BMI – Earnings track in line with our expectations; premium growth improvement continues - Earnings Flash
  • 2024-01-29T00:00:00
  • Company Research

BMI released its 2023 business results with a gross written premium of VND6.2tn (USD256mn; +3.6% YoY) and profit before tax (PBT) of VND377bn (USD16mn; +9.7% YoY), achieving 98% and 100% of our respective FY2023 forecasts. The bottom line met our expectation and was primarily driven by a 51.4% YoY increase in net financial income. This increase outweighed a 44.4% YoY decrease in underwriting profits. We see no major changes to our earnings forecasts, pending a more comprehensive review.

  • The Q4 direct premiums of VND1.5tn increased 9.1% QoQ, which shows the sustained improvement in BMI’s premium since the trough experienced in Q2 2023. The 2023 retention ratio was 73.6% (-2.2 ppts YoY). 
  • The 2023 combined ratio was 98.2%, which increased 3.3 ppts YoY due to a 27.9% YoY surge in claim expenses. We believe that it was driven by the key product lines including healthcare and vehicle insurance. However, on a QoQ basis, we estimate that the combined ratio decreased 11.8 ppts in Q4 2023 due to a significant improvement in claim expenses. 
  • 2023 net financial income significantly increased YoY due to the positive impact of the policy rate hikes in late 2022 and strong dividend income from BMI’s equity investments in Q3 2023. However, 2023 net financial income completed 89% of our full-year forecast and tracked behind our expectation. We estimate that the interest income from fixed-income investments has decreased QoQ, which we attribute mainly due to the negative impact from the interest rate cuts that started in mid-2023. 

BMI’s consolidated 2023 results

VND bn

2022

2023

YoY

Q4 2022

Q4 2023

YoY

Direct premium

 5,399 

 5,560 

3.0%

 1,437 

 1,499 

4.3%

Inward reinsurance premium

 582 

 638 

9.5%

 139 

 144 

3.7%

Gross written premium

 5,981 

 6,198 

3.6%

 1,576 

 1,643 

4.2%

Outward reinsurance premium

 (1,452)

 (1,639)

12.9%

 (331)

 (369)

11.3%

Net written premium

 4,529 

 4,559 

0.6%

 1,245 

 1,274 

2.4%

Unearned premium reserve

 (251)

 (33)

-86.8%

 (46)

 (75)

62.2%

Net earned premium

 4,278 

 4,526 

5.8%

 1,199 

 1,199 

0.1%

Other premiums earned

 232 

 195 

-15.9%

 70 

 48 

-32.1%

Claims and losses

 (1,271)

 (1,625)

27.9%

 (299)

 (344)

15.0%

- of which: net claims

 (1,415)

 (1,582)

11.8%

 (414)

 (431)

4.0%

Underwriting expense

 (2,954)

 (2,838)

-3.9%

 (886)

 (806)

-9.1%

G&A expense

 (139)

 (175)

26.4%

 (38)

 (49)

29.7%

Operating income

 147 

 82 

-44.4%

 45 

 48 

5.8%

Financial income

 311 

 413 

32.7%

 67 

 68 

0.7%

Financial expense

 (126)

 (132)

4.9%

 (32)

 (27)

-15.1%

Net financial income

 186 

 281 

51.4%

 35 

 41 

14.9%

PBT

 343 

 377 

9.7%

 86 

 94 

8.7%

NPAT

 291 

 329 

13.0%

 67 

 75 

10.9%

Loss ratio

29.7%

35.9%

6.2 ppts

25.0%

28.7%

3.7 ppts

Expense ratio

65.2%

62.3%

-3.0 ppts

71.2%

63.3%

-8.0 ppts

Combined ratio

94.9%

98.2%

3.3 ppts

96.2%

92.0%

-4.2 ppts

Source: BMI, Vietcap.

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