The stable growth of business has created a foundation for non-life insurance companies to pay dividends at 10-15 percent per annum in recent years. This year, this dividend payment rate continues to be maintained, although some companies recorded outstanding growth results.
The 2020 Annual general Meeting (AGM) of Bao Minh Insurance Corporation (BMI) has approved the plan to pay 2019 dividends at a ratio of 15%, reaching the set target. This is a fairly high dividend payment of this insurance company in recent years.
Regarding business performance, closing the year 2019, BMI recorded a total revenue of 4.593 trillion dong, completing 100.3 percent of the plan and 7.5 percent higher than the realised figure in 2018. In particular, the revenue from financial activities was 217 billion dong, completing 94.5 percent of the plan and equivalent to 89.4 percent of the 2018′s results.
According to BMI, the revenue decline of financial activities was mainly due to the unpredictable fluctuations of the stock market which led to a sharp reduction in the securities trading profit, despite the increase in profit from dividends and deposits.
Overall, BMI completed most of the business targets. Thanks to that, the company’s pre-tax profit in 2019 was 220.6 billion dong, completing 100.3 percent of the annual plan, and 9.9 percent higher than the result in 2018.
Petrolimex Joint Stock Insurance Corporation (PJICO) one of the Top 5 companies with largest market share also announced the completion of the business targets assigned by the Shareholders Meeting in 2019. Specifically, the company’s total revenue of original premiums (excluding fishing vessel insurance under Decree 67/CP) was 3.048 trillion dong, up by 10 percent compared to 2018; the original insurance claim rate fell by four percent; the total pre-tax profit was 200 billion dong, completing 109 percent of the plan and up by 12 percent compared to 2018. With this result, PJICO pays dividends at 13%, up by one percent compared to the previous plan.
At Post and Telecommunication Joint Stock Insurance Corporation (PTI) the third largest non-life insurance market share owner, its representative said that the company will propose shareholders for approval of a payment rate of 10 percent for 2019 dividends.
Military Insurance Joint Stock Corporation (MIC) has approved a rate of 10 percent for the 2019 dividend payment, up by two percent compared to 2018. It is known that by the end of 2019, MIC’s original premium revenue was 2.507 trillion dong, up by 30 percent (2.4 times higher than non-life insurance market). The company’s pre-tax profit reached 177 billion dong, up by 30.7%, in which the profit from investments was 154/5 billion dong, up by 31%.
The positive business results in 2019 help businesses make good dividends. However, since difficulties still exist, the 2020 dividend plan will be cautiously considered.
Typically, BMI expects to pay 2020 dividends at 10%, significantly lower than the 15 percent in 2019. Along with that, the company maintains a prudent business plan to ensure efficient response to the impacts of the disease, consolidate and maintain the growth momentum, and create momentum for growth in the near future.
Specifically, BMI targets a revenue of 3.895 trillion dong, equivalent to 85 percent of the realised revenue in 2019; total pre-tax profit of 188 billion dong, equivalent to 85.21 percent of the realised figure in 2019.
PTI’s representative said that the company will submit a dividend payment rate of 10 percent in 2020, the same as 2019′s. Meanwhile, PJICO plans to pay 2020 dividends at 12%, based on the revenue target of 3.468 trillion dong and pre-tax profit of not less than 180.8 billion dong. MIC aims to grow the 2020 original premium revenue by 15 percent compared to 2019, and commits to pay dividends at eight to 10 percent.
Talking to Dau tu Chung khoan, representative of an insurance company said that the reason why companies keep stable dividend payment of the insurance sector at around 10 15 percent despite achieving high profit because setting dividend payment rate must base on many factors.
“Dividends are paid after the company has fulfilled its tax obligations, provisioned for funds and offset losses (if any), and must ensure the solvency of debts and financial obligations which due soon. On the other hand, the dividend payment of 10-15 percent is not low if compared with the current common level,” said the above representative.
Although business results grow steadily and dividend payment is regularly paid at fairly good levels, the mark of non-life insurance on the stock market remains gloomy.
However, with a high growth prospect, the stocks of non-life insurance are forecasted to see exciting trading in the near future, especially after the foreign ownership room is carry out. The participation of large insurers in the world will help domestic companies access their professionalism, thereby creating impressive growth steps, especially those with small market share.
According to KIS Securities Vietnam, the highlight that attracts attention of investors to insurance stocks will focus on events affecting the business model and the capital structure of businesses such as conducting private placement for strategic investors, state capital divestment or performing equitisation, listing, etc.
The latest information of PTI showed that at the coming AGM, the company’s Board of leaders will propose shareholders for approval of raising the maximum ownership of foreign investors from 49 percent to 100%. According to PTI’s representative, increasing foreign ownership to the maximum level is necessary to upgrade the credit rating in the future, as well as meet the need to increase charter capital.
“In the case when PTI expands business by increasing capital or issuing corporate bonds, increasing ownership rate of foreign investors will increase the success of this plan. In addition, the liquidity and stock value of PTI on the stock market will also be improved,” PTI’s representative emphasized.
Shareholders of PJICO have agreed the document submitted by the company’s BOD on expanding room for foreign investors in accordance with the law, with the goal of improving liquidity and attractiveness of PJICO’s stocks (PGI) on the stock market, ensuring the rights of all investors and shareholders.
At the recent AMG of BMI, many shareholders expressed their interest in the divestment of State Capital Investment Corporation (SCIC). SCIC’s representative said that the company continues to work with authorities to complete the divestment of SCIC. Representative of SCIC said that the company is working with authorities to complete the divestment procedure, creating a basis for BMI to raise foreign ownership room to 100%.
It is known that the divestment will be carried out through auction and SCIC has met many foreign investors, but not yet received specific request. According to current regulations, the maximum ownership rate of foreign investors at BMI is 49 percent of charter capital.
