The logo of BIDV Insurance Corporation (BIC) - one of the leading non-life insurers in Vietnam. (Photo thoibaotaichinhvietnam.vn)Hanoi (VNS/VNA) - State divestment is expected to lure foreign investors into andlift Vietnam’s non-life insurance market.
Among the major State-owned insurers are PVI Insurance, Bao MinhInsurance and BIDV Insurance.
PVI Insurance was on the list of companies that the National Oiland Gas Group (PVN) had to divest from in 2019.
But the divestment did not happen. The major shareholdersin PVI are German firm HDI Global SE and PVN.
The German insurer holds 42.91 percent while PVN has 35.47percent.
HDI Global SE was planning to raise its stake in PVI Insurancewhen the Government sold its share in the firm, according to BIDVSecurities Corp (BSC).
Bao Minh Insurance has been on the must-sell list since 2017with the divestment expected to be completed in 2020. The company has made some amendments to its businessregistration to allow foreign investors to increase their holdings in thefirm.
The total insurance revenue of the sector in 2019 was estimatedat 160.2 trillion VND (6.9 billion USD), up 20.3 percent on-year.
Of the total figure, non-life insurance sales were worth 52.4trillion VND, an annual rise of 11.6 percent.
The non-life insurance market has room for furtherdevelopment in 2020, BSC said in a recent report, noting that Vietnam’s population is young and the country’s average incomegrows 7 percent each year.
According to BSC, the percentage of Vietnamese people buying non-life insuranceproducts was low (1.3 percent) compared to those in emerging markets (3-4percent). Spending on non-life insurance products was only 21 USD percapita, which is comparatively low to emerging markets that reached 70USD per capita, the brokerage said.
It said large-cap firms are actively increasing their market shares andoffering new products to win customers, which could help them raise corerevenues and market shares during the year.
In 2020, businesses are expected to cut corporate management andadministration costs, BSC said, adding the non-life insurance market could grow11 percent on-year in 2020.
But the outbreak of the coronavirus pandemic, named COVID-19,could dampen corporate earnings in the first three months of 2020, according tothe Ministry of Finance.
Insurers may have to extract a part of their earnings this yearto hedge the risks for China-invested businesses, which have struggled with thelack of Chinese employees amid travel controls between the two countries.
These controls would also reduce the number of touristsvisiting Vietnam, and insurers may have to take care of contracts signed withlocal travel businesses.
In addition, after the pandemic is declared over or thesituation improves at least in the short term, insurers may face financialclaims from customers who want the funding for medical treatment andquarantine expenses./.
