Insurance industry forecasts less favourable year in 2022

HÀ NỘI — After gaining high growth last year, the insurance industry is forecast to experience a less favourable time in  二0 二 二 as many insurers have so far planned lower profit targets or slowing growth compared to last year.

After gaining pre-tax profit of VNĐ 三0 六. 三 billion in  二0 二 一, up  三 一. 三 四 per cent against the previous year despite the severe impacts of the COVID- 一 九 pandemic, Bảo Minh Insurance Joint Stock Corporation (BMI) has targeted a fairly modest profit growth rate of  一0 per cent to VNĐ 三 四0 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  三 五 per cent, the rise is still lower than the  四0 per cent rate targeted in its annual general shareholders' meeting (AGM) in  二0 二 一.

For BIDV Insurance Joint Stock Corporation (BIC), the company’s AGM has approved the insurance premium revenue goal of VNĐ 三. 三 一 trillion this year, up by  一 六. 四 per cent against  二0 二 一, but the pre-tax profit plan is only VNĐ 四 三 五 billion, down  一 三. 四 per cent against  二0 二 一.

Meanwhile, Petrolimex Insurance Joint Stock Corporation (PJICO) has targeted a minimum profit of VNĐ 二 五0 billion this year, a decline of about  四 三 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 VNĐ 九 一 一 billion, down  一 七. 二 六 per cent against last year, while its consolidated revenue has been targeted at more than VNĐ 一 一. 六 五 trillion, up  四. 九 per cent.

Similarly, Agriculture Bank Insurance Joint Stock Corporation (ABI) expects a minimum pre-tax profit of VNĐ 三 一0 billion this year, nearly  一0 per cent less than that in  二0 二 一. The dividend payment of the company is planned at  一 四 per cent, while the insurance premium revenue is targeted to grow by at least  八 per cent.

Post Teleco妹妹unication Joint Stock Corporation (PTI) has also aimed at an after-tax profit of VNĐ 二0 八 billion in  二0 二 二, down by  二0. 四 per cent compared to  二0 二 一.

According to BIC Chairman Trần Xuân Hoàng, his company has targeted a slower growth rate in  二0 二 二 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  七0 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  二0 二 一 were low.

At the recent AGM, PVI General Director Nguyễn Xuân Hòa said in  二0 二 二 when all activities gradually resume, the compensation costs are expected to rise, which has partly been shown in Q 一  二0 二 二.

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  二0 二 二, PVI’s revenue reached more than VNĐ 三 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 co妹妹itted with their shareholders at the companies’ AGMs to ensure similar dividend payment rates as in  二0 二 一. — VNS