- 2024-05-03T00:00:00
- Company Research
BVH released its consolidated Q1 2024 results with a gross written premium of VND10.4tn (USD418mn; -1.7% YoY) and PBT of VND741bn (USD30mn; +13% YoY), achieving 23% and 32% of our respective FY2024 forecasts. The Q1 2024 earnings tracked ahead of our forecasts primarily due to a 14.7% YoY increase in net financial income, which outweighed a 15.2% YoY increase in underwriting losses. Overall, though Q1 2024’s earnings were better than our expectations, we still expect pressure on earnings in the coming quarters due to (1) slow premium growth recovery, and (2) lower net financial income and higher technical reserve expenses due to the low interest rate in the last few quarters.
- Both Q1 2024 life and non-life premiums of VND7.8tn (-2.7% YoY) and VND2.6tn (+1.5% YoY) tracked in line with our expectations. According to the General Statistics Office of Vietnam (GSO), systemwide life premiums decreased by 10.9% YoY, while systemwide non-life premiums rose by 9.8% YoY in Q1 2024. Therefore, we believe BVH could have expanded its market share in the life insurance sector and lost market share in the non-life sector.
- The claims ratio and reserve ratio in Q1 2024 were 45.4% (+2.7 ppts YoY) and 50.1% (+1.4 ppts YoY), respectively. The YoY increase in Q1 2024 claim expenses was mainly driven by the life insurance sector, in which net claim expenses for life insurance increased 5.4% YoY and net claim expenses for non-life insurance decreased 4.3% YoY. In addition, Q1 2024 mathematical reserve expenses of life insurance decreased 7.1%, which we attribute to (1) weak new business premiums and (2) a higher YoY technical discount rate.
- In Q1 2024, (1) premium growth decreased YoY and (2) the net claims and reserve ratio increased YoY, and total underwriting and G&A expenses decreased 4.3% YoY, which helped to ease underwriting losses.
- Q1 2024 net financial income was VND2.9tn (+15% YoY), achieving 28% of our full-year forecast mainly due to a 37% YoY decrease in financial expenses, which we believe was due to the interest rate cuts that started in mid-2023. Although Q1 2024 net financial income tracked ahead of our expectation, we believe that there could also be pressure on BVH’s financial income in the remainder of 2024F given the current low deposit rates.
BVH’s consolidated Q1 2024 results
VND bn | Q1 2023 | Q1 2024 | YoY |
Direct premium | 10,584 | 10,406 | -1.7% |
of which – Life | 7,978 | 7,760 | -2.7% |
of which – Non-life | 2,606 | 2,646 | 1.5% |
Inward reinsurance premium | 44 | 41 | -6.1% |
Gross written premium | 10,628 | 10,447 | -1.7% |
Outward reinsurance premium | (932) | (925) | -0.8% |
Net written premium | 9,696 | 9,522 | -1.8% |
Unearned premium reserve | (29) | (73) | 155.0% |
Net earned premium | 9,667 | 9,449 | -2.3% |
Other premiums earned | 179 | 170 | -5.1% |
Claims and reserves | (8,844) | (9,023) | 2.0% |
of which - math expense | (3,190) | (2,965) | -7.1% |
Underwriting expense | (1,710) | (1,404) | -17.9% |
G&A expense | (1,163) | (1,346) | 15.7% |
Operating income/(loss) | (1,870) | (2,154) | 15.2% |
Financial income | 3,125 | 3,258 | 4.3% |
Financial expense | (631) | (397) | -37.0% |
Net financial income | 2,494 | 2,861 | 14.7% |
Income from affiliates | 21 | 21 | -1.2% |
Other income | 2 | 5 | 96.5% |
PBT | 657 | 741 | 12.7% |
Income tax expense | (111) | (125) | 12.6% |
NPAT | 546 | 616 | 12.8% |
Minority interest | 18 | 31 | 73.1% |
NPAT-MI | 528 | 585 | 10.7% |
Loss ratio* | 42.8% | 43.4% | 0.6 ppts |
Expense ratio* | 51.6% | 54.9% | 3.3 ppts |
Combined ratio* | 94.4% | 98.2% | 3.9 ppts |
Source: BVH, Vietcap.(*) Loss ratio, expense ratio, and combined ratio here refer to the non-life business only.
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