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Insurance firms struggle to attract investors despite good performance amid pandemic

Update: January, 09/2021 - 08:32
Share prices of BVH decreased more than 4 per cent despite an increase of 29.4 per cent in the company's profit after taxes. Photo baoviet.com

HÀ NỘI — Insurance companies performed well in Việt Nam during the COVID-19 pandemic, but their shares have not attracted much attention from investors.

There are 11 insurance firms listed in Việt Nam's stock market with three companies in UPCOM. 

In 2020, Bảo Minh Insurance Corporation (BMI) shares recorded a growth of nearly 22 per cent, while Bảo Việt Holdings (BVH) and BIDV Insurance Corporation (BIC) decreased by 4.3 per cent and 9 per cent respectively.

In the third quarter of 2020, BMI reported revenue from premiums of VNĐ905.48 billion, an increase of 2.1 per cent year-on-year, while profit before tax increased nearly 47 per cent to VNĐ78.89 billion, according to third quarter financial results. In the first nine months of 2020, profit after taxes reached more than VNĐ158.4 billion, up 15 per cent year-on-year. 

BVH and BIC also witnessed big returns during the same period. BVH earned VNĐ9,593 billion from premiums in the third quarter, up 6.2 per cent year-on-year, while profit after tax up 29.4 per cent to VNĐ473.31 billion.

Similarly, BIC saw an increase of nearly 13 per cent year-on-year to VNĐ697.3 billion in premiums revenue, with profit after tax of VNĐ755.9 billion, up nearly 21 per cent. 

Data from the Ministry of Finance showed in the first eleven months of 2020, premiums revenue from insurance firms rose 16 per cent year-on-year to VNĐ449.4 trillion. Of which, revenue from non-life insurance reached VNĐ54.2 trillion, and from life insurance VNĐ111.6 trillion.

In 2020, total premiums revenue was expected to reach VNĐ182.7 trillion, up 15 per cent year-on-year. 

The growth of the insurance market has been stable so far, but its size in the market is still small compared to its capability. Experts see further room for the market to expand.

According to a report from Bao Viet Securities, Việt Nam is among countries with the fastest growth in the insurance sector during the 2016 – 2020 period, on the back of diverse needs in social welfare and medical care, as well as rising insurance needs in retirement, especially in a health crisis like last year.

Some companies, such as BVH, PVI Holdings (PVI) and Post – Telecommunication Joint Stock Insurance Corporation (PTI), have attracted more new customers than others.

With potential in expanding activities in many areas and connecting to big financial organisations, the demand for capital among insurance providers will increase gradually.

Focus on small companies

Instead of big companies, investors sought more interests in small insurance firms such as Bao Long Insurance Corporation (BLI), Agriculture Bank Insurance Joint Stock Corporation (ABI), PTI or Petrolimex Insurance Corporation (PGI)

In 2020, the price of small insurance companies' shares also rose sharply, such as BLI shares price increased nearly 49 per cent, ABI rose 34.8 per cent, PTI up 24.3 per cent, and PGI up nearly 20 per cent. 

However, the growth can not be compared to other sectors like banking which was up more than 100 per cent, such as Saigon Hanoi Commercial Joint Stock Bank (SHB) which increased more than 153 per cent.

Since insurance is a part of the financial sector, it's market expectation is as high as banking or security, Nguyễn Hồng Khanh, head of analytics of Việt Nam International Securities Joint Stock Company (VISE), told tinnhanhchungkhoan.vn. But the number of insurance stocks in the market is still low, so investors' attention is diverted to other sectors. 

While investors are still searching for new and promising investments, there is a possibility  they will only focus on well-known insurance firms with a proven track record and high potential for growth. — VNS.

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