V Vietnam Ietnam: Insur Insuranc Ance R e Report Eport

Q4 2019
www.fitchsolutions.com
Vietnam
Insur
Insuranc
anceeR
Report
eport
Includes 5-year forecasts to 2023
Vietnam Insurance Report | Q4 2019
Contents
Key View............................................................................................................................................................................................ 4
SWOT .................................................................................................................................................................................................. 5
Insurance SWOT............................................................................................................................................................................................................................ 5
Industry Forecast........................................................................................................................................................................... 6
Life Premiums Forecast ............................................................................................................................................................................................................. 6
Non-Life Premiums Forecast................................................................................................................................................................................................... 9
Non-Life Sub-Sector Forecast ...............................................................................................................................................................................................12
Industry Risk/Reward Index ....................................................................................................................................................20

Asia Pacific Insurance Risk/Reward Index ........................................................................................................................................................................20
Market Overview..........................................................................................................................................................................22
Life Market Overview.................................................................................................................................................................................................................22
Non-Life Market Overview ......................................................................................................................................................................................................25
Company Profile...........................................................................................................................................................................28
AIA Group.......................................................................................................................................................................................................................................28
Bao Viet Holdings .......................................................................................................................................................................................................................30
Manulife Financial.......................................................................................................................................................................................................................32
Prudential ......................................................................................................................................................................................................................................34
Insurance Methodology.............................................................................................................................................................36
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Key View
Key View: Major trends in Vietnam’s insurance sector remain positive: household incomes are growing, and understanding of the
benefits of insurance is rising. The leading insurers have access to the capital that they are need, are introducing innovative and
appropriate products and are developing multiple distribution channels. The regulator is working to improve transparency and
standards.
HEADLINE INSURANCE FORECASTS (VIETNAM 2016-2023)

Indicator 2016 2017 2018e 2019f 2020f 2021f 2022f 2023f
Gross life premiums written, VNDbn 50,497.00 65,050.00 79,277.36 91,741.38 107,139.30 120,466.78 135,214.74 151,550.55
Gross life premiums written, VND, %

31.9 28.8 21.9 15.7 16.8 12.4 12.2 12.1
y-o-y
Gross life premiums written, USDbn 2.26 2.86 3.44 3.91 4.49 5.00 5.56 6.19
Gross life premiums written, USD, %

29.3 26.8 20.3 13.7 14.8 11.3 11.3 11.2
y-o-y
Gross non-life premiums written,

36,864.00 40,561.00 44,637.42 48,823.42 53,815.58 59,225.28 65,199.68 71,848.05
VNDbn

15.6 10.0 10.1 9.4 10.2 10.1 10.1 10.2
VND, % y-o-y

1.65 1.79 1.94 2.08 2.26 2.46 2.68 2.93
USDbn

13.3 8.3 8.6 7.4 8.3 8.9 9.2 9.3
USD, % y-o-y
e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions
Key Updates And Forecasts
• In late April 2019 UK-based multinational Aviva was reported to have moved to full ownership of its joint venture (JV) in Vietnam.
Aviva’s partner Vietinbank had held a 50% stake in the JV. Vietinbank remains a key distribution partner for Aviva in Vietnam.
• In mid-June 2019 Peak Reinsurance Company (Peak Re) introduced a new multi-benefit cancer insurance product for the
Vietnam market. The new product does not require lengthy and expensive medical examinations at the time that the policy is
taken out.
• At the end of June 2019 the Insurance Supervisory Authority (ISA - the regulator of the sector) was cited as saying that gross
written premiums in H119 amounted to more than VND71tn (USD3bn), or 24.4% more than in the previous corresponding
period.
• ISA was cited as saying that total assets of the insurance sector had risen by 19.0% through H119 to VND423.4tn. Claims and
payments were VND18.7tn, or 19.6% more than in H118.
• ISA continues to work on revising the Law on Insurance Business so that it is consistent with Vietnam’s obligations under the
various free trade agreements to which the country is a signatory.
• At the end of June ISA introduced the first formal standards for professional competency of employees in the non-life insurance
segment.
• Press reports in late July 2019 indicated that the number of people who are registered with the national health insurance system
had risen to nearly 90% of the entire population by the end of May. Premiums are set at 4.5% of monthly income.
SWOT
Insurance SWOT
SWOT Analysis
Strengths • Vietnam's sizeable population and lack of development in the life and non-life markets are positives for
investors and new entrants alike.
• Both the life and non-life insurance segments have been growing at double-digit rates, and have the
potential to do so for the foreseeable future.
• There are clear signs of pricing discipline in the non-life segment and claims control is improving.
• Given the domination of the life segment by subsidiaries of regional and global majors, lack of capital will not
be a constraint.
• The non-life segment is well diversified away from motor insurance, a staple line in many underdeveloped
markets.
• A well-developed manufacturing sector has given rise to strong demand for transport insurance.
• A fragmented marketplace with a number of smaller local players provides scope for growth via mergers and
acquisitions.
Weaknesses • The high growth expected in the life and non-life segments of the Vietnamese market is coming off a small
base.
• Many of the domestic non-life companies are subscale and lack ready access to new capital.
• Many Vietnamese households still do not have sufficient income to purchase non-essential life or non-life
products.
• The domestic economy remains undiversified, which limits potential for growth of lines such as credit/
financial guarantee and general liability insurance.
Opportunities • Rising income levels mean that many more households will be in a position to afford insurance products by
2023 and beyond.
• Car ownership is rising rapidly from a very low base, creating demand for motor insurance products.
• The massive growth in agency networks that is currently underway in the life segment should enable a
sizeable increase in overall premiums.
• The trend towards private health facilities will support demand for health insurance among wealthier
consumers.
• The government has launched a trial programme to promote the development of export credit insurance.
• Vietnam's government is gradually easing restrictions on foreign companies and appears more receptive to
overseas investment and ownership.
Threats • High inflation could constrain households from becoming first-time users of life insurance, in a country
where well over 80% lack cover.
• Lack of development and volatility in the Vietnamese capital and bond markets complicate investment
strategies.
• Vietnam is vulnerable to natural disasters, which would heavily impact the country's non-life firms.
• The expansion of the government's mandatory health insurance programme may eventually undermine
demand for private health insurance coverage.
Industry Forecast
Life Premiums Forecast
Key View: In global terms, Vietnam still ranks as a comparatively small market for life insurance in terms of total premiums written.
However, it is one of the fastest growing. Virtually all trends are positive. Household incomes are rising, with the result that the
number of households that can afford life insurance is growing quickly. The segment is dominated by innovative and dynamic local
subsidiaries of global/regional giants that have access to all the capital they need. The insurers are generally distributing through
multiple channels. We believe that the premium growth rate will slow through the forecast period, but only because the base is
(much) higher.
Latest Updates
• Reports from the leading life insurers have confirmed that the segment is growing rapidly by most metrics.
• Many of the companies are leveraging technology and/or multiple distribution channels to boost sales.
Structural Trends
While we foresee robust and sustained longer-term growth in life insurance premiums, we are mindful of potential setbacks due to
economic shocks and general low levels of awareness among Vietnamese households of the benefits of various life insurance
products. Although the insurers have been working to improve customers' understanding of life insurance, a more fundamental
problem is that most households cannot afford it.
In spite of ongoing growth, Vietnam's life insurance segment remains a small investment opportunity for international life insurers,
in comparison with other countries across South East Asia. Nevertheless, the segment has been benefiting hugely from the product
and distribution know-how and regional scale of (most of) the international companies that are establishing a presence in the
country. As the country's business environment becomes more favourable to foreign investors and as wider economic growth
improves household income levels, we expect to see further long-term growth in Vietnam's life insurance sector.
Multiple Growth Drivers

Vietnam - Gross Life Insurance Premiums (2016-2023)

Life Insurance Premiums: Developing Fast
Ongoing commitment by the Vietnamese government to improving macroeconomic fundamentals and forging financial stability
should bode well for the country's economy as a whole, and notably also for the insurance sector. However, with life density (life
premiums per capita) at about USD19.3, and life penetration (life premiums as percentage of GDP) of 1.5% in 2019, we are mindful
that many households are still struggling to properly afford life insurance. Looking forward, we foresee life premiums continuing to
track upwards strongly. Our forecast envisions a strong positive growth trajectory for life insurance to 2023.
One of the main drivers of this growth will be the increasing affordability of life insurance as household income levels gradually
increase throughout the country. In particular, we expect to see a significant rise in the number of middle-income families earning
between USD5,000 and USD10,000 a year. We expect the number of households in the high-income bracket of USD50,000-plus to
rise from around 45,500 in 2019 to more than 107,000 by the end of 2023.
Affordability A Constraint - But Not On The Growth Rate

Household Income Breakdown (2019-2023)
f = Fitch Solutions forecast. Source: National sources, Fitch Solutions
The increased earning power of Vietnamese households will result in higher levels of disposable income and, hence, demand for
savings and investment products. Accordingly, the various multinational insurers that have established operations in Vietnam are, in
our view, right to see the market as an attractive opportunity for future investment. It is likely that players will have significant
success with the development and distribution of microinsurance products to reach out to low-income households.
We expect premiums to rise by 15.7% in 2019, following growth of 21.9% in 2018. We think that life premiums will expand by 12.1%
in 2023, the final year of the forecast period.
LIFE PREMIUMS (VIETNAM 2016-2023)

Gross life premiums written, VNDbn 50,497.00 65,050.00 79,277.36 91,741.38 107,139.30 120,466.78 135,214.74 151,550.55
Gross life premiums written, VND, %

31.9 28.8 21.9 15.7 16.8 12.4 12.2 12.1
y-o-y
Gross life premiums written, USDbn 2.26 2.86 3.44 3.91 4.49 5.00 5.56 6.19
Gross life premiums written, USD, %

29.3 26.8 20.3 13.7 14.8 11.3 11.3 11.2
y-o-y
Gross life premiums written, % of

1.1 1.3 1.4 1.5 1.6 1.6 1.6 1.6
GDP
Gross life premiums written, % of

57.8 61.6 64.0 65.3 66.6 67.0 67.5 67.8
gross premiums written
Claims: Growing As Industry Develops
The trend of life payments and claims by Vietnam's life insurers has been one of rapid growth (from a low base). As a result, we
expect that such considerable increases in claims may persist over the coming years, in line with Vietnam's overall rapid economic
growth and the further development of the life insurance segment.
LIFE INSURANCE CLAIMS (VIETNAM 2011-2017)

Indicator 2011 2012 2013 2014 2015 2016 2017
Claims life, VNDbn 4,221.75 5,740.15 8,095.00 8,520.06 9,720.00 12,363.00 15,947.00
Claims life, VND, % y-o-y 51.5 36.0 41.0 5.3 14.1 27.2 29.0
Life insurance gross loss ratio 26.4 31.2 34.7 30.0 25.4 24.5 24.5
Claims life, USDbn 0.20 0.28 0.38 0.40 0.44 0.55 0.70
Claims life, USD, % y-o-y 40.2 34.6 40.0 4.4 10.3 24.6 27.0
Source: AVI, Fitch Solutions
Non-Life Premiums Forecast

Key View: We continue to expect non-life insurance premiums to rise by around 10% annually through the forecast period. The
general economic environment is benign. Most sub-sectors are benefiting from higher volumes, new users, innovation by the
insurers and higher prices.
Latest Updates
• Structural trends in each of the larger sub-sectors of the non-life segment are consistent with rapid growth in premiums
throughout the forecast period.
• Growth rates may well be boosted by the entry of large multinationals.
Structural Trends
Currently underdeveloped by virtually all metrics, Vietnam's non-life insurance sector represents a substantial growth opportunity.
Personal accident insurance - a basic line that is often the first cover purchased by new users - is well established. Volumes and
prices are growing in the important motor vehicle insurance sub-sector. Transport insurance is popular among Vietnam's state-
owned enterprises, many of which have close links to indigenous non-life companies. As income levels grow and understanding of
the benefits of insurance increases, the segment is likely to continue to expand rapidly well beyond the end of the forecast period
in 2023.
All Trends Positive

Gross Non-Life Premiums (2016-2023)
e/f = Fitch Solutions estimate/forecast. Source: AVI, Fitch Solutions
Non-Life Insurance Premiums: Healthy Growth Potential
We retain a positive outlook for Vietnam's non-life insurance segment. In spite of low per capita premiums of USD19 and low non-
life penetration (premiums as a percentage of GDP) of 0.8%, we expect that increasingly more households should become better
able to afford non-life insurance products as Vietnam's economy continues to strengthen.
As with the life insurance sector, the primary risk to our current forecasts stems from the potential derailment of domestic
economic growth prospects. For now, though, we expect premiums to rise by 9.4% in 2019, following growth of 10.1% in 2018. We
think that non-life premiums will increase by 10.2% in 2023.
NON-LIFE PREMIUMS (VIETNAM 2016-2023)

Gross non-life premiums written, VNDbn 36,864.00 40,561.00 44,637.42 48,823.42 53,815.58 59,225.28 65,199.68 71,848.05
Gross non-life premiums written, VND, %

15.6 10.0 10.1 9.4 10.2 10.1 10.1 10.2
y-o-y
Gross non-life premiums written, USDbn 1.65 1.79 1.94 2.08 2.26 2.46 2.68 2.93
Gross non-life premiums written, USD, %

13.3 8.3 8.6 7.4 8.3 8.9 9.2 9.3
y-o-y
Gross non-life premiums written, % of

0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8
GDP
Gross non-life premiums written, % of

42.2 38.4 36.0 34.7 33.4 33.0 32.5 32.2
gross premiums written
Claims: Costs Will Increase
Similar to Vietnam's life insurance segment, non-life insurance claims have also grown rapidly since 2009. The years 2011 and 2015
exhibited particularly significant growth rates of 32.3% and 26.4% respectively (in local currency terms). This trend can be attributed
to the nature of the segment, where large-scale commercial and industrial risks account for a substantial share of non-life
premiums. As a result, though losses are not frequent, they are substantial when they occur. We believe that non-life claims will grow
even more rapidly, as motor vehicle and property insurance are accounting for an increasingly larger share of total written
premiums.
Diversity
Vietnam - Non-Life Claims, USDmn (2017)
Source: AV, Fitch Solutions
As well as accounting for the majority of premiums written, motor insurance is also the largest source of non-life claims in the
Vietnamese non-life insurance sector, accounting for some 49.3% of claims paid in 2016. This represents a decrease on previous
years, indicating that insurers are gradually improving claims control processes. Transport insurance, which also has a large share of
premiums, is another major source of non-life claims. We believe that this follows Vietnam's increasingly important role in
international trade exports, growing at a healthy rate. Health and personal accident insurance, currently the third largest source of
claims, has seen costs increasing rapidly in recent years, a trend that we expect to continue moving forward as Vietnam raises fees
in state-owned medical facilities, and as care standards and availability generally improve.
NON-LIFE INSURANCE CLAIMS (VIETNAM 2012-2017)

Indicator 2012 2013 2014 2015 2016 2017
Claims non-life, VNDbn 8,857.00 10,668.00 10,954.00 13,851.00 13,232.00 15,957.00
Claims non-life, VND, % y-o-y 4.9 20.4 2.7 26.4 -4.5 20.6
Non-life insurance gross loss ratio 38.8 43.5 39.8 43.4 35.9 39.3
Non-Life Sub-Sector Forecast

Key View: That enrolment in the national health insurance system has already reached 90% of the population augurs well for the
development of health insurance. We expect health premiums to rise at double-digit rates throughout the forecast period and
beyond. The other sub-sectors should also benefit from higher volumes and prices. Risks to our forecasts lie to the upside.
Latest Updates
• We remain of the view that different factors are likely to come to the fore in the various sub-sectors. New users will boost
demand for health & personal accident insurance. A rise in the number and value of vehicles on Vietnam's roads, and likely
increased prices for insurance, should underpin the expansion of motor vehicle insurance premiums. Rising trade and
investment will likely boost transport insurance premiums.
Structural Trends
The small overall scale of Vietnam's non-life insurance market means that certain perceived non-essential lines have gained
significance, despite being of limited worth in absolute terms. The health and personal accident insurance market, for example, is
more developed proportionally than in the majority of low-income countries, accounting for about 28% of total spending at
present. Likewise, the transport insurance sub-sector comprises 13% of the market, owing to the large contribution of
manufacturing exports to GDP. In contrast, the motor and property insurance segments together account for less than 39% of total
non-life premiums, which is low for a developing economy. This reflects the low levels of affordability of these basic lines among the
general population, as well as limited vehicle ownership. We expect the current market structure to remain broadly unchanged
through to 2023.
Health & Personal Accident Insurance Well Established

Non-Life Sub-Sector Premiums (USDmn), 2019
Motor Insurance: Remaining The Major Line
The motor vehicle segment will be a key area of growth within the non-life sector over the coming quarters. Rising income levels will
support domestic passenger car demand, with our Autos team forecasting new vehicle sales to rise by 20% a year or more through
the majority of the forecast period. We believe that there is scope for rapid long-term growth in the motor vehicle segment beyond
the end of the forecast period. As basic car insurance is a compulsory line in Vietnam, the projected expansion in vehicle ownership
should be directly reflected in the level of insurance coverage.
For now, we expect motor insurance premiums to rise by 8.1% in 2019, following growth of 7.0% in 2018. We expect an expansion
of 9.6% in 2023, the final year of the forecast period. We acknowledge that we may have to revise up our forecasts.
Moving At High Speed

Motor Premiums (2016-2023)
Expansion in Vietnam's domestic vehicle fleet will underpin further growth in demand for motor vehicle premiums over the
remainder of the forecast period. Vehicle ownership in Vietnam is at an extremely low level, even by developing world standards (we
forecast passenger car density at just 21.8 cars for every 1,000 residents in 2019). A low base creates scope for rapid expansion in
the size of the fleet: Over 2019-2023, we expect the number of passenger cars on the country's roads to rise by about 15.5% a year,
with density reaching 36.8 vehicles per 1,000 population in 2023. For now, we believe that the insurers will also be able to at least
maintain prices.
Dynamics Of Vietnam's Vehicle Fleet

Vehicle Fleet Size (2016-2023)
Transport Insurance: Well-Established Line
Transport insurance accounts for about 13% of total non-life insurance spending in Vietnam, a much higher proportion than in
most developing markets. Robust export volumes, servicing Vietnam's buoyant manufacturing sector, will support strong expansion
in transport over the next few years.
Demand for transport insurance will continue to rise in line with growth in Vietnam's freight transport sector. This is in turn reflective
of the country's growing role in international trade. For example, Vietnamese exporters are expected to play a greater role in the
electronics supply chain in the near future, which is a key source of demand for air freight transport. In addition, Vietnam's
pharmaceutical sector exports much of its output, but it also imports a lot.
Amid rapidly expanding trade activity, the long-term growth prospects for the transport segment are highly positive. This is
particularly the case as several of the leading domestic non-life firms specialise in various transport lines, including the provision of
specialised transport insurance for the growing energy sector or for the large fishing industry.
We expect transport insurance premiums to increase by 8.2% in 2019, following a rise of 13.6% in 2018. We expect a rise of 7.9% in
2023.
Benefiting From Trade

Vietnam - Transport Premiums (2016-2023)
Property Insurance: Lack Of Affordability Stifling Demand
Property insurance is poorly developed as a non-life product line in Vietnam, with the majority of households not in a position to
afford this form of coverage. Property lines account for less than 8% of wider non-life premiums. Corporate risks are often covered
in regional markets, such as Singapore.
The robust development of Vietnam's real estate market will support growing demand for property insurance lines over the
remainder of the forecast period, with residential construction activity set to grow by 6.9% a year over 2019-2023.
Over the longer term, changes to the property market may result in more demand for property insurance. The government is
gradually relaxing restrictions on foreign property ownership, which could result in an influx of investment and, in turn, drive demand
for property insurance. Rapid urbanisation is another long-term growth avenue, and as household income rises, this could also
indicate increased demand for property insurance as premiums become more affordable.
We believe that property insurance premiums will rise by 5.8% in 2019. In 2023, premiums in this sub-sector should grow by 4.8%.
Still A Small Sub-Sector

Vietnam - Property Premiums (2016-2023)
Health And Personal Accident Insurance: Demand Is Rising
Healthcare provision in Vietnam is in a state of flux. The government is rolling out universal healthcare via mandatory health
insurance, with ambitious plans to expand coverage to 95% of the population by 2025. However, initial signs are that uptake of
state-provided health cover in many areas has been limited and the quality of care provided by state facilities, particularly in rural
areas, is very poor. Therefore, we believe that demand for supplementary private and personal accident insurance products will
continue to rise among high-income consumers.
Growth Bonanza
Health & Personal Accident Premiums (2016-2023)
Rising income levels (and limited appeal of state-provided health insurance coverage to Vietnam's affluent consumers) will ensure
consistently healthy demand for health insurance over the forecast period. We believe that the government's healthcare reforms
will be slow to materialise and consumers will continue to opt for private services where possible. The growing number of foreigners
living in Vietnam will further boost demand. First-time users will provide a substantial boost to personal accident insurance
premiums. The health & personal accident insurance sub-sector should be a key driver of growth for the non-life segment as a
whole.
We expect premiums in this sub-sector to rise by 10.9% in 2019. They should expand at a similar annual rate for the remainder of
the forecast period. Health and personal accident premiums should rise by 11.7% in 2023.
Credit And Financial Guarantee Insurance: Remaining A Minor Line
Credit/financial guarantee insurance occupies only a minute section of the non-life market in Vietnam, representing less than 1% of
non-life insurance premiums in 2019. Demand will be underpinned by the growth in financial services in general, and lending in
particular.
Still Miniscule
Credit & Financial Guarantee Premiums (2016-2023)
Although limited in absolute terms, this sub-sector's growth is a mark of the development in the Vietnamese financial sector, and
the growing uptake of formal banking services. However, this growth will be insufficient to expand credit/financial guarantee
insurance's share of the non-life market by the end of our forecast period in 2023.
We expect that premiums in this sub-sector will grow by 11.9% in 2019. In 2023, the growth rate should be similar, at about 12.3%.
Over the longer term, the continued expansion of the domestic economy, development of the banking sector, improved access to
financial services and diversification of industry all indicate increasing demand for credit/financial guarantee insurance products.
While this line is currently small, we expect to see healthy and sustained growth throughout and beyond the current forecast period.
NON-LIFE INSURANCE PREMIUMS BY PRODUCT LINE (VIETNAM 2016-2023)

Motor vehicle
insurance, 11,754,000.0 12,979,520.0 13,891,299.7 15,021,980.2 16,406,797.2 17,917,264.4 19,600,311.3 21,475,716.0
VNDmn
Motor vehicle
insurance, VND, 20.6 10.4 7.0 8.1 9.2 9.2 9.4 9.6
% y-o-y
Motor vehicle
insurance, % of
31.9 32.0 31.1 30.8 30.5 30.3 30.1 29.9
non-life
insurance
Property
insurance, 3,307,000.0 3,184,038.5 3,572,707.8 3,779,957.6 3,978,116.0 4,165,876.4 4,341,391.6 4,549,538.5
VNDmn
Property
insurance, VND, 13.0 -3.7 12.2 5.8 5.2 4.7 4.2 4.8
% y-o-y
Property
insurance, % of
9.0 7.9 8.0 7.7 7.4 7.0 6.7 6.3
non-life
insurance
Transport
insurance, 5,717,606.4 5,199,920.2 5,907,402.4 6,392,117.2 6,903,361.3 7,453,977.7 8,047,273.0 8,686,569.0
VNDmn
Transport
insurance, VND, 16.5 -9.1 13.6 8.2 8.0 8.0 8.0 7.9
% y-o-y
Transport
insurance, % of
15.5 12.8 13.2 13.1 12.8 12.6 12.3 12.1
non-life
insurance
Health and
personal
accident 9,472,000.0 11,920,877.9 12,472,080.5 13,832,680.0 15,505,177.9 17,328,131.3 19,359,347.3 21,622,449.1
insurance,
VNDmn
Health and
personal
accident 24.8 25.9 4.6 10.9 12.1 11.8 11.7 11.7
insurance, VND,
% y-o-y
Health and
personal
25.7 29.4 27.9 28.3 28.8 29.3 29.7 30.1
accident
insurance, % of
non-life
insurance
General liability
insurance, 822,067.2 912,622.5 985,029.3 1,093,727.2 1,226,856.5 1,372,065.2 1,533,864.8 1,714,156.7
VNDmn
General liability
insurance, VND, 21.8 11.0 7.9 11.0 12.2 11.8 11.8 11.8
% y-o-y
General liability
insurance, % of
2.2 2.3 2.2 2.2 2.3 2.3 2.4 2.4
non-life
insurance
Credit/financial
guarantee
169,574.4 214,973.3 239,202.4 267,586.4 299,660.3 335,903.8 376,858.9 423,138.3
insurance,
VNDmn
Credit/financial
guarantee
0.9 26.8 11.3 11.9 12.0 12.1 12.2 12.3
insurance, VND,
% y-o-y
Credit/financial
guarantee
insurance, % of 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.6
non-life
insurance
Other
insurance, 6,328,442.9 6,153,103.7 7,569,701.3 8,435,372.4 9,495,615.5 10,652,058.7 11,940,632.4 13,376,478.9
VNDmn
Other
insurance, VND, 7.6 -2.8 23.0 11.4 12.6 12.2 12.1 12.0
% y-o-y
Other
insurance, % of
17.2 15.2 17.0 17.3 17.6 18.0 18.3 18.6
non-life
insurance
Industry Risk/Reward Index

Asia Pacific Insurance Risk/Reward Index
The established markets of Singapore and Hong Kong hold on to first and second place in our Asia Pacific (APAC) Risk/Reward Index
(RRI). Australia rounds out the top five with Taiwan – which increased its score by 0.52 – and the North East Asian market of South
Korea. Japan and China also stay put in sixth and 10th position respectively. With the exception of Mongolia, this region excels in
Rewards, as South Korea, Japan and China place in the top 10 and score well above the APAC average of 50.67. Singapore, however,
leads this component of our index. In Risks, Australia and New Zealand maintain the highest scores in our tables. The latter’s score,
in particular, balances out a poor Rewards performance.
Fitch Solutions’ outlook is more positive for APAC than most emerging markets, but concerns still remain over the regulatory
environment in some countries like Cambodia, which has the lowest RRI in the ranking. Its profile pales in comparison with other
nations, especially for Industry Rewards Life, where it scores zero. Conversely, China – one of the region’s key players – garners
77.50 in this category, reflecting its booming life market. An impressive score, granted, but it actually positions China in sixth place;
Taiwan, South Korea and Japan rank among our five high scorers for this component alongside Hong Kong, which has a 7.50 lead
against Singapore – its closest competitor.
Fuelled by its developed life insurance market, Thailand sits among the strongest-performing countries of the less-developed
economies in our RRI. The country’s consistent performance has helped it stay in ninth position with an unchanged score of 60.65.
At the other end of the scale is the small market of Mongolia, which populates the bottom four with the underdeveloped industries
in Pakistan, Bangladesh and Cambodia. The latter three present the most risk to the market and potential investors. With an average
Risks score of 36.01 between them, they sit well below the regional mean of 61.25.
The Insurance RRI considers the current state and long-term potential of the non-life and the life segments. It also assesses how
open each segment is to new entrants and economic conditions. Collectively, these measures enable an objective review of the
limits to potential returns across all countries – and over a period of time. The scores also focus on the risks to the realisation of
returns, which is based on our proprietary Country Risk Index. It also embodies a subjective assessment of the impact of the
regulatory regime on the development and competitive landscape of the insurance sector.
ASIA PACIFIC INSURANCE RISK/REWARD INDEX

Industry Industry Industry Country Rewards Industry Country Risks Insurance Rank
Rewards Rewards Rewards Rewards Risk Risks Risk/Reward
Non-Life Life Score
Singapore 77.50 70.00 85.00 71.42 75.07 95.00 77.11 84.27 77.83 1
Hong Kong 75.00 57.50 92.50 71.97 73.79 100.00 70.14 82.08 76.28 2
Australia 75.00 80.00 70.00 62.07 69.83 90.00 83.44 86.06 74.70 3
South Korea 81.25 80.00 82.50 63.43 74.12 60.00 79.59 71.75 73.41 4
Taiwan 78.75 72.50 85.00 60.14 71.31 70.00 74.95 72.97 71.80 5
Japan 76.25 72.50 80.00 55.75 68.05 65.00 81.12 74.67 70.03 6
New Zealand 43.75 52.50 35.00 67.57 53.28 90.00 82.45 85.47 62.94 7
Malaysia 57.50 50.00 65.00 60.99 58.90 75.00 63.86 68.32 61.72 8
Thailand 62.50 55.00 70.00 53.78 59.01 70.00 60.78 64.47 60.65 9
China 73.75 70.00 77.50 43.85 61.79 55.00 59.63 57.78 60.59 10
India 63.75 60.00 67.50 42.71 55.33 45.00 68.31 58.99 56.43 11
Macau 40.00 25.00 55.00 64.91 49.96 65.00 55.67 59.40 52.79 12
Indonesia 53.75 42.50 65.00 47.61 51.29 55.00 57.12 56.27 52.79 13
Philippines 46.25 37.50 55.00 44.26 45.46 75.00 60.21 66.12 51.66 14
Vietnam 41.25 35.00 47.50 40.74 41.04 55.00 46.80 50.08 43.76 15
Sri Lanka 21.25 22.50 20.00 40.19 28.82 45.00 51.13 48.68 34.78 16
Fiji 20.00 22.50 17.50 44.20 29.68 50.00 38.63 43.18 33.73 17
Mongolia 10.00 12.50 7.50 49.10 25.64 40.00 52.78 47.67 32.25 18
Bangladesh 21.25 22.50 20.00 34.79 26.67 20.00 47.40 36.44 29.60 19
Pakistan 18.75 17.50 20.00 35.52 25.46 40.00 34.42 36.65 28.82 20
Cambodia 6.25 12.50 0.00 39.73 19.64 40.00 31.57 34.94 24.23 21
Note: Scores out of 100, with 100 the best. Source: Fitch Solutions
Market Overview
Life Market Overview
There are a number of structural factors that should support the rapid growth of Vietnam's life segment. These include: a young
population, urbanisation and the growth of the middle class, the absence of a comprehensive social security system, high savings
rates among those households that can afford to save, and innovation by multinational life insurance companies, which see
Vietnam's market as a growth opportunity.
Product Offering
For multinationals that are active across the Asia Pacific region, Vietnam is a growth opportunity, if a market that is currently
underdeveloped by many metrics. Targeting the emerging middle classes, the leading companies offer a broad range of savings and
protection products. As is the case in the rest of the region, the insurers use a variety of distribution channels - bancassurance, tied
agents, independent brokers and direct. Some companies are also targeting corporate customers with group products.
Significant regulatory improvements have further facilitated growth in Vietnam's life insurance sector. In the past, multinational
companies noted difficulties with regard to operating in Vietnam, highlighting excessive and unnecessary regulation in the market
which made the market entry process much slower and less profitable. The Vietnamese government has recognised this and has
introduced a new set of regulations in the insurance sector. In particular, the government is trying to streamline the regulatory
framework in line with international best practices and standards and to comply with Vietnam's WTO commitments.
Competitive Landscape
Life density and overall market penetration in Vietnam are low compared to other countries. However, this is not necessarily
negative for the life market, as there is significant room for growth, taking into account the country's population of 90mn. The
speedy growth of the middle class, coupled with a culture that places a high value on children's education, should mean that the
Vietnamese become more enthusiastic about buying life cover over the forecast period. Moreover, corporate customers are likely to
see the benefit of buying group life policies as a means of attracting and retaining skilled staff.
Market Dominated By Two Players

Vietnam - Life Insurance Companies' Premiums, USDmn (2017)
There were 17 life insurance companies in 2017 with about 1,000 representative offices and general insurance agents. A few
companies divide the lion's share of the life segment between them, with Prudential and the former state monopoly Bao Viet
Life taking about 42% of premiums, which is down from about 65% in 2015. We remain of the view that, over time, these two
companies' combined shares will be further eroded as new entrants come to the Vietnamese life insurance market.
VIETNAM - LIFE INSURANCE MARKET, USDMN (2010-2017)

2010 2011 2012 2013 2014 2015 2016 2017
Bảo Việt 210.4 217.3 249.2 300.4 347.3 462.1 601.6 769.1
Prudential 281.0 290.9 312.4 363.2 423.5 510.9 605.0 713.7
Manulife 76.4 86.1 103.4 123.7 148.1 205.7 273.8 357.7
Daiichi 51.8 56.4 70.8 88.3 122.6 161.5 237.0 354.5
AIA na 58.4 66.9 83.8 109.0 160.1 210.4 277.1
Chubb na 44.1 48.7 55.4 61.3 75.8 92.8 114.2
Generali na 0.0 0.9 3.1 12.9 34.9 59.5 86.1
Hanwha na 6.1 11.1 13.2 18.4 32.9 47.7 67.5
Aviva na 0.0 0.6 1.7 4.9 19.4 31.7 42.7
Sun life na na na 48.7 11.0 38.2 37.7 25.0
BIDV Metlife na na na na 0.0 3.1 11.5 22.8
Prevoir na 1.9 3.7 18.2 17.3 24.1 21.2 20.6
Cathay na 8.5 5.7 4.4 6.3 9.4 13.7 20.2
FWD 0.0 0.0 0.0 0.0 0.0 0.0 2.0 12.7
VCLI na 1.4 2.6 3.2 3.6 3.8 7.0 12.2
Phú Hưng na na na na 0.7 0.5 3.3 5.8
MB Ageas 0.0 0.0 0.0 0.0 0.0 0.0 na 1.1
na = not available/applicable. Source: Fitch Solutions, AVI
Life insurers seeking a pan-Asian presence are obvious contenders to enter Vietnam's life segment and should be the main drivers
of transactional activity over the next few years. They should be better equipped than European or North American firms to enter
the market and negotiate the sector's complex regulatory environment. Samsung Vietnam General Director Han Myoung Sup
said in September 2015 that his company intended to enter Vietnam's life insurance market. Samsung Vina Insurance is a joint
venture between Samsung Fire & Marine Insurance and Vietnam National Reinsurance Corporation (VINARE), but it
currently offers non-life lines only.
The growth of the life segment is likely to proceed hand-in-hand with the heightening sophistication of Vietnam's financial sector. In
July 2015, state media reported that Prudential Vietnam had purchased half of the government's first issuance of 20-year sovereign
bonds, for VND3.2trn (USD147.5mn). The life segment stands to benefit from a general lengthening of investment horizons in the
country. Prudential's move also had political significance, insofar as the Vietnamese government cited it as evidence of foreign
investors' faith in the country's long-term economic stability.
Non-Life Market Overview

As is the case with the life segment, demand for non-life insurance should grow as a result of the general development of the
economy, along with the expansion of the middle class. Unlike the life segment, though, the competitive landscape is dominated by
indigenous insurers - many of which have traditionally been linked with large state-owned enterprises.
Product Offering
Vietnam is already an attractive investment prospect for general insurers. It has a large, young population and an emerging middle
class. The insurance market is, however, still in the early stages of liberalisation; foreign investors were first permitted to enter the
market in the mid-1990s, and it has grown very quickly since then. Vietnam is a member of the World Trade Organization (WTO), and
is legislated to comply with its WTO commitments. While membership has allowed foreign non-life insurers to set up branches in
Vietnam, the process is ongoing, and foreign investors in Vietnam still face regulatory hurdles, with the capital investment and
solvency regulations favouring larger institutions. Insurers in Vietnam have developed multi-channel distribution strategies that
incorporate agents, bancassurance, e-marketing and telesales. Large international brokers, such as Aon, Marsh and Willis, have
strong positions in Vietnam's brokering landscape. Brokers have complained about the absence of regulations covering fees that
they can charge for consultancy services they offer, preventing them from offering such consultancy. In June 2016, the Ministry of
Finance pledged to examine the need for further regulations, which could see an expansion of brokerage operations in Vietnam
over the forecast period.
Competitive Landscape
Vietnam's non-life segment is much more fragmented than life insurance, reflecting the fact that whereas life policies remain
affordable only for the relatively small, but growing middle class, insurance is mandatory for drivers and business property. Given
Vietnam's low average incomes, price competition for basic compulsory lines is fierce.
A Crowded Marketplace
Vietnam - Leading Non-Life Companies In Terms Of Premiums, USDmn (2017)

The market incumbents are the companies associated with former state monopolies that were corporatised during Vietnam's doi
moi shift towards economic liberalism. Although their businesses are growing in absolute terms, their market share, as one would
expect, is being squeezed by newer entrants and particularly by the local businesses of major multinational insurers. The three
largest players in Vietnam's non-life insurance market are Bao Viet, PVI and Bao Minh. Together, they account for about half of all
non-life premiums written year-to-year. However, the remainder of the market is fragmented, with particular groups focusing on
niche specialties.
Besides the three largest companies, there are 25 players in the non-life segment. Local companies include AAA, Agricultural
Bank Insurance, BIC (a subsidiary of Bank for Investment and Development of Vietnam), Bao Tin, GIC, Great Mountain JSC,
Hung Vuong JSC, Military Insurance, Petrolimex Joint Stock Insurance Company (PJICO), Nha Rong Insurance (Bao
Long), Petrovietnam Insurance (PVI), Post Office Insurance, SVIC, Union Insurance, VietinBank Insurance, VNA
Insurance, Vietnam National Reinsurance (VinaRe) and VASS. Joint ventures include Samsung Vina Insurance and Bao
Viet Tokio Marine Insurance. Foreign groups with a presence on the ground include AIG, QBE, Liberty Mutual, Fubon
Insurance, MSIG and ACE (Non-Life).
The development of the premiums of the various non-life companies highlights a number of key features and trends. First,
Vietnam's non-life segment is growing steadily in absolute terms, even if this due to a rise in overall GDP rather than non-life
penetration. Second, the larger companies (other than Bao Viet) have close links with state-owned enterprises that are not naturally
in the insurance businesses. These insurance subsidiaries continue to handle industrial risks for their parents; this is an aspect of the
market that makes it fairly unusual. Third, very few of the players have scale, even though a few of them are affiliates of regional/
global insurers that can see their Vietnam operations in the context of a larger entity. Many of the companies that are active in the
segment are writing premiums of less than USD20mn annually. They are rather small by almost all standards.
NON-LIFE INSURANCE MARKET (USDMN), 2010-2017

2010 2011 2012 2013 2014 2015 2016 2017
Bảo hiểm Bảo Việt 219.6 236.1 257.9 269.8 269.0 265.9 293.5 354.4
Bảo hiểm PVI 183.7 205.3 223.2 242.5 273.9 294.6 291.8 294.5
Bảo Minh 101.5 107.0 109.5 109.7 117.5 128.7 138.7 149.5
PTI 35.5 51.8 78.6 70.3 80.6 112.3 138.4 141.2
PJICO 83.3 91.4 94.4 94.4 99.1 101.8 111.1 115.0
VASS 14.9 14.1 10.8 16.1 21.7 58.7 88.5 113.3
MIC 21.7 20.9 22.7 33.0 47.3 64.0 77.7 84.6
BIC 26.6 30.2 32.1 37.7 46.6 70.8 74.6 81.1
ABIC 20.3 19.7 21.8 25.2 30.0 35.8 48.6 54.4
GIC 19.4 23.3 23.5 23.5 28.1 25.2 31.2 50.7
Samsung Vina 12.7 21.3 35.1 43.7 53.3 52.4 45.2 47.7
Bảo Long 19.8 14.8 12.1 20.6 22.4 25.9 34.2 39.3
VBI 6.8 7.3 5.8 6.9 13.0 22.2 30.9 39.2
UIC 6.5 6.7 8.8 10.7 12.1 15.4 30.2 35.9
VNI 25.2 28.7 21.5 21.0 18.0 14.0 20.7 28.1
BSH 14.4 15.1 14.9 10.4 14.7 16.9 20.6 26.6
2010 2011 2012 2013 2014 2015 2016 2017
BVTM 10.4 12.0 13.1 13.6 16.6 17.1 18.6 19.9
AIG 10.1 12.1 13.0 17.5 20.7 20.5 22.8 17.9
BHV 1.9 2.7 3.8 3.8 4.4 5.9 9.5 12.3
AAA 20.0 22.4 22.7 25.1 19.4 12.2 12.5 10.7
Source: National sources, Fitch Solutions
Health insurance is likely to be a growth opportunity. In 2014 the World Bank said that Vietnam had made 'huge progress' in
extending social care insurance to the general population, but out-of-pocket costs still made up nearly 60% of healthcare costs in
2010. Further subsidies for health premiums were an example of a World Bank recommendation, which again should sustain the
uptake of health insurance policies if enacted.
Vietnam has the fastest-growing car market in South East Asia, which will support growth of general insurance premiums. Rapid
urbanisation will also assist the sale of property insurance, with the compulsory fire and explosion cover a springboard for the
marketing of non-mandatory comprehensive policies.
There are also opportunities for reinsurers. Under Vietnamese law, the maximum loss or liability that an insurer can take on each risk
must be no more than 5% of its equity. The rest must be laid off in outwards reinsurance. Vietnamese domestic non-life insurers rely
heavily on outwards reinsurance, indicating that they are still unable to tap into international financial markets to strengthen their
balance sheets. This offers an opportunity for foreign insurers to partner with them and use their local knowledge to expand market
share, while using their own financial strength to improve retention rates.
Company Profile
AIA Group
SWOT Analysis
Strengths • Very large scale by any standard.
• Strength of capital and access to global financial markets.
• Strong and growing cashflows.
• Unique status as the largest independent pan-Asian life insurer, with a footprint that spans 15 markets.
• Well established in Vietnam's life insurance sector, with a market share of about 9%.
• Only foreign company to operate on its own (as opposed to as a joint venture partner) in China.
• Continuing growth in annualised new premiums (ANP), value of new business (VONB) and VONB
margins across almost all the markets in which AIA operates.
• Diverse products, for both individual and corporate clients.
• Multi-channel distribution complements very strong proprietary agency distribution channel in most of AIA's
markets.
Weaknesses • There are some countries (eg, South Korea, Taiwan and China) where AIA is still, by many metrics, a relatively
minor player.
• Like all large life companies, AIA is exposed to the challenges that arise from a global investment
environment in which interest rates are, and will likely remain, low.
Opportunities • Arguably the leading beneficiary of the growth of organised savings in East and South East Asia.
• Clear strategies to boost profitability - as well as premium income.
• Successful product innovation in many of the markets in which AIA operates.
• Potential to undertake substantial acquisitions.
• Well placed to benefit from improving perceptions of risk in the emerging markets of South East Asia.
• Development of relationship with Nippon Life.
Threats • Given the current structure of AIA's overall business, growth and profitability would suffer for a time in the
event of political and/or economic instability in Thailand.
• Robust competition, in some markets, from very large multinational insurers, many of which share some of
AIA's strengths.
• Robust competition, in some markets, from enormous local insurance companies. In China and India, the
rules governing participation by foreigners present challenges.
• At some stage, the absolute size of AIA alone will mean that it becomes significantly more difficult to
maintain growth in business and profitability at the rates that have been achieved in recent years.
Company Overview
AIA Group (AIA) is one of the leading pan-Asian life insurance groups, with a presence in 17 markets in the Asia Pacific region. It is
one of the three main insurance companies (the others being Alico, which is now a part of MetLife's global operations, and AIG)
whose origins date back to the establishment of an insurance agency in Shanghai by Cornelius Vander Starr in 1919.
For a long time, AIA was an important component of American International Group (AIG). The problems of AIG in the wake of the
global financial crisis forced it to look for a sale. Through much of 2010, Prudential sought to purchase AIA, but was unable to raise
the funds that it needed. In late October 2010, AIA was listed in Hong Kong in what was, at that time, the largest ever initial public
offering.
Although AIA offers accident and health products (which we would normally consider as part of the non-life segment) in some of
the markets that it serves, it is overwhelmingly a life insurer. The company classifies its wide range of products in six major groups:
protection, savings, investment, retirement, wealth management and corporate solutions (employee benefits, credit insurance and
retirement services).
Latest Updates
AIA reported that its Vietnam operations performed well during 2018. Value of new business (VONB - the company's preferred
metric) achieved double-digit growth relative to 2017. AIA's tied agency force remained the most important distribution channel in
terms of VONB. However, the bancassurance channel also achieved strong growth in VONB.
Strategy
As one of the region's leading life insurance companies, AIA can bring a number of strengths to bear in the development of its
business in Vietnam. These include its brand, scale and access to global capital markets. AIA focuses on building both the size and
the productivity of its tied agency force. It also uses other distribution channels such as bancassurance. AIA is also investing in
technology to facilitate post-sales services and to boost customer experience.
Financial Data
Other Markets (Philippines, Vietnam, India) 2018
• Value of new business: USD435mn (up by 13%)

• Annualised new premiums: USD1,206mn (up by 27%)
• Value of new business margin: 35.8% (down by 4.1pp)
Bao Viet Holdings

SWOT Analysis
Strengths • The top player in both the non-life and the life segments, with market shares of 20% and 26.5% respectively.
• Breadth of product range, including aviation insurance.
• Significant asset management, banking and securities operations.
• Strong brand and nationwide distribution network.
• Capital strength.
• Backing of SCIC and Sumitomo Life of Japan, which has an 18% stake.
• A key beneficiary of the growth of the overall economy and the increase in insurable assets.
• A key beneficiary of the continuing development or organised savings.
• Strong top-line growth and rising profits in the recent past.
Weaknesses • Lack of overseas presence leaves the company vulnerable to swings in the local economy.
• Vulnerable to volatility in Vietnam's financial markets.
• Underdevelopment of bancassurance and alternative channels.
Opportunities • Further growth in the overall market for insurance, in both major segments.
• Cross selling.
• Product innovation.
• Further improvements to cost control and business systems.
• Optimisation of the investment portfolio.
• Development of strategic relationship with HSBC or another major foreign group.
Threats • Volatile financial markets.

• Potential major catastrophe losses.
• Strong competition in the life segment from subsidiaries of major foreign multinationals.
Company Overview
Founded in 1965 as the state-owned insurance monopoly, Bao Viet is today a listed (since 2009) composite insurance company
with additional financial services activities. It was corporatised in 2007.
Bao Viet Life Corporation and Bao Viet Insurance Corporation are the life (re)insurance and the general (re)insurance businesses
respectively. Bao Viet Fund Management Company is the group's asset management subsidiary. Other interests include Bao Viet
Securities JSC (59.9%), Bao Viet Commercial Joint Stock Bank (52%), Bao Viet Investment JSC (real estate investment - 95%) and Bao
Viet Au Lac LLC (vocational driving training services - 60%).
HSBC was initially the sole foreign strategic partner of Bao Viet, lifting its stake in the insurer from 8% to 18% in early 2010. HSBC
maintained its 18% stake in the rights issue of November 2010. HSBC has provided considerable technical support.
The other strategic shareholder is the State Capital Investment Corporation (SCIC), the vehicle through which the government holds
investments in state-owned enterprises. SCIC became a major shareholder in September 2009, when it took over a stake previously
held by Vietnam Shipbuilding Industry Corporation (Vinashin).
In late 2012, HSBC sold its 18% stake in Bao Viet to Japan's Sumitomo Life, which, like HSBC, has also extended technical assistance
to Bao Viet to enhance its competitiveness. This is particularly true in the life segment, Sumitomo's specialism, but also in terms of
product and system development.
Bao Viet provides a broad range of insurance products in the Vietnamese market. These include corporate lines such as cargo
insurance, aviation and aerospace insurance, oil and gas insurance, hull and protection indemnity insurance, group motor vehicle
insurance, engineering insurance and property insurance, liability and miscellaneous insurance and travel, personal accident and
health insurance for staff. Individual lines include personal accident insurance, health insurance, travel insurance, motor vehicle
insurance, as well as hull and protection indemnity insurance.
Latest Updates
At the end of February 2019, Bao Viet published its results for 2018. Highlights included strong growth in both premiums and assets,
as the company maintained its leadership position in terms of total premiums written. The company enjoyed growth of over 25% in
motor, general liability and health insurance premiums written. In its life insurance business, Bao Viet has benefited from its
investment in digital technology, such as the MyBVLife app. With the digital solutions, Bao Viet is able to settle some life insurance
claims in as little as 15 minutes.
Strategy
Unlike many of the other leading insurance companies in Vietnam, Bao Viet does not have the benefit of a massive regional
network of insurance businesses that have full access to global capital markets. Nevertheless, it is clearly achieving rapid growth in
revenues. The main elements of its strategy appear to be: promotion of its well-established brand; leveraging the benefits of being a
diversified financial services organisation, with presence in both the life and the non-life segments of the insurance sector;
and investment in technology to improve customer experience.
Financial Data
2018
• Total revenue: VND41,700bn (up by 27.6%)

• Life insurance premiums: VND21,508bn (up by 23.1%)
• Non-life insurance premiums: VND9,841bn (up by 22.2%)
• Total claims and benefits paid: VND36,425bn
• Total assets: VND113,769bn (up by 24.5%)
• Total equity: VND15,435bn (up by 6.8%)
Manulife Financial
SWOT Analysis
Strengths • Massive scale, financial strength and access to capital from global markets.
• Multinational diversification across Canada, the US and Asia through Manulife Asset Management.
• Huge variety of products and distribution channels.
• Strong presence in Vietnam, and currently among the three largest life insurance providers.
• Benefits from both ageing populations in rich countries and strong growth in demand for long-term savings
products in emerging markets.
• Proven capability to undertake successful acquisitions, of which the US insurance group John Hancock is the
most important example.
• Clear and proven strategy.
Weaknesses • Some of the markets in which Manulife operates are mature and/or highly competitive.
• Impacted, like many insurance companies, by low interest rates.
Opportunities • Product innovation.

• Further expansion by way of acquisitions.
• A natural beneficiary of the relatively strong growth of emerging markets in Asia.
Threats • Potential, but unlikely, turmoil in global financial markets.

• Robust competition in some markets, from companies that have many of the same strengths as Manulife.
Company Overview
Originally founded in 1887, Manulife is one of the world's largest and financially strongest listed multinational life insurers. In general
terms, it describes its product and service offerings as including individual life insurance, group life and health insurance, long-term
care insurance, retirement products, annuities, mutual funds and banking products. Manulife Asset Management serves external
institutional clients around the world. In Asia, Manulife is present in 12 markets and has about 6mn customers.
Manulife Vietnam provides a broad range of products for individuals and corporate groups. Products include investment linked
savings products, retirement planning, income and critical illness cover, personal accident cover and medical insurance.
Latest Update
Manulife's results for Q119 confirmed that the strong growth in revenues and profits of its Asian businesses had continued into the
new year. APE new business sales in the 'Other Asia' segment (including Vietnam) were USD431mn, or 16% higher than in Q118.
Insurance sales were 22% higher at USD418mn. Value of new business was 6% higher at USD96mn.
Strategy
Manulife's strategy for its business in Vietnam appears to have much in common with the strategies of other major multinationals
that are competing in that country's life insurance market. The group can exploit a strong brand, regional/global scale, access to
capital and know-how in the development of innovative products. Benefits also come from investment in digital technology to
facilitate (post) sales service and to enhance customer experience.
Financial Data
Asian Business Q119
• Gross written premiums: USD4,034mn (up by 9%)

• Total revenue: USD6,584mn (up by 9%)
• Gross benefits and claims paid: USD4,997mn (up by 130%)
• Pre-tax income: USD697mn (up by 65%)
• Net income: USD522mn (up by 45%)
Prudential
SWOT Analysis
Strengths • Massive scale, financial strength and access to capital from global markets.
• Multinational diversification across Asia, the US, the UK and through M&G and Eastspring Investments.
• Second largest life insurance provider in Vietnam, with a market share of more than 24%.
• Huge variety of products and distribution channels.
• Strong brands.
• An example of a leading multinational insurer par excellence that benefits from both ageing populations in
rich countries and the strong growth in demand for long-term savings products in emerging markets.
• Proven capability to undertake successful acquisitions - of which the SRLC deal in the US is the latest
example.
• Clear and proven strategy.
Weaknesses • Market share in Vietnam is falling amid increased competition from rivals.
• Some of the markets in which Prudential operates are mature and/or highly competitive.
• A small player in (or absent from) some of the most important emerging markets in Asia.
• Affected, like many insurance companies, by low interest rates.
Opportunities • Product innovation.

• Further expansion by way of acquisitions.
• Further growth in agency force in Asia.
• Further growth in agent productivity in Asia.
• A natural beneficiary of the relatively strong growth of emerging markets in Asia.
• Further development of Eastspring Investments' business.
Threats • Further erosion of market share in Vietnam as rivals grow their operations.
• Potential, but unlikely, turmoil in global financial markets.
Company Overview
Originally founded in 1848, Prudential is one of the world's largest and financially strongest listed multinational life insurance
companies. Globally, it has assets under management of more than GBP496bn. It serves 26mn customers and is listed in London,
New York, Singapore and Hong Kong. Around the world, Prudential has more than 26,000 employees. There are four main business
units: Prudential Corporation Asia, Jackson National Life Insurance Company, Prudential UK and M&G - the group's principal asset
management operation. In terms of APE new business premiums, around 45% of Prudential's overall business is derived from
Prudential Corporation Asia. Jackson and the UK account for around 35% and 20% respectively. In relation to new business profit,
the corresponding figures are 50%, 38% and 12%.
Prudential Corporation Asia is active in 12 markets in Asia and provides regular premium savings and protection products, through
agents and a growing number of bancassurance partners. Across the region, there are more than 350,000 agents and 12mn clients.
Across the region, Prudential Corporation Asia identifies six businesses: life insurance, fund management, consumer finance (in
Vietnam), retirement planning, health solutions and Islamic financial products (in Malaysia, Indonesia and the Gulf).
Prudential has been present in Vietnam since 1995 and has expanded to have a branch network of around 200 offices across the
country. The firm continues to expand its range of products available in Vietnam, including the recent introduction of casualty
insurance, which was launched alongside a 24/7 emergency assistance line and new medical expense escrow payment system,
which sees customers present their insurance card at the point of use (instead of paying for medical care up front and then making
a claim).
Prudential Vietnam contributes extensively to local social welfare programmes, such as the recent donation of VND5bn to Saigon
Children's Charity for the construction of three new schools.
In April 2014, Prudential and Standard Chartered Bank entered into a new agreement to establish a 15-year strategic partnership to
grow their bancassurance business together. Vietnam is one of the markets where Standard Chartered Bank branches will
exclusively distribute a range of Prudential Vietnam's life insurance products. In 2013, Prudential signed a 10-year bancassurance
partnership with Vietnam's Maritime Bank.
Vietnam was one of the markets in the region where Prudential Corporation Asia launched the MyDNA service. This provides
customised diet and exercise advice supported by an app.
Latest Updates
At the beginning of January 2019, Prudential highlighted the successful completion of the first three years of its 15-year strategic
bancassurance partnership with Vietnam International Bank. The number of new policies issued in 2018 was 200% higher than in
2017 and 260% greater than in 2016. The new Pru-Flex Investment has been particularly well received. The success of the
partnership has been due in part to the use of digital tools to boost customer experience. Customers can manage their policies
through the PRUonline mobile app. They can seek information from the PRU-Bot solution and make an appointment with a
Prudential financial expert with the Matchbook tool.
Strategy
Over the last two years, Prudential's life insurance business in Vietnam has grown strongly, in part because of the organic growth of
the market. Prudential has also leveraged its brand, scale and access to capital. Other key aspects of its strategy include multi-
channel distribution, including the bancassurance partnership with Vietnam International Bank, and exploitation of technology to
facilitate sales and to boost customer experience. In February 2019, the company introduced straight-through-processing, which
reduces the waiting time for new life insurance policies from 20 days to just 20 minutes.
Financial Data
Vietnam 2018
• Total revenues: VND19,019bn (up by 18.7%)

• Annual premium equivalent of new business: VND4,480bn (up by 14.2%)
• Pre-tax profit: VND1,380bn
• Total assets: VND90,024bn (up by 21.4%)
• Total investments: VND18,508bn (up by 23.0%)
• Claims and benefits paid: VND6,703bn (up by 7.1%)
Insurance Methodology
Industry Forecast Methodology
Our industry forecasts are generated using the best-practice techniques of time-series modelling and causal/econometric
modelling. The precise form of model we use varies from industry to industry, in each case being determined, as per standard
practice, by the prevailing features of the industry data being examined.
Common to our analysis of every industry, is the use of vector autoregressions. Vector autoregressions allow us to forecast a
variable using more than the variable's own history as explanatory information. For example, when forecasting oil prices, we can
include information about oil consumption, supply and capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own history is often the most
desirable method of analysis. Such single-variable analysis is called univariate modelling. We use the most common and versatile
form of univariate models: the autoregressive moving average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality is poor. In such cases,
we use either traditional decomposition methods or smoothing methods as a basis for analysis and forecasting.
We mainly use OLS estimators and, in order to avoid relying on subjective views and encourage the use of objective views, we use a
'general-to-specific' method. We mainly use a linear model, but simple non-linear models, such as the log-linear model, are used
when necessary. During periods of 'industry shock', for example poor weather conditions impeding agricultural output, dummy
variables are used to determine the level of impact.
Effective forecasting depends on appropriately selected regression models. We select the best model according to various different
criteria and tests, including but not exclusive to:
• R2 tests explanatory power; adjusted R2 takes degree of freedom into account;

• Testing the directional movement and magnitude of coefficients;
• Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value); and
• All results are assessed to alleviate issues related to auto-correlation and multi-co linearity.
Sector-Specific Methodology
In constructing these indices, the following indicators have been used. Almost all indicators are objectively based.
Our insurance reports provide detailed insight into insurance markets globally, examining both the present conditions in and
prospects for each market. Incorporating the most up-to-date information available from sources such as industry regulators, trade
associations, comparable information from other countries and our own economic and risk data, our analysts provide a
comprehensive picture of the insurance sector. The principal focus of the reports is on gross written premiums, to which 'premiums'
refers unless otherwise stated.
The following are considered in our reporting of the sector:
• We consider health insurance to be included in the non-life sector. As such, in instances where sources report health insurance
as part of the life sector, the required adjustments are made to conform to our standardised definitions.
• Where a market contains a significant inward reinsurance sector, these accepted premiums are considered as part of the non-life
sector and are classed within the 'Other' category of our non-life breakdown.
• Life insurance contains all long-term savings products that are legally structured as insurance products and therefore do not
contain pension plan contributions and other long-term saving schemes that are not legally constituted as being within the
insurance sector.
Life
In projecting life insurance premiums, the following are considered:
• The likely development of population.

• The likely development of life density (life premiums per capita).
• Wider macroeconomic trends.
In some instances, further factors are considered, including:
• Maturity of the life insurance sector.

• Competitive and regulatory environments.
• Life density in nearby markets at similar levels of development.
Non-Life
In projecting non-life insurance premiums on a line-by-line basis, the following are considered:
• The likely development of nominal GDP.

• The likely development of non-life penetration (non-life premiums as a percentage of GDP).
• Autos sector data, typically passenger car fleet size.
• Banking sector data, typically Client Loans figures.
• Shipping/Freight data, typically freight tonnage.
• Household stratification data, typically number of permanent properties.
• Healthcare data, typically private health expenditure.
In some instances, further factors are considered, including:
• Maturity of the non-life insurance sector.

• Competitive and regulatory environments.
• Non-life penetration in nearby markets at similar levels of development.
Reinsurance and Net Premiums
When forecasting the size of reinsurance markets, the following are considered:
• Historic levels of reinsurance coverage in both life and non-life sectors.

• Projected development of the life and non-life sectors.
• Prevalence of reinsurance in similar markets.
Where applicable, 'net premiums' refers to net written premiums and is considered as gross written premiums, less the cost of
reinsurance. In some instances, source data is reported according to different definitions of 'net premiums'. In these cases, this data
is used and forecasts for net premiums and reinsurance are made separately.
When forecasting net premiums independently of the reinsurance market, the following are considered:
• Historic levels of net premiums in both life and non-life sectors.

• Projected development of the life and non-life sectors.
At a general level we approach our forecasting from both a micro and macro perspective, taking into account the expansion plans
of relevant domestic and international firms, as well as wider economic outlook. In this regard, macro variable projections, such as
output, consumption, investment, policy, and GDP growth are employed.
Burden of Disease
The 'burden of disease' in a country is forecasted in disability-adjusted life years (DALYs) using our Burden of Disease Database,
which is based on the World Health Organization's burden of disease projections and incorporates World Bank and IMF data.
Risk/Reward Index Methodology
Our Risk/Reward Index (RRI) provides a comparative regional ranking system evaluating the ease of doing business and the
industry-specific opportunities and limitations for potential investors in a given market.
The RRI system divides into two distinct areas:
Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state characteristics that may
inhibit its development. This is further broken down into two sub categories:
• Industry Rewards (this is an industry specific category taking into account current industry size and growth forecasts, the
openness of market to new entrants and foreign investors, to provide an overall score for potential returns for investors).
• Country Rewards (this is a country specific category, and the score factors in favourable political and economic conditions for the
industry).
Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic profile that call into
question the likelihood of anticipated returns being realised over the assessed time period. This is further broken down into two sub
categories:
• Industry Risks (this is an industry specific category whose score covers potential operational risks to investors, regulatory issues
inhibiting the industry, and the relative maturity of a market).
• Country Risks (this is a country specific category in which political and economic instability, unfavourable legislation and a poor
overall business environment are evaluated to provide an overall score).
We take a weighted average, combining market and country risks, or market and country rewards. These two results in turn provide
an overall risk/reward score, which is used to create our regional ranking system for the risks and rewards of involvement in a
specific industry in a particular country.
For each category and sub-category, each state is scored out of 100 (100 being the best), with the overall risk/reward index a
weighted average of the total score. Importantly, as most of the countries and territories evaluated are considered by us to be
'emerging markets', our indices is revised on a quarterly basis. This ensures that the index draws on the latest information and data
across our broad range of sources, and the expertise of our analysts.
Our approach in assessing the risk/reward balance for infrastructure industry investors globally is fourfold:
First, we identify factors (in terms of current industry/country trends and forecast industry/country growth) that represent
opportunities to would-be investors.
Second, we identify country and industry-specific traits that pose or could pose operational risks to would-be investors.
Third, we attempt, where possible, to identify objective indicators that may serve as proxies for issues/trends to avoid subjectivity.
Finally, we use our proprietary Country Risk Index in a nuanced manner to ensure that only the aspects most relevant to the
infrastructure industry are incorporated. Overall, the system offers an industry-leading, comparative insight into the opportunities/
risks for companies across the globe.
INDICATORS
Rewards
Insurance market rewards Rationale
Non-life premiums, 2017 (USDmn) Indicates overall sector attractiveness. Large markets more attractive than small ones.
Growth in non-life premiums, five years to

Indicates growth potential. The greater the likely absolute growth in premiums the better.
end-2021 (USDmn)
Premiums expressed as % of GDP. An indicator of actual and (to an extent) potential

Non-life penetration, %
development of non-life insurance. The greater the penetration the better.
Non-life segment measure of openness Measure of market's accessibility to new entrants. The higher the score the better.
Life premiums, 2017 (USDmn) Indicates overall sector attractiveness. Large markets more attractive than small ones.
Growth in life premiums, five years to end-2021

Indicates growth potential. The greater the likely absolute growth in premiums the better.
(USDmn)
Premiums as % of GDP. An indicator of actual and (to a certain extent) potential

Life penetration, %
development of life insurance. The greater the penetration the better.
Life segment measure of openness Measure of market's accessibility to new entrants. The higher the score the better.
Country rewards
GDP per capita (USD) A proxy for wealth. High-income states receive better scores than low-income states.
Those aged 16-64 in each state, as a % of total population. A high proportion suggests
Active population
that market is comparatively more attractive.
Corporate tax A measure of the general fiscal drag on profits.
GDP volatility Standard deviation of growth over 7-year economic cycle. A proxy for economic stability.
Measure of financial sector's development, a crucial structural characteristic given the

Financial infrastructure
insurance industry's reliance on risk calculation.
Risks
Regulatory framework
Regulatory framework and development Subjectively evaluates de facto/de jure regulations on development of insurance sector.
Regulatory framework and competitive

Subjectively evaluates impact of regulatory environment on the competitive landscape.
landscape
Country risk (from our Country Risk Index)
Long-term financial risk Evaluates currency volatility.
State's vulnerability to externally induced economic shock, which tend to be principal

Long-term external risk
triggers of economic crises.
Policy continuity Evaluates the risk of sharp change in broad direction of government policy.
Legal framework Strength of legal institutions. Security of investment key risk in some emerging markets.
Bureaucracy Denotes ease of conducting business in a state.
Source: Fitch Solutions
Weighting
Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal weight. Consequently,
the following weighting has been adopted:
WEIGHTING OF INDICATORS
Component Weighting, %
Rewards 70, of which
- Industry rewards 65
- Country rewards 35
Risks 30, of which
- Industry risks 40
- Country risks 60
Source: Fitch Solutions
Fit
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ondon. E14 5GN, UK
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Web: www.fitchsolutions.com
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using the service on a trial basis). All such content is copyrighted in the name of Fitch Solutions Group Limited and as such no part of this content may be reproduced,
repackaged, copied or redistributed without the express consent of Fitch Solutions Group Limited.
All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Fitch
Solutions Group Limited makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability
whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.
This report from Fitch Solutions Macro Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch
Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2019 Fitch Solutions Group Limited.
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Q4 2019

Industry Risk/Reward Index ....................................................................................................................................................20

HEADLINE INSURANCE FORECASTS (VIETNAM 2016-2023)

Gross life premiums written, VND, %

Gross life premiums written, USD, %

Gross non-life premiums written,

Gross non-life premiums written,

Gross non-life premiums written,

Gross non-life premiums written,

Key Updates And Forecasts

Multiple Growth Drivers

e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions

Life Insurance Premiums: Developing Fast

Affordability A Constraint - But Not On The Growth Rate

f = Fitch Solutions forecast. Source: National sources, Fitch Solutions

LIFE PREMIUMS (VIETNAM 2016-2023)

Gross life premiums written, VND, %

Indicator 2016 2017 2018e 2019f 2020f 2021f 2022f 2023f

Gross life premiums written, USD, %

Gross life premiums written, % of

Gross life premiums written, % of

Claims: Growing As Industry Develops

LIFE INSURANCE CLAIMS (VIETNAM 2011-2017)

Non-Life Premiums Forecast

All Trends Positive

e/f = Fitch Solutions estimate/forecast. Source: AVI, Fitch Solutions

Non-Life Insurance Premiums: Healthy Growth Potential

NON-LIFE PREMIUMS (VIETNAM 2016-2023)

Gross non-life premiums written, VND, %

Gross non-life premiums written, USD, %

Gross non-life premiums written, % of

Gross non-life premiums written, % of

Claims: Costs Will Increase

Source: AV, Fitch Solutions

NON-LIFE INSURANCE CLAIMS (VIETNAM 2012-2017)

Claims non-life, VNDbn 8,857.00 10,668.00 10,954.00 13,851.00 13,232.00 15,957.00

Non-Life Sub-Sector Forecast

Health & Personal Accident Insurance Well Established

Source: AVI, Fitch Solutions

Motor Insurance: Remaining The Major Line

Moving At High Speed

e/f = Fitch Solutions estimate/forecast. Source: AVI, Fitch Solutions

Dynamics Of Vietnam's Vehicle Fleet

e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions

Transport Insurance: Well-Established Line

Benefiting From Trade

e/f = Fitch Solutions estimate/forecast. Source: AVI, Fitch Solutions

Property Insurance: Lack Of Affordability Stifling Demand

Still A Small Sub-Sector

e/f = Fitch Solutions estimate/forecast. Source: AVI, Fitch Solutions

Health And Personal Accident Insurance: Demand Is Rising

e/f = Fitch Solutions estimate/forecast. Source: AVI, Fitch Solutions

Credit And Financial Guarantee Insurance: Remaining A Minor Line

e/f = Fitch Solutions estimate/forecast. Source: AVI, Fitch Solutions

NON-LIFE INSURANCE PREMIUMS BY PRODUCT LINE (VIETNAM 2016-2023)

Indicator 2016 2017 2018e 2019f 2020f 2021f 2022f 2023f

Industry Risk/Reward Index

ASIA PACIFIC INSURANCE RISK/REWARD INDEX