Korean life insurers in Vietnam reported mixed results for the first half of the year. According to recent local media reports, Hanwha Life Vietnam increased its net profit by 68% due to effective asset management and cost control, while Shinhan Life Vietnam reduced its losses by nearly half by cutting insurance payout costs and sales expenses. Both companies focused on internal management despite a lack of significant growth in insurance operations.
Hanwha Life Vietnam experienced a slight downturn in its insurance operations during the first half of the year. Net insurance premiums totaled 15.22 trillion dong (approximately $790 million), a 7% decrease from the same period last year. Gross premiums also fell by about 7% to 16.12 trillion dong, largely due to a decline in universal life insurance premiums, which dropped to around 11.17 trillion dong. Reinsurance premiums remained stable at 930 billion dong compared to the previous year.
Despite the decrease in premium income, the company also reduced its insurance operating costs. Total insurance payout costs decreased by 7% to 13.13 trillion dong, while other insurance operating expenses fell by 14% to 640 billion dong. Consequently, the gross profit from insurance operations was nearly 1.45 trillion dong, only a 2% decline from the previous year.
The key to Hanwha Life's improved performance was its financial sector. The company's financial income exceeded 8.25 trillion dong, marking a 26% increase from the same period last year. Interest income from deposits and certificates of deposit surpassed 4.07 trillion dong, and profits from bond sales exceeded 1 trillion dong. Financial costs decreased by 11% to around 250 billion dong, further enhancing profitability in the financial sector.
Sales and administrative expenses also saw reductions, with sales costs falling to below 2.5 trillion dong (an 11% decrease) and administrative costs dropping to around 1.45 trillion dong (also an 11% decrease). As a result of expanded financial income and cost-cutting measures, pre-tax profit reached approximately 5.5 trillion dong, while net profit rose to about 4.42 trillion dong, a 68% increase compared to the previous year.
Unlike Hanwha Life, Shinhan Life Vietnam did not achieve profitability but significantly reduced its losses. In the first half of the year, net insurance premiums were 1.37 trillion dong (approximately $71 million), a 1% decrease from the previous year. However, gross premiums increased by 2% to 1.37 trillion dong, driven by higher sales of regular insurance products.
Cost reductions in insurance operations contributed to the decrease in losses. Total insurance operating expenses fell by 31% to 570 billion dong, with insurance payout costs dropping by 72% to around 160 billion dong. However, other insurance operating expenses rose by 66% to over 400 billion dong due to increased commissions for insurance agents. The reduction in payout costs offset the rise in commissions, leading to an overall decrease in insurance operating expenses, with gross profit from insurance operations exceeding 810 billion dong, a 42% increase.
The financial sector's performance showed slight deterioration. Shinhan Life Vietnam's financial income was approximately 590 billion dong, a 5% decrease, impacted by lower interest income from time deposits and certificates of deposit. Sales expenses decreased by 31% to around 770 billion dong, but administrative expenses rose by 5% to over 1.14 trillion dong due to increased salaries and costs for equipment and office supplies.
Overall, Shinhan Life Vietnam reported a net loss of nearly 520 billion dong for the first half of the year. However, this was a significant reduction compared to a net loss of over 1.01 trillion dong in the same period last year. The company is working to lower its cost burden and improve its loss structure.
As of the end of June, total assets stood at over 21.3 trillion dong, a 3% decrease from the beginning of the year, while equity was reported at 17.59 trillion dong. With the first half's results, cumulative losses exceeded 5.6 trillion dong.
There is a significant difference in the scale and financial strength of the two companies. As of the end of June, Hanwha Life Vietnam's total assets were 238.99 trillion dong, more than ten times that of Shinhan Life Vietnam.
Hanwha Life Vietnam's long-term financial investments reached approximately 211.88 trillion dong, a 57% increase, while liabilities exceeded 171.27 trillion dong. Equity was close to 67.72 trillion dong, with retained earnings around 17.23 trillion dong.
While Hanwha Life Vietnam is already generating profits based on its substantial asset base and expanding financial income, Shinhan Life Vietnam is still in the phase of growing its business scale while reducing cumulative losses.
The future challenges for the two companies are distinctly different. Hanwha Life Vietnam needs to move beyond reliance on financial income for performance improvement and restore growth in its insurance operations, while Shinhan Life Vietnam must expand its business scale to escape its loss structure.
* This article has been translated by AI.
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