- 2024-01-31T00:00:00
- Company Research
BVH released consolidated 2023 results with a gross written premium of VND42.9tn (USD1.8bn; -0.6% YoY) and NPAT-MI of VND1.7tn (USD71mn; +12.5% YoY), both achieving 100% of our FY2023 forecasts. The bottom line in 2023 aligned with our forecast primarily due to a 32.5% YoY increase in net financial income, which outweighed a 40.6% YoY increase in operating losses.
- Both 2023 life and non-life premiums of VND32.4tn (-2.1% YoY) and VND10.1tn (+4.0% YoY) tracked in line with our expectations. According to the General Statistics Office of Vietnam (GSO), systemwide life premiums decreased by 12.6% YoY, while systemwide non-life premiums rose by 2.4% YoY in 2023. Therefore, we believe BVH could have expanded its market share in both sectors in 2023.
- The claims ratio and reserve ratio in 2023 were 46.9% (+10.4 ppts YoY) and 51.2% (-2.7 ppts YoY), respectively. The YoY increase in 2023 claim expenses was mainly driven by the life insurance sector, in which net claim expenses for life insurance increased 34.0% YoY and net claim expenses for non-life insurance increased 2.5% YoY. In addition, 2023 mathematical reserve expenses of life insurance plummeted YoY, which we attribute to (1) weak new business premiums and (2) a higher YoY technical discount rate. In Q4 2023, net claim expenses over net written premiums of both life and non-life insurance improved QoQ.
- 2023 net financial income was VND10.7tn (+32.5% YoY), achieving 102% of our full-year forecast. Q4 2023 net financial income decreased 7.6% QoQ, which we believe was due to the negative impact from interest rate cuts that started in mid-2023. We estimate that Government bonds and term deposits accounted for 86.3% of BVH’s total investment portfolio as of 2023. Meanwhile, corporate bonds accounted for 8.8% of the total investment portfolio as of 2023.
BVH’s consolidated 2023 results
VND bn | 2022 | 2023 | YoY | Q4 2022 | Q4 2023 | YoY |
Direct premium | 42,962 | 42,641 | -0.7% | 11,240 | 11,275 | 0.3% |
of which – Life | 33,202 | 32,493 | -2.1% | 8,745 | 8,587 | -1.8% |
of which – Non-life | 9,760 | 10,148 | 4.0% | 2,495 | 2,688 | 7.8% |
Inward reinsurance premium | 149 | 212 | 42.2% | 39 | 71 | 80.8% |
Gross written premium | 43,112 | 42,854 | -0.6% | 11,279 | 11,346 | 0.6% |
Outward reinsurance premium | (3,241) | (3,445) | 6.3% | (768) | (907) | 18.0% |
Net written premium | 39,871 | 39,409 | -1.2% | 10,511 | 10,439 | -0.7% |
Unearned premium reserve | 113 | (168) | -248.3% | (23) | (156) | 572.7% |
Net earned premium | 39,984 | 39,241 | -1.9% | 10,488 | 10,283 | -2.0% |
Other premiums earned | 714 | 793 | 11.0% | 101 | 288 | 185.1% |
Claims and reserves | (36,118) | (38,497) | 6.6% | (9,871) | (10,320) | 4.5% |
of which - math expense | (17,185) | (13,477) | -21.6% | (4,064) | (3,845) | -5.4% |
Underwriting expense | (6,789) | (5,131) | -24.4% | (1,597) | (606) | -62.0% |
G&A expense | (3,993) | (5,066) | 26.9% | (833) | (1,829) | 119.7% |
Operating income/(loss) | (6,186) | (8,674) | 40.2% | (1,727) | (2,233) | 29.3% |
Financial income | 9,923 | 13,547 | 36.5% | 2,662 | 3,296 | 23.8% |
Financial expense | (1,842) | (2,837) | 54.0% | (521) | (664) | 27.3% |
Net financial income | 8,081 | 10,710 | 32.5% | 2,141 | 2,632 | 23.0% |
Income from affiliates | 68 | 103 | 51.5% | 11 | 37 | 246.3% |
Other income | 25 | 20 | -20.9% | 13 | 11 | -9.9% |
PBT | 1,988 | 2,160 | 8.6% | 437 | 448 | 2.4% |
Income tax expense | (385) | (362) | -5.9% | (83) | (78) | -5.9% |
NPAT | 1,604 | 1,797 | 12.1% | 354 | 369 | 4.3% |
Minority interest | 73 | 75 | 2.4% | 11 | 11 | 3.9% |
NPAT-MI | 1,530 | 1,722 | 12.5% | 343 | 358 | 4.3% |
Loss ratio* | 47.4% | 47.9% | 0.5 ppts | 46.4% | 45.7% | -0.7 ppts |
Expense ratio* | 53.9% | 52.1% | -1.8 ppts | 50.2% | 43.0% | -7.2 ppts |
Combined ratio* | 101.3% | 100.0% | -1.3 ppts | 96.6% | 88.7% | -7.9 ppts |
Source: BVH, Vietcap.(*) Loss ratio, expense ratio, and combined ratio here refer to the non-life business only.
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