- 2024-07-23T00:00:00
- Company Research
BMI released its H1 2024 business results with a gross written premium of VND3.5tn (USD123mn; +17% YoY) and profit before tax (PBT) of VND187bn (USD7mn; +1% YoY), achieving 52% and 47% of our respective FY2024 forecasts. The bottom line met our expectation and was primarily driven by better-than-expected underwriting profit, which outweighed lower-than-expected financial income. We see no major changes to our earnings forecasts, pending a more comprehensive review.
- The Q2 2024 direct premiums of VND1.3tn decreased 26% QoQ from a high base in Q1 2024. However, BMI’s direct premium growth of 17% YoY vs the systemwide non-life premium growth of 11% YoY in H1 2024 indicates an expansion in BMI’s premium market share, which further strengthens its top-three position. The H1 2024 retention ratio was 74.2% (vs 73.6% in 2023).
- The H1 2024 combined ratio was 92.9%, which decreased 6.5ppts YoY due to (1) a 1.6-ppt YoY decrease in the loss ratio and (2) a 5.1 ppt YoY decrease in the expenses ratio. However, on a QoQ basis, the combined ratio increased 13 ppts QoQ in Q2 2024. Overall, H1 2024 underwriting profit completed 92% of our full-year forecast and tracked well ahead of our expectation, given (1) robust premium growth and (2) well-controlled claim expenses, which we attribute partly due to the company’s strategy to restructure its healthcare insurance business, especially its group healthcare product. Additionally, we believe that stronger-than-expected H1 2024 premium growth could be driven by fire & explosion insurance, property, and casualty insurance for some public projects given BMI’s strong SOE customer base.
- H1 2024 net financial income significantly decreased 14% YoY, which was mostly driven by a 40% QoQ decrease in Q2 2024 net financial income. We attribute the weak net financial income in Q2 2024 to (1) most term deposits being rolled over to lower yields amid the company’s strategy to prioritize SOE banks and MBB, and (2) an upward pressure on financial expenses amid unfavorable equity market performance in Q2 2024. Overall, H1 net financial income completed 30% of our full-year forecast and tracked slightly behind our expectation. We note that BMI usually records the highest quarterly net financial income in Q3 due to receiving cash dividends from its equity investments.
BMI’s H1 2024 results
VND bn | H1 2023 | H1 2024 | YoY | Q2 2023 | Q2 2024 | YoY |
Direct premium | 2,692 | 3,135 | 16.5% | 1,286 | 1,335 | 3.9% |
Inward reinsurance premium | 326 | 362 | 11.0% | 170 | 179 | 4.8% |
Gross written premium | 3,018 | 3,497 | 15.9% | 1,456 | 1,514 | 4.0% |
Outward reinsurance premium | (889) | (902) | 1.4% | (432) | (383) | -11.4% |
Net written premium | 2,128 | 2,595 | 21.9% | 1,024 | 1,131 | 10.4% |
Unearned premium reserve | 85 | (121) | -243.0% | 123 | 125 | 1.7% |
Net earned premium | 2,213 | 2,474 | 11.8% | 1,147 | 1,256 | 9.5% |
Other premiums earned | 104 | 105 | 1.3% | 44 | 48 | 9.4% |
Claims and losses | (808) | (863) | 6.9% | (403) | (457) | 13.5% |
- of which: net claims | (758) | (817) | 7.7% | (411) | (436) | 6.1% |
Underwriting expense | (1,339) | (1,505) | 12.4% | (699) | (722) | 3.4% |
G&A expense | (81) | (104) | 28.6% | (46) | (60) | 31.5% |
Operating income | 89 | 106 | 19.2% | 44 | 65 | 47.2% |
Financial income | 134 | 129 | -3.9% | 71 | 51 | -27.3% |
Financial expense | (42) | (50) | 17.8% | (24) | (22) | -9.8% |
Net financial income | 92 | 79 | -13.9% | 47 | 30 | -36.3% |
PBT | 185 | 187 | 1.4% | 93 | 96 | 3.8% |
NPAT | 147 | 150 | 1.9% | 74 | 77 | 4.9% |
Loss ratio | 36.5% | 34.9% | -1.6 ppts | 35.1% | 36.4% | 1.3 ppts |
Expense ratio | 62.9% | 58.0% | -4.9 ppts | 68.2% | 63.9% | -4.4 ppts |
Combined ratio | 99.4% | 92.9% | -6.5 ppts | 103.3% | 100.3% | -3.1 ppts |
Source: BMI, Vietcap
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