Insurance firms struggle to attract investors despite good performance
Insurance companies performed well in Vietnam during the COVID-19 pandemic, but their shares have not attracted much attention from investors.
There are 11 insurance firms listed in Vietnam's stock market with three companies on UPCOM.
In 2020, Bao Minh Insurance Corporation (BMI) shares recorded a growth of nearly 22%, while Bao Viet Holdings (BVH) and BIDV Insurance Corporation (BIC) decreased by 4.3% and 9% respectively.
In the third quarter of 2020, BMI reported revenue from premiums of VND905.48 billion, an increase of 2.1% year-on-year, while profit before tax increased nearly 47% to VND78.89 billion, according to third quarter financial results. In the first nine months of 2020, profit after taxes reached more than VND158.4 billion, up 15% year-on-year.
BVH and BIC also witnessed big returns during the same period. BVH earned VND9,593 billion from premiums in the third quarter, up 6.2% year-on-year, while profit after tax up 29.4% to VND473.31 billion.
Similarly, BIC saw an increase of nearly 13% year-on-year to VND697.3 billion in premiums revenue, with profit after tax of VND755.9 billion, up nearly 21%.
Data from the Ministry of Finance showed in the first eleven months of 2020, premiums revenue from insurance firms rose 16% year-on-year to VND449.4 trillion. Of which, revenue from non-life insurance reached VND54.2 trillion, and from life insurance VND111.6 trillion.
In 2020, total premiums revenue was expected to reach VND182.7 trillion, up 15% 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, Vietnam 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%, ABI rose 34.8%, PTI up 24.3%, and PGI up nearly 20%.
However, the growth can not be compared to other sectors like banking which was up more than 100 percent, such as Saigon Hanoi Commercial Joint Stock Bank (SHB) which increased more than 153%.
Since insurance is a part of the financial sector, it's market expectation is as high as banking or security, Nguyen Hong Khanh, head of analytics of Vietnam 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.