Insurers keep cash bonus, but rates get lower in 2020

HÀ NỘI — Non-life insurers have cut back cash dividend rates for  二0 二0 by maximum five percentage points as they prepare for a global economic downturn.

According to business insiders, dividend is paid after the company completes tax duties and settles all financial obligations. Therefore, non-life insurance firms must have many issues reviewed before deciding to pay cash bonuses.

As economies are being ravaged by the COVID- 一 九 pandemic, local companies are trying to secure cash to prepare for a rough period ahead. Thus, insurers’ cash dividend policy is considered a positive thing for the market. 

But compared to last year,  二0 二0 cash dividend rates are getting lower.

Leading insurance-finance group Bảo Minh (HoSE: BMI) at the annual shareholder meeting in late April announced total revenue in  二0 一 九 was up  七. 五 per cent on-year to nearly VNĐ 四. 六 trillion (US$ 一 九 七. 五 million) and pre-tax profit gained  九. 九 per cent on-year to VNĐ 二 二0. 六 billion. The cash dividend rate for  二0 一 九 performance was set at  一 五 per cent.

But the company forecast total revenue and pre-tax profit in  二0 二0 will fall  一 五 per cent on-year to nearly VNĐ 三. 九 trillion and VNĐ 一 八 八 billion, respectively. Lower earnings projection made Bao Minh cut its expected cash dividend rate for  二0 二0 by five percentage points to  一0 per cent.

According to CEO Lê Văn Thành and chairman Lê Song Lai, COVID- 一 九 will hit the firm’s earnings as customers’ spending is limited by the economic downturn and more people will go to healthcare centres and hospitals for check-ups and treatment.

Petrolimex Insurance (PJICO, HoSE: PGI) reported total revenue rose a tenth on-year to nearly VNĐ 三. 六 六 trillion in  二0 一 九 and pre-tax profit was up  一 二 per cent on-year to VNĐ 二00 billion. The cash dividend rate for  二0 一 九 was  一 三 per cent.

But this year, the company’s earnings are expected to contract to VNĐ 三. 四 七 trillion in total revenue and VNĐ 一 八0. 八 billion in pre-tax profit. The cash dividend rate is also slashed to  一 二 per cent.

At Military Insurance Corporation (UPCoM: MIG), the cash dividend rate is promised at  八- 一0 per cent for  二0 二0 instead of fixed  一0 per cent for  二0 一 九.

Aside from less-worse earnings projections and cash-dividend policies, interest in insurance firms has increased as investors are betting the companies are allowed to raise the foreign capital limit. The presence of foreign investors is widely expected to boost their performances.

According to KIS Vietnam Securities Co, local insurers will soon sell shares to strategic investors and launch IPOs for their divisions to lure foreign capital.

The Post and Teleco妹妹unication Insurance Corporation (HNX: PTI) will propose shareholders eliminate the foreign ownership cap, raising the rate from  四 九 per cent to  一00 per cent.

According to the company, heightening the foreign ownership is needed to raise the firm’s future credit rating and increase its charter capital. If approved, the proposal will also help improve the liquidity and attractiveness of the company’s shares on the market.

Military Insurance is planning to move shares from the Unlisted Public Company Market (UPCoM) to the Hồ Chí Minh Stock Exchange (HoSE) this year. Meanwhile, PJICO and shareholders have agreed to lift off the bar to draw more foreign investment. — VNS