The cost of life insurance claims increased in the third quarter of this year and directly affected the profits of businesses.
The Post and Telecommunication Insurance Joint Stock Corporation (PTI) has just revealed unsatisfactory business results for the third quarter.
PTI's revenue reached nearly VND980 billion (US$41.3 million) in this quarter, down 12 per cent compared to the same period last year; while compensation expenditure more than doubled to more than VND770 billion.
Plus commissions and other expenses, the total cost of the insurance business is nearly VND1.15 trillion, causing the company to have a gross loss of nearly VND170 billion.
PTI lost more than VND167 billion in the third quarter of this year, while it still profited more than VND105 billion in the same period last year.
Accumulated in the first nine months of this year, PTI's insurance business net revenue still increased by 8 per cent year-on-year to more than VND3.8 trillion.
Insurance business expenses increased by 25 per cent to VND4.1 trillion, administrative expenses increased by 22 per cent and other expenses also rose by 68 per cent.
As a result, PTI's corporate profit after tax was negative more than VND347.8 billion, down 275 per cent; becoming the listed insurance company with the heaviest losses in the market.
Though no loss was recorded, the profit in the third quarter of the BIDV Insurance Corporation (BIC) continued to decline due to the decrease in profit from the insurance business and growing administration costs.
Specifically, BIC's net income from the insurance business was nearly VND691 billion, up 43 per cent.
However, the total cost of insurance business activities of the enterprise amounted to VND529 billion, up 69 per cent.
This means BIC's gross profit reached just VND161 billion, down 5 per cent.
Bao Viet Securities (BVSC) previously forecast that the insurance claim ratio would grow from a low base.
Previously, last year was a favourable year for the insurance industry with a claim rate of only 43.8 per cent, down 13.6 per cent and the lowest level in the past four years.
However, due to the absence of favourable conditions, BVSC believed that the compensation rate would rise back to the average level of 53 per cent.
SSI Securities also forecast that the profit results of most insurers would decline from the second quarter of this year.
Although interest rates would increase, the compensation rate at insurance companies would return to normal and the profit from stock investment would not be as favourable as last year, said SSI. — VNS