Insurance enterprises should list on the stock market: MoF
Insurance enterprises should list on the stock market: MoF
Listing on the stock exchange is one of the solutions to improving the financial and governance capacity of insurance enterprises in the future, according to a proposal of the Ministry of Finance (MoF).
The ministry has submitted the draft strategy for the development of the insurance market through 2030 to the Government for approval.
According to the draft, it is necessary to promote qualified and competent enterprises, which have a need to offer shares to the public, to list on the stock market to strengthen the financial capacity, risk management, corporate governance, publicity, and transparency of insurance enterprises in the future.
Moreover, the draft said that it is also necessary to promote insurance and reinsurance businesses to perform credit ratings.
A report from MoF showed that there are currently seven insurance ticker symbols listed on the stock market, including Post - Telecommunication Insurance Joint Stock Corporation (PTI), Military Insurance Company (MIC), Bao Minh Insurance Corporation (BMI), Petrolimex Insurance Corporation (PGI), PVI Reinsurance JSC (PRE), Vietnam National Reinsurance Corporation (VNR) and BIDV Insurance Corporation (BIC).
PVI Holdings (PVI) and Bao Viet Holdings (BVH) are two companies operating in the finance-investment industry, and they own 100 per cent of the capital in two companies: PVI Insurance and Bao Viet Insurance, respectively, so they are not included in the statistics of the ministry.
In addition, a number of businesses are trading stocks on the UPCoM market, such as Aviation Insurance (AIC), Agricultural Bank Insurance (ABI), and Bao Long Insurance Corporation (BLI).
Among these companies, only VNR and PRE are in the reinsurance sector; the rest are in the non-life insurance industry. Therefore, at the moment, there is not one company in the life insurance group present on the stock exchange.
According to statistics from tinnhanhchungkhoan.vn, in the whole non-life insurance and reinsurance market in Viet Nam, there are 19 companies operating under the model of joint stock companies (excluding BVH and PVI), of which there are 17 non-life insurance companies and two reinsurance companies.
Besides the seven enterprises listed on the stock exchanges, there are still 12 enterprises operating in the form of joint stock companies but not listed, including Aviation Insurance, Agriculture Bank Insurance, Bao Long Insurance, VietinBank Insurance, Vien Dong Insurance (VASS), AAA, OPES Insurance, Phu Hung, Global, Xuan Thanh, Hung Vuong, and Sai Gon - Ha Noi Insurance Corporation (BSH).
This means the listed insurance enterprises account for just over one-third of the total insurance enterprises operating as joint stock companies.
According to MoF, the listing of shares and the implementation of a corporate credit rating will help insurance businesses improve their financial capacity, governance, and competitiveness, especially amid the current situation when a number of domestic insurers have a poor sense of compliance and have not been proactive in corporate governance and risk management.
"Not to mention, due to low operational efficiency, there are a number of domestic non-life insurance enterprises that have not focused on investing in information technology systems to serve insurance business activities. Regarding financial management, most domestic non-life insurers still apply a decentralised and hierarchical management model for branches and representative offices, which contain many potential risks," said the ministry.
In fact, insurance providers such as AAA, BSH, VASS, and Aviation Insurance, have planned to list for many years, but until now, they have not been able to implement it. Currently, the whole market has six insurance companies with major shareholders being commercial banks, including ABIC, BIC, VBI, MIC, Bao Long, OPES, and MB Ageas.
The listing of shares will open up great opportunities for insurers, such as raising new capital and building a better reputation with customers and partners, but the pressure on businesses is also greater.
They have to comply with strict standards of business performance, corporate governance, and information transparency. This pressure will force insurers to upgrade their financial capacity, governance capacity, and competitiveness, leading to a healthy and sustainable development of the new insurance market.
