3:26:28 PM | 7/8/2005
The State-owned Vietnam Insurance Corporation (Bao Viet), the largest insurer in the country, has announced it will undergo the first steps in the privatisation process this year.
Privatization is a vital requirement to build Bao Viet into a powerful insurance and financial corporation, said Trinh Thanh Hoan, Deputy Director General of the corporation
The forthcoming move is based on the policy of the Vietnamese government in expanding subjects for share sale publicly. However, the State will retain the majority stake in this firm.
A detailed privatisation plan has not been finalized, however, it is likely for Bao Viet to equitize life insurance subsidiary first, said Le Van Binh, Member of the Management Board of Bao Viet.
The life insurance company (Bao Viet Life) was established at the end of 2004 as an independent company of Bao Viet.
Once privatised, the shares are to be made available to foreign investors, he said, as Bao Viet aims at strategic investors who have advantages in technology. Bao Viet needs experience and advanced technology from its partners to develop new life insurance products and expand market share.
The opinion from well informed circles said that Bao Viet life insurance shares would be attractive to foreigners. Many life insurers have been waiting to enter
Figures from the Insurance Association said the life insurance sector grew 25 per cent in 2004 after reaching 40 per cent in 2003, and the figure is expected to be 30 per cent for 2005.
Mr. Binh did not reveal the percentage of shares available for foreigners, but he said the ratio would not exceed the 30 per cent level allowed by current regulations.
According to him, Bao Viet is choosing a foreign consultant appraise operation activities for Bao Viet. Subsequent steps, including enterprises appraisal will be carried out later.
Among the candidates applying for consultancy services, Mr. Binh named international PricewaterhouseCoopers, KPMG and the local Vietnam Auditing Company.
In related news, Bao Viet is planning to set up a fund management company, which will manage and invest corporate and member capital and premiums.
The company is scheduled to be operational in the end of the year with initial capital of VND400 billion (US$25.5 million). It then will set up Bao Viet Investment Fund with total capital of around US$10 million.
In 2004, Bao Viet continued to lead
The State insurance giant reported total revenues rose 16.7 per cent from a year earlier to VND5.54 trillion (US$355.4 million) by the end of 2004 with revenues from the life sector at VND3.1 trillion (US$198.7 million). It targeted VND6.23 trillion (US$369.8 million) total revenues in 2005.
By the end of 2004, Bao Viet had reinvested VND8.87 trillion (US$565 million) into the economy (50 per cent for the government’s socioeconomic development programs and government bond purchase). It earmarked VND670 billion (US$42.9 million) worth of financial investment in 2004, up 49 per cent on-year.
The corporation targeted to reach net profits of VND239.55 billion (US$15.3 million) in 2005, up from VND224.7 billion (US$14.3 million) in 2003, or 6.6 per cent.
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