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 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
Related News
Insurance creates trust and peace of mind for customers affected by typhoon No. 3
10:05 | 23/09/2024 Finance
Insurance brings peace of mind to customers during Yagi typhoon
20:34 | 17/09/2024 Finance
The insurance industry is expected to grow by 10 percent in 2024
08:27 | 04/08/2024 Finance
Under amended law, it needs clarification on cooperation between commercial banks and insurance companies
09:56 | 15/07/2024 Finance
Latest News
Monetary policy forecast unlikely to loosen further
15:51 | 22/11/2024 Finance
World Bank outlines path for Vietnam to reach high income status
13:44 | 22/11/2024 Finance
Strictly control public debt and ensure national financial security 2025
09:26 | 22/11/2024 Finance
Revising the title of a draft of 1 Law amending seven finance-related laws
14:33 | 21/11/2024 Finance
More News
Transparency evates the standing of listed companies
09:47 | 21/11/2024 Finance
State-owned securities company trails competitors
14:46 | 20/11/2024 Finance
Strengthening the financial “health” of state-owned enterprises
09:23 | 20/11/2024 Finance
U.S. Treasury continues to affirm Vietnam does not manipulate currency
13:46 | 19/11/2024 Finance
Exchange rate fluctuations bring huge profits to many banks
13:43 | 19/11/2024 Finance
A “picture” of bank profits in the first nine months of 2024
09:42 | 19/11/2024 Finance
Many challenges in restructuring public finance
10:02 | 18/11/2024 Finance
Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs
09:19 | 17/11/2024 Finance
Disbursement of public investment must be accelerated: Deputy PM
19:32 | 16/11/2024 Finance
Your care
Monetary policy forecast unlikely to loosen further
15:51 | 22/11/2024 Finance
World Bank outlines path for Vietnam to reach high income status
13:44 | 22/11/2024 Finance
Strictly control public debt and ensure national financial security 2025
09:26 | 22/11/2024 Finance
Revising the title of a draft of 1 Law amending seven finance-related laws
14:33 | 21/11/2024 Finance
Transparency evates the standing of listed companies
09:47 | 21/11/2024 Finance