Apart from industry-specific difficulties, the trend of interest rates going down will also make inroads into insurers’ profitability. Bancassurance grinds to a halt The insurance industry has lately faced mounting challenges. Insurance companies in Vietnam currently follow a two-pillar business model, with their revenue mainly coming from the insurance business itself and from financial investment. Their insurance business this year has to some extent subdued due to bancassurance hitting the rock bottom and the people tightening their belt, forcing insurers to make a marked shift to financial investment, expecting to gain more profits from securities trading, bank deposits and investment trust. At Bao Viet Insurance for example, the company’s leaders pin high hopes on financial investment in the second half of this year as most of its financial investments have yielded better returns against last year. The company is also seeking to restructure its portfolio, targeting to invest more in bonds issued by commercial banks to optimize profits. At the Military Insurance Corporation, financial investments including bond holding currently account for 10% of its profit-generating assets, including investments in manufacturing and financial enterprises. According to the company’s leadership, the issuers of such bonds have always serviced the bonds in due […]
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