BVH – Life premium market share expands; profit tracks in line with our expectation - Earnings Flash
  • 2024-07-31T00:00:00
  • Company Research

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.  

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