Investors of Vietnam insurance stocks optimistic about outlook for 2022

, Investors of Vietnam insurance stocks optimistic about outlook for 2022

State capital divestment planning and the removal of limitations on foreign ownership are expected to drive insurance stocks to flourish in 2022.

There are currently nine insurance stocks listed on the market, five of which are listed on the Ho Chi Minh Stock Exchange (HoSE); Bao Viet Holdings (BVH), Bao Minh Insurance Corp (BMI), Military Insurance Co (MIG), Petrolimex Insurance Corp (PGI) and BIDV Insurance Corp (BIC).

The other four are listed on the Hanoi Stock Exchange (HNX); Post-Telecommunication Joint-Stock Insurance Corp (PTI), PVI Holdings (PVI), Vietnam National Reinsurance Corp (VNR) and PVI Reinsurance Joint-stock Corp (PRE).

In terms of market price, in 2021, these nine stocks had an average growth of 56.5 per cent, relatively high figures compared to the average growth rate of the VN-Index of 36 per cent.

Non-life insurance companies also made good growth, such as PTI increasing by 165 per cent to 59,000 dong ($2.60) per share, VNR rising by 82 per cent to 31,500 dong per share, BMI gaining by 74 per cent to 43,600 dong per share, MIG rising by 64 per cent to 23,850 dong per share, PVI rising by 60.5 per cent to 48,900 dong per share.

In the first nine months of 2021, the total assets of insurance businesses were estimated at 650.2 trillion dong, up nearly 21 per cent over the same period in 2020. Total insurance premium revenue reached 152 trillion dong, an increase of more than 15 per cent over the same period in 2020 and reaching the highest level ever.

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According to BIDV Securities Co (BSC), the financial statements for the first nine months of 2021 of eight non-life insurance companies on the stock exchange showed that the average profit growth was 29.7 per cent over the same period last year.

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PGI’s profit after tax increased by 91.1 per cent, reaching 260.5 billion dong; MIG rose by 51.6 per cent, reaching 148.57 billion dong; PVI increased by 28.7 per cent, reaching 805 billion dong; VNR gained 17 per cent to nearly 267 billion dong; BMI achieved 188 billion dong, up 19 per cent; PTI reported 196 billion dong, up 13.5 per cent over the same period of 2020.

The process of state capital divestment and expanding foreign ownership to 100 per cent in the insurance sector has also had a positive impact on the prices of stocks on the market.

On August 31, 2021, the Ministry of Planning and Investment officially updated the “market access conditions” in 59 industries with conditional market access for foreign investors, including the insurance sector. For the insurance sector, the percentage of foreign investors’ ownership has been opened up to 100 per cent.

PTI’s board of directors said that lifting ownership limitations for foreign investors was necessary, helping the company expand its business and grow profits. In addition, the liquidity and value of shares on the stock market also improved.

In mid-December, VNPost completed the auction of 18.2 million PTI shares to three domestic individual investors, with an average successful auction price of 77,341 dong per share, 63 per cent higher than the starting price.

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According to the capital divestment plan of the Corporate Finance Department under the Ministry of Finance, in the first quarter of 2022, the State Capital Investment Corp (SCIC) will divest from BMI and VNR.

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Although there is much potential, insurance stocks haven’t made strong gains when compared to the growth of other financial stocks in the banking and securities groups. Except for BVH, other stocks only have low liquidity of a few thousand shares per session.

Currently, the capitalisation of nine insurance companies on the stock market remains trivial at about 80 trillion dong, equivalent to more than one per cent of the total market capitalisation. Excluding BVH, the remaining eight enterprises have a market capitalisation of 1.5 trillion to 11 trillion dong, which is quite low.

The small amount of market capitalisation in the context of good and steady business in recent years shows that the insurance group has good growth potential in the near future. Vietnam is currently one of the countries with the highest growth rate of premium revenue in the world, with an average annual growth rate of over 9.3 per cent.

According to Bao Viet Securities Co (BVSC), when the Covid-19 pandemic ends, the non-life insurance industry will quickly return to the average growth rate of 15 per cent, like in the previous period, while life insurance will still maintain a high growth rate of 25 per cent to 30 per cent per year.


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