Monday, 25 Jun 2018

Foreign players sacrifice profit for market shares

Updated at Tuesday, 12 Jun 2018, 14:52
The Hanoitimes - Manulife Vietnam and Dai-ichi Vietnam have been accepting heavy losses in exchange for market shares, indicating a fierce competition in Vietnam`s life insurance market.
In 2017, Vietnam's life insurance market showed a contrasting picture, in which three major 100% foreign-owned life insurers namely Manulife Vietnam, Dai-ichi Vietnam and Prudential Vietnam saw a slump in profit, while state-controlled Bao Viet Life posted a pre-tax profit of VND1 trillion (US$43.75 million), up 60% year-on-year.
Illustration photo.
Illustration photo.
Dai-ichi Vietnam in 2017 recorded a pre-tax loss of VND515 billion (US$22.5 million) versus a profit of VND135 billion (US$5.9 million) one year earlier. 
Similarly, Manulife Vietnam reported a pre-tax loss of VND1.24 trillion (US$54.25 million) while it made a VND463 billion (US$20.2 million) profit in 2016. 
Prudential Vietnam, meanwhile, saw a slump of 60% in its pre-tax profit, going down from VND1.6 trillion (US$70 million) in 2016 to VND645 billion (US$28.2 million) in 2017.
The result was due to those companies' growth in business expenses outpacing their respective growth rate in insurance-related revenues, of which Dai-ichi Vietnam is 65% and 50%, Manulife Vietnam of 82% and 33%, and Prudential Vietnam of 65% and 20%, respectively. 
Notably, Bao Viet Life's revenue growth came at 30% in 2017, which is lower than that of both Dai-ichi Vietnam and Manulife Vietnam, indicating a shift in market shares in the life insurance market. 
Additionally, Dai-ichi Vietnam's equity in 2017 has increased from VND2.93 trillion (US$128.1 million) to VND5.77 trillion (US$252.4 million), and Manulife Vietnam from VND2.72 trillion (US$119 million) to VND5.63 trillion (US$246.3 million). 
Bao Viet Life, meanwhile, maintained its equity at VND3.55 trillion (US$155.3 million).
In spite of the lowest revenue growth among others, Prudential Vietnam is currently the leading life insurer in Vietnam with equity of VND6.23 trillion (US$272.5 million) and total assets worth VND74.1 trillion (US$3.24 billion) in 2017. 
Prudential Vietnam's revenue stood at VND26.2 trillion (US$1.14 billion) in 2017, up 43% year-on-year. 
Ngoc Thuy
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