Insurance businesses are cautious in building profit plans

BIC only targets profit growth in 2024 at 4,5%, compared to an increase of nearly 20% in 2023. Photo: Duc Thanh

Bright spot on the locomotives

The recently held annual general meeting of shareholders of PVI Joint Stock Company approved an ambitious total revenue plan, up to nearly 17.400 billion VND, an increase of 8,17% compared to 2023. This is also a level never achieved in PVI's history.

More importantly, if the goal is achieved, PVI will have the fourth consecutive year extending the revenue growth chain and become even more firmly in the leading position in terms of scale among non-life insurance businesses.

2023 is a year of many changes for the operations of the Vietnamese insurance market. Although still "brighter" than the life insurance segment, the non-life insurance market revenue for the whole year only increased by 3%, estimated at 71.064 billion VND.

In terms of business segments, according to calculations by the Vietnam Insurance Association, some product segments have narrowed their revenue scale such as aviation insurance (-10,8%); cargo insurance (-10,8%); Motor vehicle insurance (-1,9%) in both mandatory and voluntary products. However, there are also some areas with strong growth such as voluntary fire and explosion insurance, property damage insurance, credit insurance and financial risks... all exceeding 10%.

Similarly, the revenue growth of each insurance company is also a colorful picture, especially strongly differentiated at the top.

The revenue of two insurance companies, Postal Insurance (PTI) and Military Insurance (MIG), decreased by more than 4% compared to 2022. Both of these companies are in the Top 5 non-life insurance market shares. last year.

On the contrary, a number of other businesses rose with double-digit growth. Leading the way is BIDV Insurance (BIC), with premium revenue growth of up to 2%. Hanoi Reinsurance (Hanoi Re) - a subsidiary owned by PVI with more than 31,1% capital - achieved growth of more than 81%. PVI last year recorded a growth rate nearly 17 times higher than the overall growth of the market, earning 5 billion VND in revenue from the insurance segment alone - the main factor contributing to the total revenue of 14.466 billion VND.

Statistics of more than 10 insurance businesses on the exchange (Bao Viet Group only counts the non-life segment), revenue from insurance premiums in 2023 will increase by approximately 6%, higher than the general growth rate of the entire non-life insurance industry. longevity.

Setting goals for 2024, PVI is not the only unit with great expectations for revenue growth. Although only completing 77% of the revenue plan and ending a growth streak lasting more than 10 years, Military Insurance continues to aim to enter the Top 4 market shares in 2024, with increased insurance premium revenue. 33%.

Meanwhile, according to the business plan submitted to shareholders prepared for the upcoming general meeting of shareholders, BIDV Insurance leaders said that the target insurance premium revenue in 2024 is 4.774 billion VND, an increase of 14,2%. .XNUMX% compared to the previous year.

Challenges from the falling interest rate environment

Unlike many non-life insurance businesses that have announced business plans at the present time, PJICO sets a rather conservative revenue target, with primary insurance revenue only "not lower than the year's performance results". 2023”. The task set for this year is to follow the direction of safe - sustainable - effective business development, along with digital transformation activities, improving customer experience.

Statistics from more than 10 insurance businesses on the exchange show that revenue from insurance premiums in 2023 will increase by approximately 6%, higher than the general growth rate of the entire non-life insurance industry.

The common point that is quite noticeable in this year's business plan is the caution in building profit plans. Mobilization interest rate - a factor that greatly impacts financial revenue because insurance companies allocate a large proportion of their portfolio to deposits.

According to Ms. Nguyen Thi Huong Giang, General Director of PJICO, bank interest rates will decrease very sharply, about 35% compared to the average deposit interest rate in 2023, which will lead to a significant decrease in deposit revenue. The solution that PJICO leaders offer is to seek cooperation with banks with preferential loan interest rates to optimize investment cash flow, regularly review financial investment portfolios, choose the time to divest capital, sell stocks…

Evaluating bank deposit interest rates at a low level and forecasting that there is little possibility of an increase in 2024, Hanoi Reinsurance also assesses that this is a top challenge, directly affecting investment activities. finance.

PJICO sets a flat profit target. Although BIDV Insurance plans a revenue growth of over 14%, it only targets a profit increase of 4,5%. This insurance company has recorded profit growth in 2023 of nearly 20%, thanks to revenue from deposits increasing by more than 58% compared to 2022.

Meanwhile, PVI is more cautious, setting a plan for profits to go backwards, down more than 13%, despite a positive increase in target revenue.

Military Insurance is a rare case that continues to expect high growth in profits (+25%) and revenue (+33%). The company believes that low interest rates in 2024 are also one of the driving forces to help the stock market grow, in addition to the recovery of profits of businesses on the stock exchange compared to the low comparative base level.