Bao Minh and Vinare insurers set to go public

These two insurers will also be restructured prior to equitisation and will receive increased capital from the State along with the profits from new share issuances.
The government is to give Bao Minh VND3 billion ($194,800) by next year to meet the VND70 billion ($4.5 million) equitisation requirement under the Law for Insurance companies.
Bao Minh is to then issue shares worth VND500 billion ($32.4 million). The company has set a target of $71.4 million in registered capital by 2010.
The government will retain a major stake in Bao Minh which will continue to focus on the non-life market and provide investment and financial services.
There are plans to merge the company with the PetroVietnam Insurance Company (PVIC) – operating under the Vietnam Oil and Gas Corporation – in the near future.
PVIC operates as a captive insurer in the oil and gas sector but is finding it difficult to secure contracts as the market opens to foreign rivals.
Like Bao Minh, Vinare is to become a joint-stock company, however it will focus on the re-insurance sector.
By 2005, Vinare is expected to fully regulate the country’s re-insurance market, which is to become independent of the international re-insurance market in the aviation, oil and gas sectors.
Vinare will receive at least VND200 billion ($12.9 million) of government funds along with profits from share issuance. If the company fails to reach VND500 billion by 2010, it will capitalise reserves and issue additional shares.
It is hoped that by then Vinare will be financially capable of joining the international re-insurance market.
Vietnam’s largest insurer, Bao Viet, will remain wholly state-owned and is to be developed into a consortium with life, non-life, financial and securities wings.
Its chartered capital will be increased from VND586 billion ($38 million) to VND3 trillion ($194 million) by 2005 and VND5 trillion ($322 million) by 2010.
The strategy also sets out conditions for insurance companies: state-owned insurers cannot use public funds to set up new insurance companies or provide services to a single industry.
The strategy is intended to produce an annual premium turnover growth rate of 24 per cent allowing the market to account for 2.5 per cent of GDP by 2005 and 4.2 per cent by 2010.
Growth in the non-life sector to 2005 is pegged at 16.5 per cent and that of the life sector at 28 per cent.
Under the strategy, insurance companies are to invest in 2005 an amount equalling 14 times that of 2002, which stood at VND6.7 trillion ($430 million).
The sector is to provide jobs for around 150,000 people by 2010, twice the current figure.
In the past 10 years, the insurance market has achieved an average growth rate of 29 per cent per year.