Foreign investors covet Vietnam’s $28 bln non-life insurance market

Vietnam’s non-life insurance market, expected to grow tenfold to around $28 billion by 2030, is drawing increasing interest from foreign investors, industry insiders say.

Ten top insurers in the country including PVI, Bao Viet, PTI, Bao Minh and MIC command 78% of the non-life insurance market, according to the Insurance Association of Vietnam.

These market leaders have become attractive propositions for trategic foreign investors, it adds.

PVI Holdings, a subsidiary of state-owned Petrovietnam that’s listed on the Ho Chi Minh Stock Exchage (HoSE) as PVI, has received investments from Germany’s HDI Global SE, Oman investment fund Funderburk Lighthouse and the International Finance Corporation (IFC).

French insurer AXA and Hong Kong’s Firstland reportedly hold a combined 20% stake in Bao Minh Insurance Corporation (HoSE: BMI).

South Korea’s Hyundai Marine & Fire Insurance holds a 25% stake in VietinBank Insurance (VBI), making it the second-largest shareholder, behind VietinBank.

Since 2018, Thailand-based Bangkok Insurance and China’s PICC Property and Casualty Company Limited (PICC P&C) have cooperated with Bao Viet Holdings (HoSE: BVH).

DB Insurance, South Korea’s second-biggest insurer, holds a 37% stake in Post-Telecommunication Joint Stock Insurance Corporation (PTI).

This indicates confidence that their investments are profitable. However, despite being strategic investors, foreign partners’ involvement in the Vietnamese non-life insurance market is yet to significantly impact human resources, management, technology, and market influence.

However, several experts have predicted that as the market reaches a certain level of development and requires a qualitative breakthrough, foreign investors could play a more prominent role in the firms they have invested in.

They have said that when this happens, large insurers will further strengthen their positions, while smaller players will face increased competition for shrinking market shares.

Small firms, big ambitions

The remaining 22% of Vietnam’s non-life insurance market share is held by 22 firms smaller than the big players. These include BIDV Insurance Corporation (HoSE: BIC), Saigon-Hanoi Insurance (BSH), PJICO Insurance Corporation (HoSE: PGI), Vietnam National Aviation Insurance Corporation (VNI), Global Insurance Corporation (GIC), and Agriculture Bank Insurance Joint Stock Corporation (ABIC).

The smaller firms have also attracted significant foreign investments.

South Korean insurer DB Insurance, which has invested in one of the bigger players, PTI, has also poured capital into smaller insurers VNI and BSH, holding stakes of 75% and 37%, respectively.

Meanwhile, BIC is nursing a big ambition to become a top five non-life insurer by market share by 2025. In this, it has the support of Canada-based insurer FairFax Asia, which holds a 35% stake.

This year, the company has targeted VND5.6 trillion ($220.1 million) in revenue from insurance premiums, up 16.7% year-on-year. Last year, its insurance premiums from new policies surged 27.9% to VND4.6 trillion ($180.9 million), 10 times higher than the overall market’s growth.

PJICO, 20% owned by Samsung Fire & Marine Insurance, has targeted VND4.77 trillion ($187.5 million) in revenue from insurance premiums this year, with an annual growth rate of 3-5% in insurance premiums from new policies.

Last year, the firm’s insurance premiums from new policies topped VND4 trillion ($157.2 million) for the first time. Its pre-tax profit surpassed the 2023 plan by 11% to reach VND283.68 billion ($10.36 million), up 12.3% from 2022.

However, the performance of the smaller insurers pales beside their larger peers. In 2023, the consolidated revenues of PVI, Bao Viet Holdings and Bao Minh were VND16.08 trillion ($632.2 million), VND11.75 trillion ($461.95 million) and VND6.6 trillion ($259.43 million), respectively.

Tough going

Amid intense competition, the smaller insurers have seen their market shares shrink despite foreign investments.

ABIC's market share declined to 2.8% in 2023 from 3.3% in 2019. In this period, GIC's share fell from 2.6% to 2.2% and that of Bao Long Insurance Corporation decreased from 2.2% to 1.8%.

Most small insurers have struggled with the competition, prompting them to seek overseas partners for financial, administrative and market support. However, the outcomes of the outreach have fallen short of expectations.

The association says that overall, Vietnam’s non-life insurance market will continue to be dominated by the top 10 insurers. It adds that smaller firms will keep struggling to secure a firm foothold in the market and their foreign partners will face longer wait times and higher risks.