Techcombank contributes capital to establish life insurance company

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

According to the announcement, after its establishment, the life insurance company will have two major shareholders: Techcombank with an 80% ownership ratio, equivalent to VND 1,040 billion, and businesses in the Vingroup ecosystem.

TCLife will operate in 7 life insurance lines and 2 health insurance lines. The company's term of operation is determined to be 50 years from the date the Ministry of Finance grants the Establishment and Operation License.

Techcombank expects the life insurance company to make a loss in the first two years of operation. Starting from the third year, TCLife will recover its capital and record a net profit of VND605 billion. After five years, Techcombank will receive a net profit of VND1,195 billion from TCBLife, a return on investment equivalent to 23.4%.

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

In addition, TCBLife also contributes to increasing the net assets of shareholders, including Techcombank. The total assets of the insurance company in the first year were 728 billion VND and in the 5th year are expected to reach 16,081 billion VND, equivalent to a 22-fold increase.

According to analysis from Techcombank, the life insurance market in Vietnam still has a lot of potential and opportunities for development. Vietnam's population structure is still in the golden population phase with more than 50% of the population being of working age, which is the mainstay that needs to be protected. The proportion of the population protected by life insurance contracts is relatively low with 1.2% of the life insurance premium rate to GDP and 12.44 million contracts in effect as of December 31, 2023.

Besides, Vietnam's economy continues to recover, with GDP growth in 2024 reaching about 7.09% and GDP growth in 2025 forecast to reach 8%.

Household income has grown well, Cimigo's 5-year study from 2017 to 2022 shows that the proportion of families with monthly income from 500 to 999 USD increased by 67%, and families with income from 1,000 USD increased by 378%.

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

Chau Anh