Insurance industry forecasts less favourable year in 2022

After gaining high growth last year, the insurance industry is forecast to experience a less favourable time in 2022 as many insurers have so far planned lower profit targets or slowingnbsp;growth compared to last year.

An insurance employee checks a car to discuss the compensation with a customer. Compensation costs related transport accidents of insurers last year were low due to social distancing. — Photo tinnhanhchungkhoan.vn

After gaining high growth last year, the insurance industry is forecast to experience a less favourable time in 2022 as many insurers have so far planned lower profit targets or slowing growth compared to last year.

After gaining pre-tax profit of VNĐ306.3 billion in 2021, up 31.34 per cent against the previous year despite the severe impacts of the COVID-19 pandemic, Bảo Minh Insurance Joint Stock Corporation (BMI) has targeted a fairly modest profit growth rate of 10 per cent to VNĐ340 billion this year when the economy has recovered.

Similarly, though Military Insurance Joint Stock Corporation (MIC) submitted its shareholders a plan to increase pre-tax profit by at least 35 per cent, the rise is still lower than the 40 per cent rate targeted in its annual general shareholders' meeting (AGM) in 2021.

For BIDV Insurance Joint Stock Corporation (BIC), the company’s AGM has approved the insurance premium revenue goal of VNĐ3.31 trillion this year, up by 16.4 per cent against 2021, but the pre-tax profit plan is only VNĐ435 billion, down 13.4 per cent against 2021.

Meanwhile, Petrolimex Insurance Joint Stock Corporation (PJICO) has targeted a minimum profit of VNĐ250 billion this year, a decline of about 43 per cent compared with last year.

PVI Insurance Joint Stock Corporation (PVI)’s pre-tax profit plan this year has also been set at only VNĐ911 billion, down 17.26 per cent against last year, while its consolidated revenue has been targeted at more than VNĐ11.65 trillion, up 4.9 per cent.

Similarly, Agriculture Bank Insurance Joint Stock Corporation (ABI) expects a minimum pre-tax profit of VNĐ310 billion this year, nearly 10 per cent less than that in 2021. The pidend payment of the company is planned at 14 per cent, while the insurance premium revenue is targeted to grow by at least 8 per cent.

Post Telecommunication Joint Stock Corporation (PTI) has also aimed at an after-tax profit of VNĐ208 billion in 2022, down by 20.4 per cent compared to 2021.

According to BIC Chairman Trần Xuân Hoàng, his company has targeted a slower growth rate in 2022 as the profit from the investment segment is forecast to grow at a low level as savings interest rates remain low.

Under the current legal regulations, non-life insurers have to use at least 70 per cent of their capital to deposit at banks or buy Government bonds to ensure the insurers’ capital safety. Therefore, though the economic recovery can give non-life insurers opportunities to improve revenue, it will be still difficult for them to increase profits as the majority of their investment portfolios are bank savings and Government bonds, whose interest rates are forecast to remain at low levels this year.

Meanwhile, the profit from the insurance business segment is predicted to decline this year, Hoàng said, explaining the insurance business segment last year enjoyed favourable conditions due to social distancing as the company’s compensation costs related to transport accidents and the cost of health check-ups declined.

In fact, not only BIC, but all other insurers reported the insurance claims for motor vehicle insurance and personal insurance in 2021 were low.

At the recent AGM, PVI General Director Nguyễn Xuân Hòa said in 2022 when all activities gradually resume, the compensation costs are expected to rise, which has partly been shown in Q1 2022.

In addition, some of PVI’s rivals this year have applied price solutions, causing the company to consider lowering insurance premiums to increase its competitiveness. The new policy will cause the company earn less profit this year.

Besides, the uncertainty around the world will also pose risks to PVI’s insurance and financial investment segments, Hòa said.

It is estimated that by the end of the first quarter of 2022, PVI’s revenue reached more than VNĐ3 trillion and Hòa said the company would try its best to meet the yearly target.

According to experts, the main profit of insurance companies still comes from financial investment and insurance activities. Therefore, if there are no big changes in claim and cost management or financial investment, it will be difficult for insurers to generate high profits.

Despite setting lower profit targets for this year, boards of directors of some insurance companies such as PJICO and MIC have so far still committed with their shareholders at the companies’ AGMs to ensure similar pidend payment rates as in 2021. — VNS

Source: VNA
vietnamnews.vn

Related News

Insurance creates trust and peace of mind for customers affected by typhoon No. 3

Insurance creates trust and peace of mind for customers affected by typhoon No. 3

VCN - The Insurance Supervisory Authority (ISA) initially estimated that the total compensation for human and property losses is approximately VND 7,000 billion. However, with the severe damage caused by typhoon No. 3 (Yagi) and the post-storm circulation, these losses will certainly increase.
Insurance brings peace of mind to customers during Yagi typhoon

Insurance brings peace of mind to customers during Yagi typhoon

VCN - The Insurance Supervision Authority (Ministry of Finance) initially estimated that the total amount of insurance paid for human and property damage was about VND7,000 billion. However, with the severe damage caused by storm No. 3 (Yagi Typhoon) and the post-storm circulation, this number will certainly increase.
The insurance industry is expected to grow by 10 percent in 2024

The insurance industry is expected to grow by 10 percent in 2024

VCN - Despite many difficulties, thanks to timely instructions from regulatory agencies, the introduction of the Insurance Business Law (2023) along with guiding decrees and circulars and the efforts of businesses, the insurance industry is still making significant progress, expected to grow from 5-10 percent in 2024.
Under amended law, it needs clarification on cooperation between commercial banks and insurance companies

Under amended law, it needs clarification on cooperation between commercial banks and insurance companies

VCN - Banks and insurance businesses have different understandings of the regulations in the Law on Credit Institutions 2024.

Latest News

Monetary policy forecast unlikely to loosen further

Monetary policy forecast unlikely to loosen further

It will be difficult for the State Bank of Vietnam (SBV) to further loosen monetary policy due to a rising USD/VNĐ exchange rate pressure, experts said.
World Bank outlines path for Vietnam to reach high income status

World Bank outlines path for Vietnam to reach high income status

The World Bank (WB) has released a report which explores how Vietnam can upgrade its participation in global value chains to become a high-income country by 2045.
Strictly control public debt and ensure national financial security  2025

Strictly control public debt and ensure national financial security 2025

VCN – In order to achieve goal of strictly managing public debt and maintaining security and safety of the national financial system in 2025, it is necessary to ensure the borrowings and repayments of public debts is within the approved estimate; closely monitor public debt indicators to ensure that they are within the ceiling and warning thresholds approved by the National Assembly.
Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

VCN - On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws. Concluding the session, Vice Chairman of the National Assembly Nguyen Duc Hai emphasized the need for the Government to direct the drafting body and relevant agencies to collaborate closely to finalize a persuasive and widely supported report, ensuring the quality of the draft law for the National Assembly's consideration and decision.

More News

Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

VCN - According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
State-owned securities company trails competitors

State-owned securities company trails competitors

Contrary to the outstanding performances in the banking sector, the securities subsidiaries of major banks have yet to fully leverage their potential, despite numerous inherent advantages.
Strengthening the financial “health” of state-owned enterprises

Strengthening the financial “health” of state-owned enterprises

VCN - The state economy plays a key role in the socio-economic development process, but it is necessary to strengthen the financial health and competitiveness of state-owned enterprises (SOEs).
U.S. Treasury continues to affirm Vietnam does not manipulate currency

U.S. Treasury continues to affirm Vietnam does not manipulate currency

VCN - In its latest report, the U.S. Department of the Treasury has positively assessed Vietnam's monetary policy, reaffirming that Vietnam does not engage in currency manipulation.
Exchange rate fluctuations bring huge profits to many banks

Exchange rate fluctuations bring huge profits to many banks

Net profits from the foreign exchange trading segment of many banks have gained positive results thanks to a strong USD/VNĐ exchange rate fluctuations this year.
A “picture” of bank profits in the first nine months of 2024

A “picture” of bank profits in the first nine months of 2024

VCN - Pre-tax profits for banks during the first nine months of 2024 remained positive, exceeding 200 trillion VND, solidifying the sector's position as a market leader.
Many challenges in restructuring public finance

Many challenges in restructuring public finance

VCN - Restructuring public finance is an important step to improve state financial management, ensure resources are allocated reasonably and effectively, contributing to the country's sustainable development. In addition to the achieved results, the process of accelerating public finance restructuring also faces many pressures.
Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

VCN - E-commerce platforms that declare and pay taxes on behalf of traders not only help to reduce the number of tax declaration points but also reduce the cost of compliance with administrative procedures for the whole society because only one point as the e-commerce trading platform implements tax deduction, payment and declaration on behalf of tens, hundreds of thousands of individuals and business households on the platform.
Disbursement of public investment must be accelerated: Deputy PM

Disbursement of public investment must be accelerated: Deputy PM

Deputy Prime Minister Ho Duc Phoc has called on ministries, agencies, and localities to accelerate the disbursement of public investment from now until the year-end and further tighten investment management.
Read More

Your care

Latest Most read
Monetary policy forecast unlikely to loosen further

Monetary policy forecast unlikely to loosen further

It will be difficult for the State Bank of Vietnam (SBV) to further loosen monetary policy due to a rising USD/VNĐ exchange rate pressure, experts said.
World Bank outlines path for Vietnam to reach high income status

World Bank outlines path for Vietnam to reach high income status

The World Bank (WB) has released a report which explores how Vietnam can upgrade its participation in global value chains to become a high-income country by 2045.
Strictly control public debt and ensure national financial security  2025

Strictly control public debt and ensure national financial security 2025

VCN - According to the plan for borrowing and repaying public debt and foreign debt of the country in 2025, the total borrowing demand of the Government in the year is expected to be at VND 815,238 billion, an increase of 20.6% compared to the Government'
Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws.
Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
Mobile Version