Despite holding large sums of cash, insurance companies often seek to make a profit through financial investment. A part of the cash flow is poured into stocks, but many investments are having to set aside significant reserves when the market value decreases lower than the original price.
According to the consolidated financial statements for the second quarter, Bao Viet Group (BVH) is holding nearly VND 3,670 billion in trading securities, of which more than VND 3,279 billion is listed shares. The list includes ACB, CTG, VNM and some other stocks.
At the end of June, the listed stock portfolio was worth only nearly VND3,121 billion, forcing Bao Viet to set aside nearly VND159 billion in reserves. The largest deficit investment is VNM, with a reserve of nearly 123 billion VND, equivalent to 29% of the original price.
Bao Viet also invested nearly 63 billion VND in unlisted stocks such as Ca Mau Seafood (CAT), Dong Sea Transport and Trading (NOS), VEAM (VEA), MBLand... The book value at the end of June was nearly 40 billion VND, meaning it had to reserve more than a loss of 36%.
In addition, BVH's stock portfolio has more than VND 297 billion in fund certificates, including internal funds of Bao Viet Fund and ETF DCVFMVN30 of Dragon Capital.
Another enterprise, Bao Minh Joint Stock Corporation (BMI), has a stock investment value of about VND 284 billion, but the portfolio is quite diverse with 33 codes on HoSE, HNX, UPCoM and un listed stocks. The company is having to reserve a discount of more than 58 billion VND, equivalent to more than 20% of the portfolio.
Of these, only 5 codes do not need to be provisioned, namely TCB, CTG, MBB, VPB and un listed shares of Real Estate Company 9. The rest must be reserved.
The two largest losses are NOS and DGT (Dong Nai Traffic Works), with reserves of 92.5% and 87.4%, respectively. NOS has been restricted by HNX from trading, with market prices below VND 1,000/share. DGT is still trading but has not recovered due to consecutive losses in three quarters. The entire portfolio on the UPCoM floor such as GDA, DVN, CLX, VEA, ACV or ABB is also in a state of having to be set aside.
Bao Long Insurance (BLI) has more than VND19 billion in commercial securities, of which VND4.2 billion is invested in TCB by Techcombank, currently only VND783 million is of reasonable value, equivalent to a reserve of nearly VND3.4 billion. However, thanks to Dragon Capital's 15 billion VND investment in DCDS fund certificate increased to 17.5 billion VND, the total portfolio only suffered a loss of about 6%.
Petrolimex Insurance (PJICO - PGI) has more than 22 billion VND invested in stocks with 4 codes HPG, SKV, PLA and DPM. Of which, PLA had to reserve nearly 3 billion VND, equivalent to 60% of the original price. In contrast, the remaining three investments all made a profit, including HPG up 72%, SKV up 31% and DPM up 7% in the first half of the year.
In fact, stock investment only accounts for a small proportion of the total assets of insurance companies. For Bao Viet, this rate is about 1.2% and for Bao Minh it is about 3.8%. Therefore, even if there are losses, stock investments will hardly affect business results or overall financial health.
VN-Index this year fluctuated strongly, there were periods of explosive growth with record liquidity and continuously set new peaks. However, in early April, the market plummeted again due to the announcement of counterpart taxes, causing the index to lose 17% and fall below 1,100 points.
After that, VN-Index recovered but the increase did not spread evenly, mainly concentrated in the banking group and some large-cap stocks such as Vingroup. This reality is also clearly reflected in the portfolio of insurance companies when most of the code that does not need to be provisionally reserved is bank stocks, while many other enterprises have not yet recovered.
