BVH – Life premium market share expands; profit tracks in line with our expectation

BVH released its consolidated H1 2024 results with a gross written premium of VND20.9tn (USD824mn; flat YoY) and PBT of VND1.3tn (USD50mn; +10% YoY), achieving 46% and 51% of our respective FY2024 forecasts. This implies Q2 2024 PBT of VND534bn (-28% QoQ; +5% YoY). The H1 2024 earnings tracked in line with our forecasts primarily due to a 4% YoY increase in net financial income, which outweighed a 2% YoY increase in underwriting losses.

Both H1 2024 life and non-life premiums of VND15.9tn (-1% YoY) and VND5.0tn (+3% YoY) tracked in line with our expectations. According to the General Statistics Office of Vietnam (GSO), systemwide life premiums decreased by 10% YoY, while systemwide non-life premiums rose by 11% YoY in H1 2024. As a result, we believe BVH may have expanded its market share in the life insurance sector and lost market share in the non-life sector in H1 2024. Additionally, Q2 2024 direct life premium inched up by 4% QoQ implying a modest sign of recovery to us.
The claims ratio and reserve ratio in H1 2024 were 47.0% (flat YoY) and 48.6% (flat YoY), respectively. H1 2024 claim expenses were mainly driven by the life insurance sector (contributed 82% to the total net claim expenses), in which net claim expenses for life insurance increased 2% YoY and net claim expenses for non-life insurance decreased 6% YoY. We observe that the net claim expenses of non-life insurance business have gradually decreased in the last one year and life insurance net claim expenses were relatively flat in the same period. In addition, in Q2 2024, mathematical reserve expenses of life insurance increased 12% QoQ and math reserve/net earned premium increased 1.1 ppts QoQ to 40.9%, which we attribute partly to the slight QoQ recovery in life premium (potentially a new business premium).
H1 2024 net financial income was VND5.4tn, which achieved 53% of our full-year forecasts. Q2 2024 net financial income decreased 11% QoQ. We believe that there could also be pressure on BVH’s financial income in H2 2024 given prolonged low deposit rates.

BVH’s consolidated H1 2024 results

VND bn	H1 2023	H1 2024	YoY	Q2 2023	Q2 2024	YoY
Direct premium	20,878	20,837	-0.2%	10,294	10,431	1.3%
of which – Life	16,036	15,858	-1.1%	8,059	8,098	0.5%
of which – Non-life	4,841	4,978	2.8%	2,235	2,333	4.4%
Inward reinsurance premium	76	102	34.1%	32	60	89.7%
Gross written premium	20,954	20,938	-0.1%	10,325	10,491	1.6%
Outward reinsurance premium	(1,653)	(1,732)	4.8%	(721)	(807)	12.0%
Net written premium	19,301	19,206	-0.5%	9,604	9,684	0.8%
Unearned premium reserve	94	65	-31.3%	123	138	12.3%
Net earned premium	19,395	19,271	-0.6%	9,727	9,822	1.0%
Other premiums earned	343	338	-1.3%	164	168	2.8%
Claims and reserves	(18,571)	(18,418)	-0.8%	(9,726)	(9,395)	-3.4%
of which - math expense	(6,213)	(6,280)	1.1%	(3,022)	(3,315)	9.7%
Underwriting expense	(3,126)	(2,653)	-15.1%	(1,416)	(1,249)	-11.8%
G&A expense	(2,173)	(2,728)	25.5%	(1,010)	(1,382)	36.8%
Operating income/(loss)	(4,117)	(4,184)	1.6%	(2,247)	(2,030)	-9.7%
Financial income	6,737	6,375	-5.4%	3,612	3,116	-13.7%
Financial expense	(1,508)	(960)	-36.4%	(877)	(562)	-35.9%
Net financial income	5,229	5,415	3.6%	2,735	2,554	-6.6%
Income from affiliates	46	33	-28.1%	25	12	-50.7%
Other income	6	11	65.7%	4	6	48.7%
PBT	1,164	1,275	9.5%	507	534	5.3%
Income tax expense	(197)	(218)	10.7%	(86)	(93)	8.2%
NPAT	968	1,057	9.2%	422	441	4.7%
Minority interest	37	45	20.6%	19	14	-28.4%
NPAT-MI	930	1,012	8.8%	402	428	6.3%
Loss ratio*	49.9%	45.9%	-4.0 ppts	58.7%	48.7%	-10.0 ppts
Expense ratio*	56.9%	57.0%	0.1 ppts	63.6%	59.4%	-4.2 ppts
Combined ratio*	106.8%	102.9%	-3.9 ppts	122.3%	108.1%	-14.3 ppts

Source: BVH, Vietcap.(*) Loss ratio, expense ratio, and combined ratio here refer to the non-life business only.