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| A customer care centre of the SHB-Vinacomin insurance company. Many insurers plan to cut dividend payments due to unsatisfactory business performances. — Photo tinnhanhchungkhoan |
HA NOI (Biz Hub)— Many insurers have planned to slash dividend payments, following the usual round of insurance company shareholder meetings.
A manager from the Military Insurance Corporation told the Dau tu chung khoan (Securities Investment) newspaper said his company failed to meet its profit target in 2012.
It bought a 19 per cent stake in a real estate firm and had to make provisions for diminution in value of investments worth VND10.4 billion (US$490,500).
If there had been no provision, the insurer's last year profit would have been VND42.3 billion ($1.9 million) – or 60.5 per cent of the plan – rather than the actual VND31.9 billion ($1.5 million).
In addition, profit from insurance business in 2012 accounted for only 1.9 per cent of 2011, he said.
Last year, most insurance companies made the payment as pledged. Only a few paid out at lower rates, such as SHB-Vinacomin 6 per cent compared to the target of 10 per cent, and Military Insurance 5 per cent instead of 12-15 per cent.
Agribank Insurance, despite its efforts to pay dividends at 10 per cent in 2012 as promised, this year will pay 8-10 per cent.
While shareholders required the company to set the minimum dividend at 10 per cent, chairman Nguyen Van Minh said 8-10 per cent was the best he could do.
The company was facing difficulties handling insurance claims for the Vinalines Queen ship which sank last year.
PVI Holding (PVI) decided to reduce dividends from 15 per cent to 9 per cent; Pjico planned at least 10 per cent compared to 13 per cent last year.
Meanwhile, SHB-Vinacomin might not pay this year's dividend, as it expected a profit of only VND916 million ($43,200).
Insurers such as PVI said profits from investment activities had declined, leading to lower dividend rates.
Only insurers Bao Viet (BVH) and VinaRe will not reduce dividend rates for this year. Bao Viet planned to retain its 15 per cent while VinaRe pledged 20 per cent compared to 18 per cent in 2012, the highest level among domestic insurance companies. — VNS