Brian Jeffrey
Despite facing considerable financial setbacks, German insurer HDI Global SE is raising its investment in PVI, one of Vietnam’s top insurance firms, by funneling large sums shortly after the recent storm.
Following Typhoon Yagi, insurance firms in Vietnam are grappling with a surge in claims, estimating overall losses around VND 10 trillion. Thousands have reported damage to homes, vehicles, factories, and lives, prompting insurers to activate their damage estimation mechanisms and begin processing claims.
PVI Holdings (HNX-PVI) has been significantly impacted, presenting claims exceeding VND 3 trillion as of September 23, 2024, an increase of roughly VND 1 trillion since September 11.
As of September 23, PVI Insurance recorded 751 incidents of losses across property, vehicle, and personal insurance claims. The company has already provided VND 15 billion in advance compensation for property claims. However, the assessment of damages, particularly in non-life insurance, remains difficult due to the extensive devastation caused by the typhoon.
This relative stability can be credited to HDI Global SE, which sought to acquire an additional 2.95 million shares on September 12, following the storm, and later completed the purchase of over 2.775 million shares on September 18. This transaction, priced at around VND 45,000 per share on that date, amounted to nearly VND 125 billion in investment.
As a result, HDI Global SE now owns over 99.15 million shares in PVI, which corresponds to a 42.33% ownership stake.
Adding to this, Funderburk Lighthouse Limited holds more than 29.5 million shares, making up a 12.61% stake. Collectively, the German investment group possesses nearly 128.7 million shares in PVI, which is 54.94% of the company’s total shares. Notably, HDI Global SE had also secured 161,600 shares of PVI on September 9.
An affiliate of the Talanx insurance group, HDI Global SE fully owns its charter capital. They maintain a controlling interest in PVI Holdings, which in turn fully owns PVI Insurance.
After a notable decline in stock values post-Typhoon Yagi, the insurance sector in Vietnam is witnessing a rebound, with losses now estimated between 3-7% compared to pre-storm prices.
For example, shares of Bao Viet Holdings (BVH) dropped from VND 44,800 on September 6 to VND 43,300 by September 26, reflecting a modest decrease of 3.3%. As of September 18, Bao Viet projected that claims from Typhoon Yagi reached VND 955 billion.
The Post and Telecommunication Insurance Corporation (PTI) shares also demonstrated a strong recovery, with consistent increases in the past trading days, climbing to VND 32,500 by September 26 from VND 30,600 on September 6.
While the damage from Typhoon Yagi has been extensive, insurance firms possess substantial reserves. By the close of Q2 2024, PVI had nearly VND 15.9 trillion in reserves, including VND 6.9 trillion earmarked for claims and VND 8.5 trillion for unearned premium expenses.
PTI anticipates its payouts associated with the typhoon to total VND 200 billion by September 12, which is relatively minor compared to its reserves of over VND 4.08 trillion at the end of Q2 2024, including VND 1.42 trillion for claims.
Vietnam’s insurance industry has confronted several obstacles over the last year and a half. Life insurers have reported declining profits due to reduced sales, as investment-linked products have lost popularity. Legislative changes effective from early 2023, along with Circular 67 from late 2022, have imposed stricter regulations aimed at safeguarding policyholder rights.
The recovery in non-life insurance has also been sluggish, as the sector is still dealing with lingering negative public sentiment stemming from recent issues in the life insurance domain over the past year.
Nevertheless, some insurers have displayed positive growth in Q2 2024. PVI reported a profit increase of over 40% year-on-year, while Bao Viet Insurance Corporation (BIC) achieved analogous growth. Additionally, PTI reported an 8% profit rise in Q2 2024.
Even amid challenges, Vietnam’s insurance market is thriving and drawing a considerable amount of foreign investments. Unlike saturated markets like Germany, Vietnam’s insurance sector presents significant potential for growth, supported by the nation’s developing economy.
Currently, foreign investors own a significant 56% stake in PVI. At Bao Viet, Sumitomo Life holds more than 22%, with various funds owning around 1.6%.
