Good morning, Vietnam

During the last 12 months, PVI Re has become the biggest domestic reinsurer in Vietnam. Its growth has largely been from domestic business, although it keeps a close eye on opportunities in its neighbouring CLMV markets.
“In our portfolio, 85% comes from domestic business and 15% comes from the overseas market,” said PVI Re CEO Trinh Anh Tuan. “Last year was a wonderful year for domestic business and we saw more than 40% growth. Overseas business was the same as the year before. However, we changed the focus of our overseas business and we now focus more on neighbouring countries like Cambodia, Laos and Myanmar for growth.”
Mr Trinh makes the point that PVI Re’s B++ rating from AM Best makes is hard to secure new business from some developing countries like China, Korea, Japan, Thailand and Malaysia – leaving the more local CLMV markets more attractive to the reinsurer.
“Now we are focusing on developing countries like Cambodia and Laos but our major focus is on the domestic market,” said Mr Trinh. “Last year, thanks to the growth of retail business, we saw growth of 40% in our home market.”
Drilling into which lines of domestic business offer greatest potential for PVI Re is also revealing.
“We saw a lot of growth in property – particularly engineering,” said Mr Trinh. “Vietnam is focused on developing its infrastructure. So, our engineering portfolio will grow very fast because there are a lot of roads, and bridges and other construction work. In addition to our traditional business, we have seen more business from motor vehicles and healthcare as well. This is the retail business made our income increase very sharply last year.”
Reinsurance pricing
Pricing of reinsurance has also been something of a focus in Vietnam, as it has is many global markets.
“Pricing for property, engineering and mining reinsurance is going up, but not sharply like other markets,” said Mr Trinh. “Pricing in other markets has been double digit – but it has been only single digit in Vietnam. For retail business like motor and healthcare, the competition has been very, very tough and the result is that the price for motor and healthcare has been flat with no increase. Property, engineering and marine have seen increases.”
And PVI Re naturally keeps a close eye on Nat CAT and the cover that it can offer.
“Nat CAT is a concern for the Vietnam market,” said Mr Trinh. “Last year, for business relating to Nat CAT exposures, we increased the price a little bit because under our retrocession programme, we have to buy more expensive retrocession.
“But, fortunately last year was a quiet one for Vietnam with no big typhoons or big storms and this means that last year business for Nat CAT was good. However, we are very conservative with Nat CAT exposures in Vietnam. We still buy very high limits for our retrocession programmes to protect our portfolio,” he said.
New technology is also more in evidence in the reinsurance business – for instance, using AI.
“Yes, we have already applied some AI models to calculate our Nat CAT exposure thanks to the support of some of our reinsurance brokers,” said Mr Trinh.
While ESG is a focus for PVI Re too, it is perhaps not as far up the agenda as it is in more developed markets.
“Since some of our shareholders are international, they have required us to start applying ESG already,” said Mr Trinh. “We are still at the very beginning. We will take it gradually, step by step.
“In Vietnam there is a lot of coal mining, a lot of coal thermal power plants in operation and under construction. Since 85% of our business comes from the domestic market, it could be very challenging for a local reinsurer to apply ESG to our domestic business. We may need some time gradually to apply ESG to our underwriting discipline,” he said.
Where does PVI Re see growth coming from in the next year?
“I think we will take advantage of rising prices,” said Mr Trinh. “We will take advantage of this time to grow our traditional business lines
like property and engineering. We will focus a lot in on engineering because in next 12 months, a lot of new construction will be undertaken in Vietnam. Also cargo business, because Vietnam is now exporting and importing a lot more cargo.
“However, I am a little bit conservative with retail business in Vietnam market. So maybe we will not focus on growing this line of business in the next 12 months, because after COVID, you know that the retail business in some other countries is not good and that includes Vietnam. For retail business, I would be conservative in next 12 months,” said Mr Trinh.