Bao Viet to Become Vietnam's Leading Financial Corp. 

 

According to Mr Trinh Thanh Hoan, General Director of Vietnam Insurance Corporation, the corporation has put forth the target of becoming Vietnam’s No.1 financial corporation by 2005; in 2004, the corporation recorded great successes with the total turnover of VND6,000 billion and the nationwide coverage network; it is the largest investor in the financial market with the aggregate investment of VND10,000 billion, and also the only enterprise covering both life and non-life insurance.

In 2004, Vietnam Insurance Corporation spent much time and effort rearranging and restructuring the model of a self-financed corporation with member companies providing life insurance and non-life insurance services in Vietnam. At present, Bao Viet is faced with fierce competition as the Ministry of Finance has provided for the foundation of Bao Minh Corporation and ten other big corporations. The Vietnam Re-insurance Joint Stock Company has entered into operation since October 1, 2004 with the participation of 13 shareholders being non-life insurance companies in Vietnam. The national insurance market has also added a new member, namely the Far East Insurance Joint Stock Company with the major shareholders being joint stock banks like Saigon Thuong Tin Bank, Marine Bank and Hanoi Housing Development Ban. These emerging competitors constitute heavy counterweights against Bao Viet in the insurance market. Moreover, although the Ministry of Finance has promulgated and enforced the regulation on administrative penalty in insurance industry, unfair competitive practices remain frequent. However, the insurance sector’s growth rate is quite high.

Vietnam Insurance Corporation has recorded high growth rate with the turnover from non-life insurance service up 15 per cent, life insurance up 12 per cent, and financial investment up 49 per cent. In particular, Bao Viet remains the leading company in the non-life insurance market with an original insurance turnover of VND 1,862 billion. The company’s success in the life insurance business is well beyond its expectations with the revenue from life insurance reaching VND 3,100 billion. Bao Viet has made the mature payment of VND 1,391 billion for 75,000 clients. At present, the number of Bao Viet’s existing life insurance contracts stands at 1,672,648.

As far as financial investment is concerned, though the investment environment is not favourable with the continual fall of VN Index during the whole year of 2004, the revenue from financial investment has increased to VND 670 billion, up 49 per cent as compared with 2003. In 2004, Bao Viet’s total investment in the economy reached VND 8,871 billion, of which 50 per cent was allocated to the Government’s socio-economic development programs and the State budget through the purchase of Government bonds and projects. In 2004, Bao Viet contributed more than VND 209 billion to the State budget, up nearly 23 per cent against 2003.

2005 is expected to be a promising year for the insurance industry. The Government is expected to issue the Decree on obligatory fire and allied perils insurance in 2005. The Ministry of Finance will take actions to facilitate the operation of life insurance companies. However, difficulties in the insurance market still linger: the consumer price index is increasing, exerting negative impact on people’s income; unfair competition is on the rise; newly emerging non-life insurance companies and insurance brokers may intensify the already fierce competition in insurance on goods and foreign-invested ventures. A number of insurance companies are planning to expand their markets with a large amount of investment in market exploration and occupation.

Under the guidelines of the Ministry of Finance, in 2005 Bao Viet will undertake partial equitization which is time-consuming and exerts considerable impacts on its business operations. However, the corporation is determined to go ahead with its restructuring efforts with a view to developing into Bao Viet Financial & Insurance Corporation. As regards strategic management, the corporation will attach importance to substantial solutions aimed at enhancing its services’ quality towards the goal of “Efficiency, Growth and Sustainable Development”. As far as non-life insurance is concerned, the corporation will strive to record a growth rate of 5.2 per cent as compared with 2004 with the increase of 13 per cent in revenues. With regard to life insurance services, it has set a target of a 15 per cent-increase in profit and a 20 per cent-increase in premium revenue from new insurance contracts. The corporation will establish Bao Viet Investment Fund and a Fund Management Company, and rapidly increase its investment capital.

• Kim Phuong