HCMC – Though some of the largest insurance firms recorded steady growth in revenue in the second quarter of the year, their losses were attributed to their investment in stocks.
The post-tax earnings in Q2 of Petrolimex Insurance Corporation and BIDV Insurance Corporation (BIC) plummeted 30% year-on-year to VND73.8 billion and 50% to VND49.9 billion, respectively, while their profit growth topped in the first quarter of this year.
Sharing the same fate, Military Insurance Corporation’s (MIC) profit after tax plunged 78.5% to VND22 billion.
Baoviet Holdings also posted a 28% fall in after-tax profit, standing at VND317 billion.
The companies’ losses were attributed to the tumbling stock market, as stock investments contribute a major part to their financial health, a leader of Baoviet Holdings explained, adding that the firm’s revenue from stock trading and investment plunged 74% year-on-year.
While the initial value of the securities portfolio, including listed and unlisted shares, bonds, and treasury certificates, was VND2.9 trillion by the end of the second quarter, the net realizable value stood at just VND2.7 trillion.
Meanwhile, the firms’ allowance for short-term investment skyrocketed from VND46 billion to VND245 billion.
Bao Long Insurance Corporation reported a loss of VND51 billion in the second quarter due to the falling stock prices. In response to this, it appropriated VND10 billion for provision.
Likewise, BIC and MIC’s profits from investment in the period declined by 24% and 32% over the same period last year, respectively.
BIC’s after-tax profit in the first half of this year declined to VND125 billion. It also raised its provision for short-term investment to VND14 billion, shooting up over 1,500%.
The situation is in line with the forecast of SSI Securities Corporation.
Meanwhile, VNDirect predicted insurance companies will achieve a steady profit growth this year due to an increase in interest rates and a prospect for the market to bounce back in the second half of the year.