Revealing the reason why insurance companies make a lot of money

Manulife Vietnam is the market leader in terms of revenue from financial investment activities, with VND4,820 billion. This contributed to the company's after-tax profit of more than VND2,500 billion.

By the end of 2022, this enterprise had nearly VND 23,000 billion in short-term financial investments (an increase of VND 9,000 billion over the same period). Of which, short-term deposits at banks were VND 11,770 billion.

Long-term financial investments also amounted to VND 62,750 billion (the same period last year was VND 53,700 billion).

Coming in second is the "giant" Prudential Vietnam with revenue from bank deposit interest, bond interest and dividends reaching VND4,015 billion, far exceeding the after-tax profit of VND3,636 billion, although this profit has increased 6 times compared to 2021.

At the end of 2022, Prudential had long-term financial investments of up to VND108,924 billion. Of which, interest from bonds alone brought Prudential VND7,500 billion, while interest from bank deposits was VND2,400 billion.

However, not all investments have yielded sweet results. Due to fluctuations in the stock market, the company recorded a loss of nearly VND300 billion from stock investments.

In addition, the revaluation of investments in associated funds also caused Prudential to record a loss of nearly VND3,000 billion.

Top 3 insurance companies with revenue from financial investment. (Photo: DA)

Ranked third is AIA Vietnam. This enterprise earned VND2,485 billion in 2022 from financial activities, contributing significantly to the after-tax profit of VND1,110 billion.

AIA's short-term financial investments amount to more than VND14,000 billion. Of which, VND884.69 billion is deposited in banks with an average interest rate of 6%/year, VND10,000 billion is deposited in banks with an average interest rate of 5.28%/year, the book value of trading securities reaches VND2,119 billion.

With long-term financial investments, AIA recorded VND28,273 billion in book value, of which VND23,000 billion were government bonds, local government bonds and corporate bonds. More than VND5,000 billion in long-term deposits at banks had an average interest rate of 7.75%/year.

At Dai-ichi Life Vietnam , financial revenue reached VND 2,478 billion in 2022. Interest income from deposits and dividends alone reached VND 2,132 billion.

At the time of reporting, Dai-ichi Life had VND 9,000 billion in bank deposits with terms of less than 3 months, enjoying interest rates from 1% to 6%/year (interest rates in 2021 are only from 0.2% to 4%/year).

In addition, the company also has nearly 5,000 billion VND in short-term financial investments including listed stocks, government bonds, and bank deposits.

Particularly, term deposits at banks from 3 months to 12 months are about 2,200 billion VND, enjoying interest rates from 4.6% to 10.5%/year (interest rates in 2021 that the company receives are from 3.55% to 7.8%/year).

At Cathay Life , the company has 9,000 billion VND in short-term financial investments and 14,000 billion VND in long-term financial investments. The financial investments bring the company financial revenue of up to 1,700 billion VND, equal to the total insurance compensation for the whole year.

Thanks to that, Cathay Life's after-tax profit increased 15 times compared to 2021, reaching 764 billion VND.

Chubb Life Vietnam and Hanwha Life together set aside up to VND15,000 billion for short-term and long-term financial investments.

With Chubb Life, last year the company earned 887 billion VND in interest and dividends, equivalent to the whole year's after-tax profit (899 billion VND).

Meanwhile, Hanwha Life recorded revenue of VND809 billion from interest and dividends. 2022 was also a year of great success for this enterprise when after-tax profit tripled compared to the same period, reaching VND502 billion.

With the BIDV Metlife insurance joint venture, the company recorded a sharp increase in revenue from financial activities compared to the same period, reaching 238 billion VND.

Of which, interest from bank deposits is 142 billion VND, interest from bond investment is 94.7 billion VND. Currently, the company has 3,129 billion VND in deposits at BIDV.

Among the life insurance companies that have announced their 2022 financial reports, Fubon Vietnam Life Insurance Company Limited and Sun Life Vietnam are the rare companies that reported losses.

Of which, Fubon Vietnam lost 31 billion VND, equivalent to the company's loss in 2021.

In 2022, the company's financial revenue will reach 110 billion VND (nearly equal to insurance premium revenue). Interest income from bank deposits alone will be more than 59 billion VND, and bond interest will be more than 50 billion VND.

As of December 31, 2022, Fubon Vietnam has VND630 billion in government bonds with a term of 7-30 years, interest rates of 7.5-8.9%/year; VND18 billion in long-term deposits at banks (term over 1 year), interest rates of 7.8%/year. Notably, Fubon has up to VND956 billion in short-term deposits (under 12 months) at banks with interest rates from 4.9% to 8%/year.

At Sun Life Insurance, although the company lost nearly 1.5 billion VND after tax, financial investments (short-term and long-term) brought the company 509 billion VND.

In addition to the above enterprises, some enterprises have not yet announced their 2022 financial reports, including: Bao Viet Life, Generali, MB Ageas,...

According to the Vietnam Insurance Association, the market share of insurance premiums of life insurance companies as of September 2022 is as follows: Bao Viet Life (19.25%), Manulife (17.94%), Prudential (16.91%), Dai-ichi Life (12.35%), AIA (10.76%), MB Ageas (3.77%), FWD (3.18%), Sun Life (2.86%), Generali (2.77%), Chubb Life (2.68%), Hanwha Life (2.5%), Cathay Life (1.66%), MVI (1.54%), BIDV Metlife (0.99%). Insurance companies: FWD Assurance, Mirae Asset Prevoir, Phu Hung Life, Fubon Life, Shinhan Life account for a market share of 1.19%.

Surprisingly, a 'tiny' insurance company pays nearly a billion in income, surpassing the big guys . The income of nearly 1 billion VND/year for insurance employees is not only found in prosperous places. There is a tiny insurance company with only 107 employees, negative profit of 31 billion VND but still paid 941 million VND per employee last year.

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