Insurance groups urged to go public when viable

According to data from the Vietnam Insurance Association, in the first three quarters of 2022, the total insurance premium revenue of the whole market was estimated at $7.5 billion, up 16.9 per cent over the same period in 2021.

Insurance groups urged to go public when viable, illustration photo

In this, non-life insurance revenues were estimated at $2.1 billion, up 19.1 per cent over the same period last year; and life insurance is estimated at $5.4 billion, up 16.2 per cent. Despite certain difficulties, revenues for both segments had started to grow again after Vietnam’s pandemic peak.

Although most domestic insurance companies have opened room for overseas involvement up to 100 per cent, the majority of share purchase and sale deals still belong to domestic investors.

In terms of legality, based on Vietnam’s international commitments and trade agreements in insurance services, Vietnam does not limit the ratio of capital contributed by foreign parties. The revised Law on Insurance Business has added regulations reaffirming that foreign investors are allowed to own shares or contributed capital up to 100 per cent of the charter capital of insurance and reinsurance enterprises.

The adjustment in strategy from parent corporations abroad has created favourable conditions for domestic investors to participate further in this emerging market.

In a typical case in the past year, Tasco received all of the contributed capital of Groupama Vietnam General Insurance. Likewise, AAA Insurance JSC was transferred to Bamboo Capital Group. After that major deal, AAA Insurance expanded its network of branches and transaction offices nationwide. Currently, AAA boasts over 50 branches and 100 transaction offices in Vietnam.

In the life insurance sector, FWD Assurance Vietnam announced the conversion of 100 per cent ownership of its charter capital to a group of domestic investors.

Aside from the limited foreign capital proportion, the number of listed insurance companies still accounts for a humble ratio. According to the Ministry of Finance (MoF), there are currently seven listed insurers on the Hanoi and Ho Chi Minh City bourses. Two are in the reinsurance sector, with the rest in the non-life insurance sector.

In addition, there are still 12 enterprises operating in the form of joint-stock companies but not yet listed, including Bao Long Insurance, VietinBank Insurance, Vien Dong Insurance, Phu Hung, and BSH. The number of listed insurance firms represents just over one-third of the total number of joint-stock insurance companies.

“Going public and facilitating a corporate credit rating will help insurance businesses improve their financial capacity, governance, and competitiveness,” the MoF noted.

Meanwhile, Bao Viet Securities BVSC said, “Vietnam consistently ranks among the world’s top nations with the greatest growth rate of premium revenue, with an average annual growth rate of above 10 per cent. Non-life insurers in Vietnam will swiftly resume their 15 per cent annual growth rate thanks to the country’s large potential. Furthermore, insurance stocks will rise in value as a result of a government initiative to reduce its holdings in publicly traded insurance firms to attract more foreign investors.”

Towards mid-year, during trips to the Vietnamese market, senior leaders of several foreign insurance groups had acknowledged that the country is still a key market in the life segment.

“Vietnam is the new Asian tiger, and we are really proud of what this market has to offer,” said Damien Green, president and CEO of Manulife Asia, adding that the company is committed to a long-term investment in the country’s life and health insurance market.

Tina Nguyen, Generali Vietnam’s general director, assessed, “The Vietnamese market, with great development potential of the life insurance industry as well as many economic and political advantages, has always been one of our key markets in terms of people and technology, as well as financial potential.”

Last year, Generali Group poured another $14.9 million into Generali Vietnam, raising the company’s charter capital to over $300 million.

Insurance sector seeks solutions to increase access for all Policymakers, insurers, and experts gathered at the Vietnam Actuarial Conference (VAC) 2022 on November 24 to discuss possible solutions to provide better insurance access for Vietnamese customers.