PVI proposes sweeping changes

To kick-start the move, the insurance giant’s board of directors has submitted a proposal on restructuring the company to its general shareholders meeting. Accordingly, PetroVietnam Insurance (PVI) will be organised into a parent company, subsidiaries and affiliates. Insurance will, however, remain its core business.

Under the proposed changes, the parent company - to be named PVI Holdings - will control management and operations of subsidiaries and affiliates. It will also take the lead in financial investments and business in other sectors.

Meanwhile, the subsidiaries and affiliates will specialise in life-insurance, non-life insurance, re-insurance, funds management, asset managements, securities and other financial sectors.

Of the subsidiaries, PVI Insurance will be wholly owned by the parent company while PVI Reinsurance will be 51 per cent owned by PVI Holdings. The other subsidiaries, comprising PV Life, PVI Invest, PV Media, PVI Fund and a hospital of the group will see a 35 per cent stake held by the parent company.

In terms of the affiliates, the parent company will hold a 30 per cent stake in PVI-Tech which specialises in researching and investing in new technologies for the group.

PVI Holdings will also sniff out profitable companies to link up with.

According to the proposal, PVI will raise its equity to the tune of between VND5 trillion ($242 million) and VND7.2 trillion ($348 million) by 2015, which is a rise from current the VND1.6 trillion ($77.3 million).

Its equity will first be increased by VND3.6 trillion ($174 million) in 2011-2012 via private placement and allocating shares to existing shareholders.

“The added funds will be used for creating charter capital for new subsidiaries, raising fund for existing ones and upgrading the current infrastructure,” stated the proposal.

The proposal also said the group’s stock would be kept intact under the code PVI and that it would remain listed on the Hanoi Stock Exchange.

In the non-life insurance sector, PVI is now the largest in terms of equity and total assets and has the huge great advantage of wholly owning the domestic energy insurance market. The company’s strong growth has prompted it to expand into sectors beyond its core non-life insurance business. It is a move which has created some operational problems including low-efficiency investments, a poor capacity to manage risk according to PVI’s board of directors.

“Restructuring has become essential for the company to satisfy its future development,” said PVI’s new business proposal.

The company aims to earn a pre-tax profit of VND420 billion ($20 million) this year, a 25 per cent increase against last year.