Techcombank invests in establishing a life insurance company.

Techcombank will partner with Vingroup to establish a life insurance company with a charter capital of VND 1,300 billion.

The Board of Directors of Vietnam Technological and Commercial Bank ( Techcombank - stock code: TCB) has just approved a resolution to contribute capital to establish Techcombank Life Insurance Joint Stock Company (TCLife) with a charter capital of VND 1,300 billion. The company's head office is expected to be located in Hanoi.

According to the announcement, the newly established life insurance company will have two major shareholders: Techcombank with an 80% ownership stake, equivalent to VND 1,040 billion, and businesses within the Vingroup ecosystem.

TCLife will operate in 7 life insurance lines and 2 health insurance lines. The company's operating term is set at 50 years from the date it is granted the establishment and operation license by the Ministry of Finance .

Techcombank anticipates that the life insurance company will incur losses in its first two years of operation. Starting from the third year, TCLife will recover its capital and record a net profit of VND 605 billion. After 5 years, Techcombank will receive a net profit of VND 1,195 billion from TCBLife, representing a return on investment of 23.4%.

Techcombank will partner with Vingroup to establish a life insurance company.

Furthermore, TCBLife also contributes to increasing the net assets of its shareholders, including Techcombank. The insurance company's total assets in its first year were VND 728 billion and are expected to reach VND 16,081 billion in its fifth year, representing a 22-fold increase.

According to Techcombank's analysis, the life insurance market in Vietnam still has significant potential and opportunities for growth. Vietnam's population structure is still in its demographic golden age, with over 50% of the population in the working age group, a crucial pillar in need of protection. The percentage of the population currently covered by life insurance policies is relatively low, at 1.2% of life insurance premiums relative to GDP and 12.44 million active policies as of December 31, 2023.

In addition, the Vietnamese economy continues its recovery trajectory, with GDP growth projected at approximately 7.09% in 2024 and an estimated 8% growth rate in 2025.

Household incomes have grown well; a five-year study by Cimigo (2017-2022) showed that the percentage of families with monthly incomes between $500 and $999 increased by 67%, and the percentage of families with incomes of $1,000 or more increased by 378%.

" With increasing affordability and improved understanding of financial instruments, life insurance will continue to be a popular product in the future ," Techcombank stated.

Chau Anh