Ministry of Finance is building criteria for appraising and classifying insurance companies into four groups, and will apply measures to manage and supervise each group, the Saigon Economic Times reported.

Accordingly, the Group 1 includes the insurance companies who are capable of ensuring payment and profitable business. These companies continue being reinforced and maintaining business operations and expanding operation scope if having efficient plans.

The Group 2 consists of the insurers who are capable of payment but facing a lot of difficulties and huge operation costs, high compensation ratio or unprofitable business in two consecutive years. For this group, the regulators will examine efficiency and reduce operation cost. Their business expansion will be supervised closely.

The Group 3 includes the insurance companies who are in threat of payment capacity (payment capacity margin lower than minimum level). They need to be watched in terms of financial status, investment restructure, equity increase, administration reform and contract transfer.

The Group 4 comprises the insurers losing payment capacity and falling in the status of special supervision according to Law on Insurance Business. If special supervision is not effective, these firms will have to be merged or bankrupted.

The insurance revenue in last 10 years always saw high and stable growth with annual rate of 18.5%. The revenue gained 38 trillion dong in 2010 and 45 trillion dong in 2011.

Total assets of insurers last year was estimated at 105 trillion dong, representing a growth rate of 15% a year. Total equity of these firms achieved 35 trillion dong and they invested 95 trillion dong in the economy via capital and stock markets, according to data of Ministry of Finance.

Restructuring insurance companies is attached with the process of restructuring credit institutions and state companies (including state giants), stock market for the period of 2012 to 2015.

The government plans to upgrade requirements on establishing insurance companies, request state groups and corporations to divest capital from insurance sector, pilot export credit insurance and agricultural insurance from 2012 to 2014, and expand new kinds of commodities and services (derivative products and retirement funds…)

According to the Ministry of Finance, the country has 39 insurance companies including 28 non-life insurers, 11 life insurers and 12 insurance brokerages. There are total over 400 branches of insurers nationwide.

Generally most insurance companies have qualified ownership capital that is higher than authorized capital. However, three companies are not able to meet the requirement. 29 of 39 insurance companies are making profitable business.

Source: Vietbiz24