Non-life insurance enterprises ‘live well’

Many non-life insurers on the stock exchange recorded good business results in the first quarter of 2023 in both insurance business and financial activities.

Investment activities flourished at the same time

In general, the first quarter business results of the insurance companies listed on the stock exchange were positive with most of the net revenue from core activities recording positive growth. In which, half of insurance enterprises achieved double-digit net revenue growth and only 1 enterprise had negative growth.

In terms of profit, 7/12 insurance enterprises achieved growth in profit after tax compared to the same period in 2022. Of which, the first three companies were Vietnam National Reinsurance Joint Stock Corporation (Vietnam National Reinsurance Joint Stock Corporation). HNX: VNR), PVI Joint Stock Company (HNX: PVI) and Vietnam Agricultural Bank Insurance Joint Stock Company (UPCoM: ABI). VNR is the enterprise with the most “huge” profit growth in the first quarter, reaching 150% over the same period (2.5 times), equivalent to 237 billion dong. This result has completed half of VNR’s full-year plan, with contributions from both insurance business and financial activities.

The other two enterprises, PVI and ABI, both saw double-digit growth in profit after tax, 18% and 26% respectively, equivalent to VND 269 billion and VND 70.7 billion. The growth drivers of the two companies both come from insurance business and financial activities. As for ABI, thanks to good cost control in the period, the business achieved a higher profit growth than PVI.

Insurance companies such as Bao Minh Joint Stock Corporation (HoSE: BMI), Insurance Joint Stock Corporation Bank for Investment and Development of Vietnam (HoSE: BIC), Bao Viet Group Joint Stock Company (HoSE: BIC), Bao Viet Group Joint Stock Company (HoSE: BIC). HoSE: BVH) and Post and Telecommunications Insurance Corporation (HNX: PTI) respectively achieved growth in profit after tax of 3%, 5%, 7% and 8%, equivalent to VND 73.5 billion, 78.9 billion dong, 546 billion dong and 41 billion dong, of which the majority of them get their thrust from core business activities. Specifically, except for BVH whose net revenue from insurance business was flat in the first quarter, the remaining 3 companies all achieved double-digit growth in core operating net revenue. Specifically, PTI achieved net sales growth of 10%, BMI of 19% and BIC of 40%.

In addition to core activities, financial activities are also the growth drivers of the four insurers mentioned above. In which, BVH alone had a revenue growth of 33% from financial activities, equivalent to nearly VND 3,125 billion, making up for the weak core business.

It is easy to see that the insurance businesses in the profit growth group all have in common that their financial performance is thriving. In which, most of the deposit interest of these enterprises achieved significant growth over the same period in the context that the deposit interest rate level remained high in the late 2022 – early 2023 period.

In addition to the bright colors, a number of insurers in the first quarter had to record a heavy drop in profit after tax. Bao Long Insurance Corporation (UPCoM: BLI) and Aviation Insurance Joint Stock Corporation (UPCoM: AIC) are the two businesses with the biggest decline in profit after tax, down at 81%, respectively. and 75%, equivalent to 24.6 billion VND and 4 billion VND respectively.

Regarding BLI, although the insurance business achieved growth compared to the same period last year, expenses in the period such as compensation expenses and administrative expenses increased by tens of percent, along with financial activities. Poor financial performance made BLI fall into the group of “catastrophic” profit declines in the first quarter. Although AIC managed costs better than BLI, both insurance business and financial activities declined compared to that of BLI. same period, leading to poor profit after tax.

PVI Reinsurance Joint Stock Corporation (HNX: PRE) and Petrolimex Insurance Joint Stock Corporation (HoSE: PGI) respectively saw a 28% decline in profit after tax in the first quarter over the same period last year. and 23%, equivalent to VND 36.5 billion and VND 54.9 billion. In particular, the main reason comes from the increase in expenses during the period such as compensation costs, financial expenses, and administrative expenses. The only insurance company with flat profit in the period was Military Insurance Corporation (HoSE: MIG) with a profit after tax of more than 68 billion dong.

What future for the insurance industry?

Total premium revenue in the first quarter of 2023 was estimated at VND 59,458 billion, up 6.8% over the same period in 2022, of which life insurance premium revenue was estimated at VND 39,588 billion, up 3.1% ; the non-life insurance sector was estimated at VND 19,870 billion, up 15.2%. In fact, the insurance companies listed on the stock exchange, except for BVH, which operates both life and non-life insurance, mainly operated in the non-life sector, which prospered in the first quarter. past.

However, accumulated in the first 4 months of 2023, life insurance premium revenue was estimated at 52,049 billion VND, up 0.5% over the same period last year. life was estimated at 23,289 billion dong, up 2.55% over the same period last year. Thus, both life and non-life insurance premiums decelerated in April 2023.

This is also the time when there are many scandals related to the insurance industry, which significantly affects the psychology of consumers. Trust is a prerequisite factor affecting the decision to buy insurance products. The wavering of consumer confidence will affect the demand for insurance products in the market, not only in the field directly related to controversies such as life insurance but also the non-life insurance sector. It is also difficult to avoid the impact even though it is more indirect.

However, many non-life insurers are still confident with their profit growth plan in 2023. In which, MIG is the one that sets the strongest profit growth target at 75% compared to the actual level. current year 2022. Many other enterprises such as PRE, BIC, and PGI all plan to increase profits by double digits from 10% to 22%. More cautiously, BMI and VNR only plan to grow at 9% and 5%. The few remaining insurers either expect profits to go backwards, sideways or have not yet announced their plans.

In a recent analysis report, VNDirect Securities Company expects the industry’s non-life insurance premium growth to gradually improve in the rest of the year as the supportive policies that the Government and the State Bank of Vietnam countries that have implemented in recent months to stimulate the economy are starting to take effect. VNDirect also expects industrial and commercial insurance lines such as property and casualty insurance to grow better than personal insurance lines, as industrial and commercial insurance will benefit from the Government. The government promoted public investment and FDI inflows remained sustainable.