Two State-owned insurance firms plan capital divestment to attract foreign investors

Bao Viet Group plans to divest State capital at its insurance firm in the future. (Photo: VNA)

Hanoi - Vietnam's two largest insurance firms – Baoviet Holdings (HoSE: BVH) and PVI Joint Stock Company (HNX: PVI) - have announced plans to divest State capital.

According to analysts, the divestment of State capital in insurance firms could bring opportunities for foreign investors to put their capital in the domestic insurance market, both as shareholders and strategic partners.

At the 2024 annual general meeting of shareholders, BVH's board of directors said that they would develop a plan on reducing the state ownership from 2026 to submit to the shareholders, reported Da tu tai chinh (VietnamFinance) magazine.

According to BVH Acting General Director Nguyen Dinh An, the State capital shares are expected to be maintained at 65 per cent of the firm's capital until the end of 2025. After that, when reducing this State capital to 51 per cent, the firms will issue shares to the existing shareholders to mobilise additional funds.

This plan on divesting State capital was also revealed by BVH at the annual meeting in 2023.

At present, the Ministry of Finance holds more than 482.5 million BVH shares, equivalent to 65 per cent of this firm's capital. State Capital Investment and Trading Corporation (SCIC) holds 22.1 million BHV shares, equivalent to nearly 3 per cent of the capital.

Meanwhile, the Vietnam Oil and Gas Group (Petrovietnam) will divest capital from PVI before the end of 2025, according to the plan on the restructuring project of Petrovietnam until the end of 2025, approved by the Government. PVI is one of seven enterprises that Petrovietnam must divest from them.

At PVI, Petrovietnam holds more than 81.9 million shares, equivalent to 35 per cent of the capital. Despite holding a large stake in PVI, Petrovietnam is not the largest shareholder of this insurance firm.

HDI Global SE, a firm from Germany, is the largest shareholder of PVI holding 38.89 per cent of PVI capital, equivalent to more than 91.1 million shares.

According to experts, these two deals show that Vietnam's insurance market is still attractive to foreign investors.

At BVH's 2024 annual general meeting, Sumitomo Life's representative emphasised their desire to accompany this insurance firm as a strategic partner. Sumitomo Life also said it would be interested in opportunities to increase investment in BVH.

In early 2024, high-level delegations from Talanx Group and HDI Global SE visited PVI's headquarters and emphasised that they would support PVI in all aspects, especially in consulting for governance and risk management.

The State ownership ratio is also high in many non-life insurance firms. At Bao Minh Joint Stock Corporation (HoSE: BMI), SCIC holds more than 61.1 million BMI shares, equivalent to 50.7 per cent of the total capital.

At Petrolimex Insurance Joint Stock Corporation (HoSE: PGI), Vietnam Petroleum Group (Petrolimex) represents State capital of 40.95 per cent, equivalent to more than 45.5 million PGI shares.

State ownership is 52.93 per cent of the capital at Vietnam Agricultural Bank Insurance Joint Stock Company (UPCoM: ABI), 40.36 per cent of the capital at the Vietnam National Reinsurance Joint Stock Corporation (HNX: VNR), and more than 51 per cent of the capital at the BIDV Insurance Joint Stock Corporation (HoSE: BIC).

The insurance sector is one of 59 conditional business sectors, but Vietnam has no limit on the ownership ratio of foreign investors in insurance firms. Many insurance companies, such as PTI, PGI and BMI, have increased ownership ratio for foreign investors to 100 per cent.

The presence of foreign investors is increasing in domestic insurance enterprises. For example, AXA Insurance Finance Group (France) holds 16.65 per cent of BMI's capital.

HDI Global SE (Germany) and Funderburk Lighthouse, an investment fund of the Government of Oman, own 38.89 per cent and 12.61 per cent of the PVI capital, respectively.

Meanwhile, Military Insurance Joint Stock Corporation (MIG), ABI, PTI, BIC and VNR, have also major foreign shareholders.

In early 2024, DB Insurance - a Korean insurance group, became the dominant shareholder in two of Vietnam's insurance enterprises, the Saigon – Hanoi Insurance Joint Stock Corporation (BSH) and the Aviation Insurance Joint Stock Corporation (VNI). This group is also a major shareholder in PTI, holding more than 37 per cent of the capital.

Life insurance players seek to rebuild trust Vietnam’s life insurance industry, noted for its stringent regulations, should enhance product quality, transparency, and stakeholder balance for sustainable development, industry leaders have urged.

Insurance firms to bounce back in 2024 A recent survey conducted by Vietnam Report between May and June found that a remarkable 45.6 per cent of insurance firms expect the insurance industry to grow nearly 5 to 10 per cent in 2024. Nearly 32 per cent of surveyed firms believe the economy will maintain a stable growth rate of 5.5 per cent.

Lack of transparency holds back insurance Sales of newly issued investment-linked insurance policies have plummeted considerably, reflecting broader challenges in the sector and highlighting the need for increased transparency in insurance products.