVI, outside investors have 23.46 percent and employees hold 0.54 percent.
Last year, PVI had an 18.09 percent market share of Vietnam's non-life insurance market, making it the third biggest after Bao Viet, which had a 34.94 percent share, and Bao Minh (BMI) with 21.29 percent, industry reports said.
PVI has been expanding from its core insurance business since early 2007 to areas such as crude oil production, banking, stock broking and cement production.
PVI said its audited net profit jumped 51.7 percent to 44 billion dong ($2.73 million) last year from 2005 following a 65.6-percent surge in insurance premiums to $72 million.
It had revenues of 1.2 trillion dong ($74.4 million) in the first half of this year, or 65 percent of its annual target.
Source: Reuters
Hanoi-based PVI, the insurance arm of state oil and gas Petrovietnam group, needed to provide additional information to its listing application before receiving a licence, the market authority said in a statement.
Shares in PVI were 80,000 dong to 82,000 dong ($5) on the unofficial markets, valuing the firm at $250 million.
Vietnam's insurance sector has grown rapidly in recent years as economic growth was more than 8 percent in 2005 and 2006. The government expects 9 percent growth in the second half of this year, up from 7.87 percent in the first half.
The growth potential for insurance in the country of 85 million people is huge as Vietnam spent $11 per head on insurance last year, up from $10 in 2005, compared with $46.3 in China, industry figures show.
Last month, PVI raised nearly $47 million by auctioning 10 million shares at an average 75,499 dong ($4.7) each, of which foreign investors bought more than 1.9 million.
The sale was part of PVI's plan to issue more than 35 million shares, with proceeds going to building three oil tankers, buying stakes in two financial firms and a power plant construction firm in Laos.
The state now owns 76 percent of PVI, outside investors have 23.46 percent and employees hold 0.54 percent.
Last year, PVI had an 18.09 percent market share of Vietnam's non-life insurance market, making it the third biggest after Bao Viet, which had a 34.94 percent share, and Bao Minh (BMI) with 21.29 percent, industry reports said.
PVI has been expanding from its core insurance business since early 2007 to areas such as crude oil production, banking, stock broking and cement production.
PVI said its audited net profit jumped 51.7 percent to 44 billion dong ($2.73 million) last year from 2005 following a 65.6-percent surge in insurance premiums to $72 million.
It had revenues of 1.2 trillion dong ($74.4 million) in the first half of this year, or 65 percent of its annual target.
Source: Reuters
Wednesday, July 04, 2007
Bao Viet avoids holding second auction
Insurance giant Bao Viet, the May 31st IPO of which fell short of expectations, will not have to hold a second share auction since the number of shares purchased in the initial auction has exceeded 70 per cent of the total shares offered, according to Bao Viet chairman Le Quang Binh.
A preliminary calculation, made three days following the June 26 deadline for winning investors to pay for the shares they had won, had indicated that unsold shares were less than 30 per cent of the issue.
Binh announced at that time that, if the proportion of unsold shares was more than 30 per cent, Bao Viet would be forced to conduct a second auction to sell the remaining shares.
Having escaped that fate, Binh said, the corporation would submit to the Ministry of Finance a specific plan for selling the abandoned stake, pursuant to regulations in Circular No 95/2006/TT-BTC dated October 12, 2006.
Under the plan, investors could negotiate to buy the remaining shares at a minimum price of VND73,910 (US$4.59) per share, the average winning price in the IPO.
If the shares fail to sell, Bao Viet would seek the ministry’s permission to adjust its charter capital and the proportion of State holdings.
The next sale would be conducted after Bao Viet has the official results of the initial auction and would not be delayed until foreign strategic partners are selected, Binh noted.
Selection of foreign strategic partners was expected this month, with many foreign financial and insurance institutions having expressed interest in investing in Bao Viet.
The criteria for selection would be partners who can offer high bids and large technical support, Binh said.
"We can lower the price at which shares will be sold for strategic partners if they can commit to give us great technical support," Binh said. "The target of Bao Viet’s equitisation is not only to enhance financial capacity but also improve management skills, technology application and operational experience."
It was likely that Bao Viet would choose only one or two foreign strategic investors, Binh stressed.
Bao Viet has chosen three domestic strategic investors so far: VNPT, which holds 3.25 per cent of shares; Vinashin, which holds 3 per cent; and the Southern Airports Services Co (Sasco), which holds 0.75 per cent.
Source: VNS
A preliminary calculation, made three days following the June 26 deadline for winning investors to pay for the shares they had won, had indicated that unsold shares were less than 30 per cent of the issue.
Binh announced at that time that, if the proportion of unsold shares was more than 30 per cent, Bao Viet would be forced to conduct a second auction to sell the remaining shares.
Having escaped that fate, Binh said, the corporation would submit to the Ministry of Finance a specific plan for selling the abandoned stake, pursuant to regulations in Circular No 95/2006/TT-BTC dated October 12, 2006.
Under the plan, investors could negotiate to buy the remaining shares at a minimum price of VND73,910 (US$4.59) per share, the average winning price in the IPO.
If the shares fail to sell, Bao Viet would seek the ministry’s permission to adjust its charter capital and the proportion of State holdings.
The next sale would be conducted after Bao Viet has the official results of the initial auction and would not be delayed until foreign strategic partners are selected, Binh noted.
Selection of foreign strategic partners was expected this month, with many foreign financial and insurance institutions having expressed interest in investing in Bao Viet.
The criteria for selection would be partners who can offer high bids and large technical support, Binh said.
"We can lower the price at which shares will be sold for strategic partners if they can commit to give us great technical support," Binh said. "The target of Bao Viet’s equitisation is not only to enhance financial capacity but also improve management skills, technology application and operational experience."
It was likely that Bao Viet would choose only one or two foreign strategic investors, Binh stressed.
Bao Viet has chosen three domestic strategic investors so far: VNPT, which holds 3.25 per cent of shares; Vinashin, which holds 3 per cent; and the Southern Airports Services Co (Sasco), which holds 0.75 per cent.
Source: VNS
Friday, June 29, 2007
Life insurance still facing crisis
The crisis in the life insurance sector is in its third year without any sign of ending as the numbers of new contracts and agents continue to fall.
Meanwhile, life insurance companies haven’t sat together yet to confront the fierce competition of other capital raising channels in the market, such as banks and the stock market.
According to the Vietnam Insurance Association, the 2006 premium of life insurance firms reaches nearly VND8,500 billion (US$531.25 million), up by 4.34% compared to 2005.
Of this number, the total premium from new contracts is VND1,289 billion ($80.56 million), equivalent to 97.6% of 2005, the lowest level since 2000.
Vietnamese people are abandoning life insurance and this fact is seen through the number of new contracts.
In 2006, the number of new contracts (for major life insurance products only) is 488,000, a fall of 17.1% over 2005. This fall means that the premiums collected in the years after 2006 will be low.
In addition, the number of cancelled contracts has been increasing. Clients canceling their life insurance contracts means that they will not continue to pay more money and suffer losses because they feel that life insurance products are less attractive than banking deposits or investing in stocks. In 2006, 431,023 contracts were canceled.
However, the major problem that threatens the development of life insurance companies is not the reduction of revenue growth, but the departure of agents.
Last year AIA had 8,632 agents, a reduction of up to 52.28% compared to 2005. The figures are 21,529 and 15.44% for Bao Viet Nhan Tho; 2,821 and 24.21% for Manulife; 20,980 and 44.53% for Prudential. Dai-ichi Life saw the lowest reduction of agents, with 2.44%. Only ACE Life had the number of its agents increase in 2006.
Notably, around 60% of the current agents are new ones. The change of agents can affect the quality of customer care services and the trust of customers in life insurers.
One of the reasons that have made customers neglect life insurance is that life insurance products are still simple and unattractive.
Life insurers now offer around 100 products but most of them are still death insurance adding savings. Vietnamese people don’t want to buy insurance for accidents or death while savings products have too low dividends.
Life insurance companies mainly invest premiums into bonds to gain safety so the profit they earn is only 12-13% per year. As a result, dividends paid to clients by life insurance firms is up to 6-8% per year only, much lower than banking interest rates and securities.
In Asia, life insurance is no longer based on death insurance and savings products but ‘revolutionary’ products such as insurance-investment or retirement insurance (as a support for compulsory social insurance).
In Vietnam, insurance-investment products (depending on contracts signed with clients, insurance firms can use part of the premium to invest in investment funds to bring higher profit for insurance buyers) have been prepared by some foreign-invested insurance companies for years but they have not been applied yet.
There are two reasons. The first is the lack of a legal framework. Only recently the Finance Ministry approved a document on the supply of life insurance-investment products. An official of the Finance Ministry said that these were new products and the ministry needed time to evaluate them.
However, some said that the Finance Ministry wanted to wait till Bao Viet Nhan Tho was ready to provide this product to allow the offer of this product in Vietnam. This product is considered a breakthrough for life insurance firms, while Bao Viet is under the aegis of the Finance Ministry so the ministry can’t let foreign companies be in advance of Bao Viet.
The lateness in offering this product to the market is perhaps not because it is too complicated but the intention of management agencies.
The second is Vietnam still has too few investment funds. Insurance firms can work with several funds like VF1, PRUBF1 and several unlisted funds. Insurance-investment products don’t allow insurance companies to directly invest in stocks so they may have to establish funds PRUBF1 of Prudential.
When will the life insurance market regains its growth? It is unclear. In the crisis, there are still businesses that gain high growth rate like ACE Life but the scale of ACE Life is too small, accounting for 0.62% of the life insurance market only (statistics by December 31, 2006).
Source: VNE
Meanwhile, life insurance companies haven’t sat together yet to confront the fierce competition of other capital raising channels in the market, such as banks and the stock market.
According to the Vietnam Insurance Association, the 2006 premium of life insurance firms reaches nearly VND8,500 billion (US$531.25 million), up by 4.34% compared to 2005.
Of this number, the total premium from new contracts is VND1,289 billion ($80.56 million), equivalent to 97.6% of 2005, the lowest level since 2000.
Vietnamese people are abandoning life insurance and this fact is seen through the number of new contracts.
In 2006, the number of new contracts (for major life insurance products only) is 488,000, a fall of 17.1% over 2005. This fall means that the premiums collected in the years after 2006 will be low.
In addition, the number of cancelled contracts has been increasing. Clients canceling their life insurance contracts means that they will not continue to pay more money and suffer losses because they feel that life insurance products are less attractive than banking deposits or investing in stocks. In 2006, 431,023 contracts were canceled.
However, the major problem that threatens the development of life insurance companies is not the reduction of revenue growth, but the departure of agents.
Last year AIA had 8,632 agents, a reduction of up to 52.28% compared to 2005. The figures are 21,529 and 15.44% for Bao Viet Nhan Tho; 2,821 and 24.21% for Manulife; 20,980 and 44.53% for Prudential. Dai-ichi Life saw the lowest reduction of agents, with 2.44%. Only ACE Life had the number of its agents increase in 2006.
Notably, around 60% of the current agents are new ones. The change of agents can affect the quality of customer care services and the trust of customers in life insurers.
One of the reasons that have made customers neglect life insurance is that life insurance products are still simple and unattractive.
Life insurers now offer around 100 products but most of them are still death insurance adding savings. Vietnamese people don’t want to buy insurance for accidents or death while savings products have too low dividends.
Life insurance companies mainly invest premiums into bonds to gain safety so the profit they earn is only 12-13% per year. As a result, dividends paid to clients by life insurance firms is up to 6-8% per year only, much lower than banking interest rates and securities.
In Asia, life insurance is no longer based on death insurance and savings products but ‘revolutionary’ products such as insurance-investment or retirement insurance (as a support for compulsory social insurance).
In Vietnam, insurance-investment products (depending on contracts signed with clients, insurance firms can use part of the premium to invest in investment funds to bring higher profit for insurance buyers) have been prepared by some foreign-invested insurance companies for years but they have not been applied yet.
There are two reasons. The first is the lack of a legal framework. Only recently the Finance Ministry approved a document on the supply of life insurance-investment products. An official of the Finance Ministry said that these were new products and the ministry needed time to evaluate them.
However, some said that the Finance Ministry wanted to wait till Bao Viet Nhan Tho was ready to provide this product to allow the offer of this product in Vietnam. This product is considered a breakthrough for life insurance firms, while Bao Viet is under the aegis of the Finance Ministry so the ministry can’t let foreign companies be in advance of Bao Viet.
The lateness in offering this product to the market is perhaps not because it is too complicated but the intention of management agencies.
The second is Vietnam still has too few investment funds. Insurance firms can work with several funds like VF1, PRUBF1 and several unlisted funds. Insurance-investment products don’t allow insurance companies to directly invest in stocks so they may have to establish funds PRUBF1 of Prudential.
When will the life insurance market regains its growth? It is unclear. In the crisis, there are still businesses that gain high growth rate like ACE Life but the scale of ACE Life is too small, accounting for 0.62% of the life insurance market only (statistics by December 31, 2006).
Source: VNE
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