For domestic non-life insurance companies such as BIDV Insurance Corporation (BIC), they will have more business capital and technical support after having foreign investment capital. Photo tinnhanhchungkhoan.vn

HÀ NỘI — While mergers and acquisitions in the Vietnamese life insurance sector have been relatively quiet, M&As in the non-life insurance sector have been quite strong, with the participation of both foreign and domestic investors.

Experts said the small market size, the potential and growth rate are the reasons why the Vietnamese non-life insurance market is attractive to new investors, especially large global financial groups.

According to the Ministry of Finance’s Vietnam Insurance Market Yearbook 2023, at the end of that year, Việt Nam had 82 insurance companies, of which 32 were non-life insurance companies.

Meanwhile, according to the Vietnam Insurance Association, as of September 30 this year, total insurance premium revenue in the whole market was nearly VNĐ164.98 trillion, of which non-life insurance premium revenue exceeded VNĐ58.44 trillion. This represents an increase of 12.8 per cent compared to the same period in 2023, while life insurance premium revenue reached more than VNĐ106.5 trillion, a decrease of 6.7 per cent compared to the same period in 2023.

Domestic non-life insurance companies will gain more business capital and technical support through foreign investment.

For example, with PetroVietnam Insurance Corporation (PVI), major foreign shareholders such as HDI Global and International Finance Corporation have helped PVI apply advanced governance models and adopt international practices. Currently, PVI is the first domestic insurance company to implement International Financial Reporting Standards in the insurance sector (IFRS 17) and has developed a risk management framework aligned with international standards.

BIDV Insurance Corporation (BIC) has also made strong progress after the participation of foreign strategic investor Canada’s Fairfax Asia Limited. BIC is currently in the top five non-life insurance companies in terms of original insurance market share and is among the top three non-life insurance companies with the highest profitability in the market.

Ranked among the top ten insurance companies in terms of market share, the Military Insurance Corporation (MIC) is looking for a suitable strategic shareholder and has recently attracted attention from many partners, including a Korean group.

The Vietnamese non-life insurance market has always been attractive for foreign investors, especially Korean investors. Most non-life insurance companies in the top 10 market share have capital contributions from Korean investors. For example, Korea’s DB Insurance and Post and Telecommunication Joint Stock Insurance (PTI), Korea’s Samsung Fire & Marine Insurance and Petrolimex Insurance Corporation (PJICO), and Korea’s Hyundai Marine & Fire Insurance and VietinBank Insurance.

Observers cite two reasons for the influx of Korean insurance companies into Việt Nam.

Firstly, the Korean insurance market is starting to saturate, so Korean insurance companies seek to expand their business operations into foreign markets.

Secondly, the Vietnamese insurance market is growing steadily, experiencing an average double-digit growth rate each year. Việt Nam has a large population and a low proportion of insurance buyers, so there is still much untapped potential.

In addition to foreign investors, M&A activities in the non-life insurance sector has also involved Vietnamese groups acquiring domestic insurance companies with small market shares to complete their ecosystems. For example, Tasco bought 100 per cent of the charter capital of Groupama Assuances Mutuelles insurance company and renamed it Tasco Insurance Company Limited. In early October 2024, Techcom Non-Life Insurance Company (TCGIns) was officially established, in which Techcombank contributed 11 per cent capital.

In contrast to the strong development in the non-life insurance sector, the Vietnamese life insurance sector has not seen any notable deals in recent years. The country’s life insurance market currently has 19 companies, of which only two companies BIDV MetLife and MB Ageas Life operate in the form of joint ventures.

Industry insiders forecast instead of selecting the form of joint ventures as previously, investors nơ tend to prioritise full ownership of Vietnamese insurance companies. One reason for this trend is the lacklustre development of life insurance joint ventures in the Vietnamese market, making this form of investment unpopular with financial corporations. — VNS