- 2025-02-03T00:00:00
- Company Research
BMI released its 2024 business results with a gross written premium of VND6.6tn (USD235mn; +7% YoY) and profit before tax (PBT) of VND273bn (USD11mn; -28% YoY), achieving 99% and 69% of our respective FY2024 forecasts. Overall, earnings trailed our forecast due to (1) weak financial income and (2) higher-than-expected G&A and underwriting expenses. We see downside risk to our earnings forecasts for 2025 and 2026, pending a more comprehensive review.
- The Q4 2024 direct premium of VND1.3tn decreased 12% QoQ and YoY. Though BMI’s premium growth in 9M 2024 was faster than the system-wide level, Q4 2024 premium growth slowed down significantly and hindered its full-year growth. 2024 system-wide non-life insurance premium growth was 11% vs BMI’s at 7.2%, indicating a potential contraction in its market share. The 2024 retention ratio was 74.9% (+1.3 ppts YoY).
- 2024 direct premium growth was mainly driven by healthcare insurance (+19% YoY; contributed 42% of 2024 total direct premiums) and vehicle insurance (+10% YoY; contributed 16% of 2024 total direct premiums). Meanwhile, fire and explosion insurance premiums decreased 6% YoY (contributed 19% of 2024 total direct premiums). We believe Q4 2024 premiums could be partly hindered by the healthcare insurance product line as though the healthcare insurance claims reduced YoY in 2024 due to BMI’s restructuring efforts, the progress tracked behind management’s initial expectation as healthcare fraud issues remain complicated (shared by management in December 2024), which prompted more conservative growth.
- The 2024 combined ratio was 98.5% (relatively flat YoY). However, on a QoQ basis, the combined ratio decreased 15.5 ppts QoQ in Q4 2024 to 97.0%. We believe Q3 2024 was a high base for claim expenses due to the aftermath of Typhoon Yagi. Overall, 2024 underwriting profit completed 47% of our full-year forecast and trailed our expectation despite robust premium growth, which was mainly due to an 11% YoY surge in underwriting expenses. Direct sales expenses for agents and marketing expenses (accounting for 59% of total underwriting expenses) surged 23% YoY and 18% YoY in 2024, respectively.
- 2024 net financial income significantly decreased by 25% YoY (trailed our forecast), driven by (1) a 27% YoY decrease in interest income and (2) a 30% YoY decrease in dividend income from its equity investments. We attribute the low interest income to most term deposits being rolled over to lower yields amid the company’s strategy to prioritize SOE banks and MBB.
BMI’s 2024 results
VND bn | 2023 | 2024 | YoY | Q4 2023 | Q4 2024 | YoY |
Direct premium | 5,560 | 5,961 | 7.2% | 1,499 | 1,326 | -11.5% |
Inward reinsurance premium | 638 | 682 | 6.9% | 144 | 131 | -9.1% |
Gross written premium | 6,198 | 6,642 | 7.2% | 1,643 | 1,457 | -11.3% |
Outward reinsurance premium | (1,639) | (1,666) | 1.6% | (369) | (194) | -47.3% |
Net written premium | 4,559 | 4,977 | 9.2% | 1,274 | 1,263 | -0.9% |
Unearned premium reserve | (33) | (97) | 192.6% | (75) | (46) | -37.9% |
Net earned premium | 4,526 | 4,880 | 7.8% | 1,199 | 1,216 | 1.4% |
Other premiums earned | 195 | 243 | 24.6% | 48 | 69 | 46.0% |
Claims and losses | (1,555) | (1,654) | 6.4% | (274) | (316) | 15.6% |
- of which: net claims | (1,574) | (1,638) | 4.1% | (423) | (412) | -2.5% |
Underwriting expense | (2,908) | (3,216) | 10.6% | (876) | (897) | 2.4% |
G&A expense | (175) | (199) | 13.6% | (49) | (52) | 6.3% |
Operating income | 82 | 54 | -35.0% | 48 | 21 | -57.5% |
Financial income | 413 | 323 | -21.8% | 68 | 46 | -32.4% |
Financial expense | (132) | (113) | -14.1% | (27) | (17) | -37.7% |
Net financial income | 281 | 210 | -25.4% | 41 | 29 | -28.9% |
PBT | 377 | 273 | -27.7% | 94 | 54 | -42.7% |
NPAT | 329 | 238 | -27.9% | 75 | 43 | -42.5% |
Loss ratio | 34.4% | 33.9% | -0.5 ppts | 22.8% | 26.0% | 3.2 ppts |
Expense ratio | 63.8% | 64.6% | 0.8 ppts | 68.8% | 71.0% | 2.3 ppts |
Combined ratio | 98.1% | 98.5% | 0.4 ppts | 91.6% | 97.0% | 5.5 ppts |
Source: BMI, Vietcap
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