Insurers keep cash bonus, but rates get lower in 2020

ABO/VNA - Non-life insurers have cut back cash dividend rates for 2020 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-19 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. 

Petrolimex Insurance staff. The company has cut cash dividend rate by one percentage point to 12 percent for 2020 from 13 percent in 2019. (Photo: tinnhanhchungkhoan.vn).

But compared to last year, 2020 cash dividend rates are getting lower.

Leading insurance-finance group Bao Minh (HoSE: BMI) at the annual shareholder meeting in late April announced total revenue in 2019 was up 7.5 percent on-year to nearly 4.6 trillion VND (197.5 million USD) and pre-tax profit gained 9.9 percent on-year to 220.6 billion VND. The cash dividend rate for 2019 performance was set at 15 percent.

But the company forecast total revenue and pre-tax profit in 2020 will fall 15 percent year-on-year to nearly 3.9 trillion VND and 188 billion VND, respectively. Lower earnings projection made Bao Minh cut its expected cash.

Petrolimex Insurance reported total revenue rose a tenth year-on-year to nearly 3.66 trillion VND in 2019 and pre-tax profit was up 12 percent on-year to 200 billion VND. The cash dividend rate for 2019 was 13 percent.

But this year, the company’s earnings are expected to contract to 3.47 trillion VND in total revenue and 180.8 billion VND in pre-tax profit. The cash dividend rate is also slashed to 12 percent.

At Military Insurance Corporation, the cash dividend rate is promised at 8-10 percent for 2020 instead of fixed 10 percent for 2019.

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.

(Source: VNA)