PVI: Making Miraculous Progresses

PetroVietnam Insurance Joint Stock Corporation (PVI) is a member unit of Vietnam’s leading concern - Vietnam National Oil and Gas Group (PetroVietnam). With miraculous progresses in business, PVI was rated one of five leading companies of Vietnam in terms of scale, liquidity and unlimited commerciality by Standard & Poor. Besides, PVI is the unique insurer in the Top 100 retailers and wins the Vietnam Golden Star Award for well-known trademark and brand. The Vietnam Business Forum had a talk with Mr Bui Van Thuan, General Director of PVI, to learn more about the success of a top-tier trademark in the Vietnamese insurance market.

Could you introduce notable business results in recent years?
In recent years, PVI has achieved very fast growth. The corporation made total revenue of VND1,304 billion and a profit of only VND60.21 billion in 2006. With its strategic policies and decisions, for the first time in history, the corporation’s PVI revenues landmarked VND2,000 billion, securing the highest growth rate in the top three insurance companies in Vietnam, when the domestic and international insurance industries are adversely affected by the global economic downturn. In 2008, our sales reached VND2,731.57 billion, up 137 percent over 2007, and our profit hit VND171.7 billion. Compared with 2006, PVI recorded revenue and profit growths of 310 percent and 386 percent, respectively.

Since 2006, PVI has focused retail system development and market expansion. The retail system’s revenues grew 176 percent in 2008 and 126 percent in the first six months of 2009 to VND620 billion, the highest growth amongst five top insurers in Vietnam. PVI’s retailing revenues are estimated to reach VND1,350 billion in 2009, making up for 50 percent of the corporation’s total premiums. In addition, PVI has expanded its operations into aviation insurance, satellite launching insurance, fibber optic system insurance. All insurance policy holders highly appreciate the professionalism and service quality of the corporation.

With these impressive figures, PVI was awarded "Reputed Securities Brand 2009", "Top Liquidity Stock," "Top 100 Listed Companies in Vietnam" Title granted by the Vietnam Association of Securities Business (VASB), the Credit Information Centre under the State Bank of Vietnam (CIC) and the Vietnam Stock Review (VSR) under the State Securities Commission. The General Director of PVI was also awarded the "Outstanding and Humanitarian Entrepreneur” Award.

A successful brand needs to create "difference". So what is the difference at PVI?
Obviously, the PVI trademark is always associated with the giant concern - the Vietnam National Oil and Gas Group (PetroVietnam). In addition, the corporation applies modern IT applications to business administration; arranges reinsurance programme, onshore and offshore reinsurance policies with indemnity amounting to billions of US dollars. PVI also offers effective insurance package not only for the oil and gas industry but also for other industrial production sectors in Vietnam and in foreign countries. PVI is the best industrial insurer in Vietnam.

Currently, PVI is preparing for its credit rating from a world-leading organization.

Moreover, PVI has a strong financial and capital source, powered by long-term close cooperation with leading financial institutions in Vietnam and in the world to enhance its reinsurance business activities as well as financial investments.

As a renowned and experienced brand, could you share the secrets for successful integration and sustainable development of PVI in the context of fierce competition when Vietnam integrates more deeply and broadly into the WTO?
In the coming time, PVI is planning to hire consultants to improve business strategy, corporate restructure and human resources consolidation. The corporation also develops new insurance projects in addition to traditional ones like health and liability insurances. The firm also expands its insurance distribution channels through its retailing and brokering network. It also boosts up the efficiency of financial investment (particularly from the premium sources and provision funds), diversifies investment forms the basis of ensuring safety and compliance with PVI’s capital source. It continues building up the brand, the corporate culture and the customer service professionalism. PVI also focuses on financial investment because PVI advantageously has strong connections with leading insurers, reinsurers and brokers in the world like Swiss Re., Lloyd's, Munich Re. and Zurich. PVI has also thinks of internationalising its trademark by providing professional insurance services outside the border of Vietnam as in Malaysia, Venezuela, Algeria and Iraq. Thus, the corporation can further build up its trademark and contribute to the development of the national brand.

How do you think about the stimulus package launched by the government? How has it affected the economy of Vietnam in general and the business community in particular?
Amid the global economic slowdown, falling prices of oil, food and raw materials and stagnation of import and export activities caused numerous challenges against the insurance and financial market in general and PVI in particular: A sharp reduction in spending of the people, the government and enterprises, domestically and internationally. In addition, the existing severe competition caused a drop in insurance premiums. Furthermore, the devaluation of assets and the narrowing of customer business activities resulted to a steep fall in property and liability insurances. This factor largely caused a decline in revenues of PVI, insolvency of many customers and delayed investment progress, which also hurt PVI’s operations. Moreover, customers, with better knowledge, make the most of the benefits covered, leading to bigger indemnity. These factors distress the efficiency of insurance activities. Lower interest rate, higher exchange rate, freezing real estate market, stock market slump, weakening liquidity and insolvency of valuable papers and investment items are the main causes to the decreasing efficiency of short and medium term investments. At present, the nonlife insurance market in 2009 is estimated to fall 40 percent from 2008 to VND11,500 billion.

However, the Vietnamese insurance market has a huge potentiality needed to be unlocked to open new insurance products. PVI knows that the economic slowdown brings many cheap assets and opportunities for it to accumulate its assets at low prices and to increase them when the economy rebounds.

Nonetheless, with the stimulus package launched by the Government, the credit market has gradually warmed up, the real estate market has gradually stabilised and the stock market has recovered. These result to higher values of short-term and long-term valuable papers and capital contributions for PVI.

Would you mind revealing our corporation’s business strategies for the coming time?
PVI is striving to become the No. 1 insurance and financial group in Vietnam and in the region, a professional financial investor and a high-quality insurance service provider. The corporation will provide enhance the efficiency of insurance businesses by selecting services and lowering risks; and improve its financial investment efficiency. It will also work with its subsidiaries and member companies to provide financial services and polish its image of No. 1 financial and insurance group in Vietnam and in the region. PVI will increase the capital to strengthen its financial capacity and develop its brand in the domestic market and in the international market.
To become a financial institution, PVI will have orderly development steps as follows: Primary insurance (maintaining the No. 1 position in the insurance industry and accelerating the development of retailing system to become a No. 1 insurer); Reinsurance (promoting reinsurance activities until 2015 to become a leading reinsurer in Vietnam and in the region); Financial investment (promoting business activities in financial investment subsidiaries to build up its reputation in financial investment activities and increase total assets for PVI).

Reported by D.Son-A.Phuong