Insurance firms struggle to attract investors despite good performance

Share prices of BVH decreased more than 4 percent despite an increase of 29.4 percent in the company's profit after taxes. (Photo: baoviet.com)

Hanoi - Insurance companies performed well in Vietnam during the COVID-19 pandemic, but their shares have not attracted much attention from investors.

There are 11 insurance firms listed in Vietnam's stock market with three companies on UPCOM.

In 2020, Bao Minh Insurance Corporation (BMI) shares recorded a growth of nearly 22 percent, while Bao Viet Holdings (BVH) and BIDV Insurance Corporation (BIC) decreased by 4.3 percent and 9 percent respectively.

In the third quarter of 2020, BMI reported revenue from premiums of 905.48 billion VND, an increase of 2.1 percent year-on-year, while profit before tax increased nearly 47 percent to 78.89 billion VND, according to third quarter financial results. In the first nine months of 2020, profit after taxes reached more than 158.4 billion VND, up 15 percent year-on-year.

BVH and BIC also witnessed big returns during the same period. BVH earned 9,593 billion VND from premiums in the third quarter, up 6.2 percent year-on-year, while profit after tax up 29.4 percent to 473.31 billion VND.

Similarly, BIC saw an increase of nearly 13 percent year-on-year to 697.3 billion VND in premiums revenue, with profit after tax of 755.9 billion VND, up nearly 21 percent.

Data from the Ministry of Finance showed in the first eleven months of 2020, premiums revenue from insurance firms rose 16 percent year-on-year to 449.4 trillion VND. Of which, revenue from non-life insurance reached 54.2 trillion VND, and from life insurance 111.6 trillion VND.

In 2020, total premiums revenue was expected to reach 182.7 trillion VND, up 15 percent year-on-year.

The growth of the insurance market has been stable so far, but its size in the market is still small compared to its capability. Experts see further room for the market to expand.

According to a report from Bao Viet Securities, Vietnam is among countries with the fastest growth in the insurance sector during the 2016 – 2020 period, on the back of perse needs in social welfare and medical care, as well as rising insurance needs in retirement, especially in a health crisis like last year.

Some companies, such as BVH, PVI Holdings (PVI) and Post-Telecommunication Joint Stock Insurance Corporation (PTI), have attracted more new customers than others.

With potential in expanding activities in many areas and connecting to big financial organisations, the demand for capital among insurance providers will increase gradually.

Focus on small companies

Instead of big companies, investors sought more interests in small insurance firms such as Bao Long Insurance Corporation (BLI), Agriculture Bank Insurance Joint Stock Corporation (ABI), PTI or Petrolimex Insurance Corporation (PGI).

In 2020, the price of small insurance companies' shares also rose sharply, such as BLI shares price increased nearly 49 percent, ABI rose 34.8 percent, PTI up 24.3 percent, and PGI up nearly 20 percent.

However, the growth can not be compared to other sectors like banking which was up more than 100 percent, such as Saigon Hanoi Commercial Joint Stock Bank (SHB) which increased more than 153 percent.

Since insurance is a part of the financial sector, it's market expectation is as high as banking or security, Nguyen Hong Khanh, head of analytics of Vietnam International Securities Joint Stock Company (VISE), told tinnhanhchungkhoan.vn. But the number of insurance stocks in the market is still low, so investors' attention is perted to other sectors.

While investors are still searching for new and promising investments, there is a possibility they will only focus on well-known insurance firms with a proven track record and high potential for growth.