Non-life insurers reap massive profits in 2021 as stock market rallies

Vietnam's listed non-life insurers gained windfall profits in 2021 on the stock market’s rallies, though the segment’s premium grew only 4%.

The entire insurance market’s premium in 2021 was VND217.34 trillion ($9.49 billion), up 16.71% from 2020. Of this, non-life insurance revenue was $2.53 billion, a 3.98% rise year-on-year, which is lower than the 6.63% growth of 2020, according to Vietnam Insurance Association.

Non-life insurers’ after-tax profit, however, grew 27.4%, with more than a dozen of them reporting double-digit growth.

Notably, Petrolimex Insurance Corporation (PJICO) achieved a record-high profit of more than VND350 billion ($15.28 million), doubling the tally in 2020. Other companies with leading non-life insurance market shares like Bao Viet, Bao Minh and PTI posted profit growth of 20-30%.

Major insurer Bao Viet Holdings’ pre-tax profit climbed 20.5% to VND2.37 trillion ($103 million), with net non-life insurance profit nearly tripling from the previous year.

Analysts said the stock market’s vibrancy in 2021 was the primary driving force behind the insurers’ strong profit growth.

Bao Viet Holdings’ financial activities generated VND1.88 trillion ($81.8 million) in profit, up 34% year-on-year, accounting for 79% of the group’s profit.

Bao Minh Insurance recorded VND69 billion ($3 million) in fourth quarter profit, 1.5 times higher than the same period last year, thanks to revenue from stock trading and dividends which skyrocketed from less than VND2 billion ($87,330) to VND62.2 billion ($2.7 million), raising its full-year profits by 28%.

Some businesses are expanding to gain more market shares. Vietnam National Aviation Insurance Corporation (VNI) has expanded its vehicle and health insurance business which drove its premium revenue up by 32%.

BIDV Insurance Corporation (BIC) saw its health and human accident insurance business grow strongest in terms of premium which rose 33% to VND869 billion ($37.96 million), making for 29.2%, up from 24.5% last year. BIC aims to increase premium revenue by an average of 20% per year.

The market also witnessed the entry of newcomers, especially insurance technology (insurtech) companies. OPES Insurance, nearly 4 years old, achieved a premium revenue of over VND813 billion ($35.4 million) over 11 months of 2021, up 78% year-on-year.

Data from 12 insurance companies listed on the Vietnamese bourses showed that they had a 13.5% growth in total assets in 2021, to nearly VND250 trillion ($10.9 billion) against the beginning of the year. The increase in equity capital was low, mainly from profit accumulation.

The number of share issuances by these firms has been fairly limited in recent years. Particularly, in 2021, charter capital increased primarily through the issuance of shares to pay dividends.

Their investment portfolios still focused on fixed income financial assets, including bank deposits, government bonds or corporate bonds.

In the middle of the year, some insurance companies expanded investment in securities to cash in on positive market moves, resulting in a significant financial return. Investments in cash and fixed-income assets of most ensurers increased against the beginning of the year.

The fact that State Bank is likely to raise deposit interest rate due to inflationary pressures might help insurance companies improve financial income as their portfolio is still predominantly comprised of securities kept until maturity, according to Bao Viet Securities JSC.