- 2024-10-31T00:00:00
- Company Research
BMI released its 9M 2024 business results with a gross written premium of VND5.2tn (USD207mn; +14% YoY) and profit before tax (PBT) of VND219bn (USD9mn; -23% YoY), achieving 77% and 55% of our respective FY2024 forecasts. Though premium growth tracked slightly ahead of our expectations, earnings trail our forecast due to the higher-than-expected combined ratio and weak net financial income. We see downside risk to our earnings forecasts, pending a more comprehensive review.
- The Q3 2024 direct premiums of VND1.5tn increased 12% QoQ, which we believe was partly supported by seasonal healthcare insurance for students. We note that the health care insurance premium increased 54% YoY in H1 2024 and was the key premium growth driver. BMI’s direct premium growth of 14.1% YoY vs the systemwide non-life premium growth of 12.8% YoY in 9M 2024 indicates an expansion in BMI’s premium market share, which further strengthens its top-three position. The 9M 2024 retention ratio was 71.6% (vs 73.6% in 2023).
- The 9M 2024 combined ratio was 99.0%, which decreased by 1ppts YoY mainly due to (1) a 2-ppt YoY decrease in the loss ratio that. However, on a QoQ basis, the combined ratio increased 12 ppts QoQ in Q3 2024 to 112.6%, which resulted in an underwriting loss of VND73bn. Overall, 9M 2024 underwriting profit completes 29% of our full-year forecast and tracks behind our expectation despite robust premium growth, which is mainly due to a 14% YoY surge in underwriting expenses and other related expenses. Though the 9M 2024 breakdown is not available, we have observed that direct underwriting expenses and marketing expenses surged 18% YoY and 35% YoY in H1 2024, respectively.
- 9M 2024 net financial income significantly decreased 25% YoY, which was mostly driven by a 20% YoY decrease in financial income, which we attribute to most term deposits being rolled over to lower yields amid the company’s strategy to prioritize SOE banks and MBB. Overall, 9M 2024 net financial income completes 68% of our full-year forecast and tracks behind our expectation mainly due to a 114% QoQ increase in Q3 2024 financial expenses.
BMI’s 9M 2024 results
VND bn | 9M 2023 | 9M 2024 | YoY | Q3 2023 | Q3 2024 | YoY |
Direct premium | 4,061 | 4,635 | 14.1% | 1,369 | 1,500 | 9.6% |
Inward reinsurance premium | 494 | 551 | 11.5% | 168 | 189 | 12.5% |
Gross written premium | 4,555 | 5,186 | 13.8% | 1,537 | 1,689 | 9.9% |
Outward reinsurance premium | (1,270) | (1,471) | 15.8% | (381) | (570) | 49.5% |
Net written premium | 3,285 | 3,714 | 13.1% | 1,156 | 1,119 | -3.2% |
Unearned premium reserve | 42 | (50) | -220.9% | (43) | 71 | -264.4% |
Net earned premium | 3,326 | 3,664 | 10.1% | 1,113 | 1,190 | 6.9% |
Other premiums earned | 147 | 173 | 17.7% | 44 | 68 | 56.6% |
Claims and losses | (1,281) | (1,337) | 4.4% | (473) | (474) | 0.1% |
- of which: net claims | (1,151) | (1,226) | 6.5% | (393) | (409) | 4.3% |
Underwriting expense | (2,032) | (2,319) | 14.1% | (693) | (814) | 17.5% |
G&A expense | (126) | (147) | 16.4% | (45) | (43) | -5.4% |
Operating income | 34 | 33 | -2.9% | (55) | (73) | 33.0% |
Financial income | 345 | 277 | -19.7% | 211 | 148 | -29.7% |
Financial expense | (105) | (96) | -8.0% | (62) | (46) | -25.5% |
Net financial income | 240 | 181 | -24.8% | 149 | 102 | -31.4% |
PBT | 283 | 219 | -22.7% | 98 | 32 | -67.9% |
NPAT | 254 | 194 | -23.5% | 107 | 44 | -58.6% |
Loss ratio | 38.5% | 36.5% | -2.0 ppts | 42.5% | 39.8% | -2.7 ppts |
Expense ratio | 61.9% | 62.5% | 0.6 ppts | 59.9% | 72.8% | 12.8 ppts |
Combined ratio | 100.4% | 99.0% | -1.4 ppts | 102.5% | 112.6% | 10.1 ppts |
Source: BMI, Vietcap
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