BMI Vietnam Insurance Report Q2 2014

Q2 2014
www.businessmonitor.com
VIETNAM
INSURANCE REPORT
INCLUDES 5-YEAR FORECASTS TO 2018
ISSN 1752-8410
Published by:Business Monitor International
Vietnam Insurance Report Q2

2014
INCLUDES 5-YEAR FORECASTS TO 2018
Part of BMIs Industry Report & Forecasts Series

Published by: Business Monitor International
Copy deadline: February 2014
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Vietnam Insurance Report Q2 2014
CONTENTS
BMI Industry View ............................................................................................................... 7
SWOT .................................................................................................................................... 9
Insurance ................................................................................................................................................. 9
Political ................................................................................................................................................. 11
Economic ............................................................................................................................................... 12
Business Environment .............................................................................................................................. 13
Industry Forecast .............................................................................................................. 14

Total Premiums Forecast .......................................................................................................................... 14
Total premiums ...................................................................................................................................... 14
Table: Total Gross Premiums Written 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Total Claims ......................................................................................................................................... 15

Table: Total Insurance Claims 2009-2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Life Premiums Forecast ............................................................................................................................ 16

Insurance Premiums ............................................................................................................................... 17
Table: Gross Life Premiums Written 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Life Insurance Drivers ............................................................................................................................ 18

Table: PRIVATE HEALTH EXPENDITURE 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Table: DISEASE ADJUSTED LIFE YEARS 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Life Claims ........................................................................................................................................... 19

Table: Life Insurance Claims 2009-2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Non-Life Premiums Forecast ..................................................................................................................... 21

Non-Life Premiums ................................................................................................................................ 22
Table: Gross Non-Life Premiums 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Table: Net Non-Life Premiums 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Non-Life Reinsurance ............................................................................................................................. 23

Table: Reinsurance Non-Life Premiums 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Non-Life Claims ..................................................................................................................................... 24

Table: Non-Life Insurance Claims 2008-2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Non-Life Sub-Sector Forecast .................................................................................................................... 26

Table: Non-Life % Breakdown 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Motor Vehicle And Transport Insurance ..................................................................................................... 27

Table: Motor Vehicle Insurance 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Table: Transport Insurance 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Table: INSURANCE KEY DRIVERS, FREIGHT TONNAGE 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Property Insurance ................................................................................................................................. 30

Table: Property Insurance 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Industry Risk Reward Ratings .......................................................................................... 32

Asia Risk/Reward Ratings ......................................................................................................................... 32
Market Overview ............................................................................................................... 38
Page 4

Life Market Overview ............................................................................................................................... 38
Non-Life Market Overview ........................................................................................................................ 39
Table: Non-Life Insurance Market (US$mn) 2006-2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Table: Non-Life Insurance Market (%) 2006-2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Company Profile ................................................................................................................ 43

AIA Group .............................................................................................................................................
American International Group (AIG) ...........................................................................................................
Bao Viet Holdings ....................................................................................................................................
Manulife Financial ..................................................................................................................................
43
46
50
53
Prudential plc ......................................................................................................................................... 57

PVI Holdings .......................................................................................................................................... 61
Sun Life Financial ................................................................................................................................... 64
Demographic Forecast ..................................................................................................... 66

Table: Vietnam's Population By Age Group, 1990-2020 ('000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Table: Vietnam's Population By Age Group, 1990-2020 (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Table: Vietnam's Key Population Ratios, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Table: Vietnam's Rural And Urban Population, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Methodology ...................................................................................................................... 70
Industry Forecast Methodology ................................................................................................................ 70
Risk/Reward Rating Methodology ............................................................................................................. 73
Table: Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Table: Weighting of Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Page 5
BMI Industry View

BMI View: Vietnam's insurance sector appears to be one of the most dynamic in South East Asia. By many
metrics, it is growing rapidly. In both of the main segments, companies are undertaking initiatives to grow
premiums and profits. Nevertheless, a number of constraints and challenges remain. The small absolute size
of the market, and a very challenging business environment mean that it may be some years before
multinationals who have been attracted to Vietnam come close to building substantial local businesses in
the way that they have in other countries in South East Asia.
BMI's new insurance report format provides forecasts of the life and non-life markets, including gross and
net premiums, reinsurance premiums and assets. Moreover, it provides forecasts for key growth drivers such
as vehicle fleet size, demographic factors and private health expenditure. The report also contains a
comprehensive breakdown of the non-life insurance market, providing forecasts for motor and transport
insurance, property, personal accident, health, general liability and credit insurance. Finally, the new report
offers a detailed breakdown of the life and non-life competitive landscapes, covering the top companies
present in each segment by premiums and market share.
There was a time when Vietnam was one of the new frontiers of insurance in the Asia Pacific, but the sector
has moved into a more exciting phase of its development. Foreign insurance companies (particularly in the
life segment) are present, and see Vietnam as a natural extension of their regional or global footprints. In
2012, Sun Life Financial (through a JV with PVI) was a newcomer to the life segment, as was Generali.
In the non-life segment, Australia's IAG has taken a strategic stake in AAA, while Talanx has increased its
shareholding in PVI. New products are being developed. Agency networks are being built. As in the rest of
South East Asia, bancassurance is being seen as an opportunity by some of the players. In the non-life
segment, the local companies have generally shown more pricing discipline than have their counterparts
elsewhere in the region. Motor insurance - so often a thankless and profitless line in emerging markets accounts for only about one third of the premiums written in the non-life segment in Vietnam.
Nevertheless, there are reasons for caution. Non-life penetration stopped growing in 2012 . Although the
non-life segment is less fragmented than its peers in other countries in South East Asia, most of the players
are sub-scale local firms that do not necessarily have access to the capital that they need to grow.
In the life segment, the main challenge is that most of the households who can afford to use life insurance
products understand the benefits, and are already doing so. In the short-to-medium term, there are not
actually all that many potential new users. Most of the more than 90% of households who lack cover are too
Page 7
poor to pay for life insurance. How this is reconciled by the life insurers with the substantial expansions in
agency forces through 2013 remains to be seen.
Key BMI Forecasts
In 2014, total premiums will rise by 13.6% to US$2.4bn.
Life premiums will grow by 10.2% to US$1.0bn.
Non-Life premiums will rise by 16.2% to US$1.4bn.
Within the non-life segment, motor vehicle insurance premiums will grow by 16.8% to US$0.4bn.
Commercial and industrial lines will rise by 16.0% to US$0.6bn.
Page 8
SWOT
Insurance
Vietnam Insurance SWOT Analysis
Strengths
Both the life and non-life insurance segments are growing at double-digit rates, and
should continue to do so for the foreseeable future.
There are clear signs of pricing discipline in the non-life segment.
Given the domination of the life segment by subsidiaries of regional and global
majors, lack of capital will not pose a constraint.
The non-life segment is well diversified away from motor insurance - a staple line in
many under-developed markets.
Weaknesses
The high growth anticipated in the life and non-life segments of the Vietnamese
market is coming off a very small base.
Opportunities
Many of the non-life companies are subscale and lack ready access to new capital.
Many Vietnamese households are too poor to use life insurance.
Growth in the non-life segment is patchy.
The massive growth in agency networks that is currently underway in the life segment
should enable a sizeable increase in overall premiums.
The size and importance of commercial lines means that the non-life segment should
grow in real terms as long as the economy can continue to expand.
Life companies are developing new and improved products.
Life companies are entering into bancassurance relationships and are undertaking
other distribution initiatives.
The government has launched a trial program to promote the development of export
credit insurance.
Page 9
Vietnam Insurance SWOT Analysis - Continued
Substantial foreign companies continue to develop subsidiaries in the non-life and life
segments.
Threats
High inflation. This could constrain households from becoming first time users of life
insurance, in a country where well over 90% lack cover.
Lack of development and volatility in the Vietnamese capital and bond markets
complicate investment strategies.
Page 10
Political
SWOT Analysis
Strengths
The Communist Party of Vietnam remains committed to market-oriented reforms and

we do not expect major shifts in policy direction over the next five years. The oneparty system is generally conducive to short-term political stability.
Relations with the US have witnessed a marked improvement, and Washington sees
Hanoi as a potential geopolitical ally in South East Asia.
Weaknesses
Corruption among government officials poses a major threat to the legitimacy of the
ruling Communist Party.
There is increasing (albeit still limited) public dissatisfaction with the leadership's tight
control over political dissent.
Opportunities
The government recognises the threat corruption poses to its legitimacy, and has
acted to clamp down on graft among party officials.
Vietnam has allowed legislators to become more vocal in criticising government

policies. This is opening up opportunities for more checks and balances within the
one-party system.
Threats
Macroeconomic instabilities continue to weigh on public acceptance of the one-party

system, and street demonstrations to protest economic conditions could develop into
a full-on challenge of undemocractic rule.
Although strong domestic control will ensure little change to Vietnam's political scene
in the next few years, over the longer term, the one-party-state will probably be
unsustainable.
Relations with China have deteriorated over recent years due to Beijing's more
assertive stance over disputed islands in the South China Sea and domestic criticism
of a large Chinese investment into a bauxite mining project in the central highlands,
which could potentially cause wide-scale environmental damage.
Page 11
Economic
SWOT Analysis
Strengths
Vietnam has been one of the fastest-growing economies in Asia in recent years, with
GDP growth averaging 7.1% annually between 2000 and 2012.
The economic boom has lifted many Vietnamese out of poverty, with the official
poverty rate in the country falling from 58% in 1993 to 20.7% in 2012.
Weaknesses
Vietnam still suffers from substantial trade and fiscal deficits, leaving the economy
vulnerable to global economic uncertainties. The fiscal deficit is dominated by
substantial spending on social subsidies that could be difficult to withdraw.
The heavily-managed and weak currency reduces incentives to improve quality of

exports, and also keeps import costs high, contributing to inflationary pressures.
Opportunities
WTO membership and the upcoming ASEAN AEC in 2015 should give Vietnam
greater access to both foreign markets and capital, while making Vietnamese
enterprises stronger through increased competition.
The government will in spite of the current macroeconomic woes, continue to move
forward with market reforms, including privatisation of state-owned enterprises, and
liberalising the banking sector.
Urbanisation will continue to be a long-term growth driver. The UN forecasts the

urban population rising from 29% of the population to more than 50% by the early
2040s.
Threats
Inflation and deficit concerns have caused some investors to re-assess their hitherto
upbeat view of Vietnam. If the government focuses too much on stimulating growth
and fails to root out inflationary pressure, it risks prolonging macroeconomic
instability, which could lead to a potential crisis.
Prolonged macroeconomic instability could prompt the authorities to put reforms on

hold as they struggle to stabilise the economy.
Page 12
Business Environment
SWOT Analysis
Strengths
Vietnam has a large, skilled and low-cost workforce, which has made the country
attractive to foreign investors.
Vietnam's location - its proximity to China and South East Asia, and its good sea links
- makes it a good base for foreign companies to export to the rest of Asia, and
beyond.
Weaknesses
Vietnam's infrastructure is still weak. Roads, railways and ports are inadequate to
cope with the country's economic growth and links with the outside world.
Vietnam remains one of the world's most corrupt countries. According to

Transparency International's 2012 Corruption Perceptions Index, Vietnam ranks 123
out of 176 countries.
Opportunities
Vietnam is increasingly attracting investment from key Asian economies, such as

Japan, South Korea and Taiwan. This offers the possibility of the transfer of high-tech
skills and know-how.
Vietnam is pressing ahead with the privatisation of state-owned enterprises and the
liberalisation of the banking sector. This should offer foreign investors new entry
points.
Threats
Ongoing trade disputes with the US, and the general threat of American
protectionism, which will remain a concern.
Labour unrest remains a lingering threat. A failure by the authorities to boost skills
levels could leave Vietnam a second-rate economy for an indefinite period.
Page 13
Industry Forecast
Total Premiums Forecast
BMI View: Vietnam's insurance sector ranks in international terms as one that is small, but reasonably
rapidly growing. During the forecast period, growth will be driven mainly by the expansion in commercial/
industrial lines in the non-life segment.
Basic lines such as motor vehicle and household property insurance are less important than they are in other
South East Asian countries, or in other low income countries in the rest of the world. At least until 2018, the
non-life segment will be dominated by the underwriting of large scale industrial/commercial risks for
(predominantly) state owned companies. Life insurance is growing, but will still be at an embryonic state of
development at the end of the forecast period.
Total premiums
In world terms, Vietnam will be an important growth market for corporate planners in global/regional multinational insurers. However, this will be the case beyond the end of the forecast period. Total premiums
appear likely to rise in line with nominal GDP, with the result that overall penetration will remain constant
over the next five years at 1.2-1.3%. Total per capita premiums will nearly double over the period but will
only be around US$43 per annum in 2018. These are low levels.
As noted above, growth will be driven mainly by the (currently) more important non-life segment, thanks to
the evolution of commercial/industrial lines. Life insurance premiums will rise in absolute terms, but will
remain constrained by the low income levels of most households in Vietnam.
Table: Total Gross Premiums Written 2011-2018
Total gross premiums

written, VNDbn
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
31,877.2
41,148.8
44,986.7
49,945.5
56,601.4
64,060.6
72,185.8
81,304.7
3.4
29.1
9.3
11.0
13.3
13.2
12.7
12.6

written, VND, % change
y-o-y
written, VND per capita
354,530.1 453,202.2 490,693.9 539,671.3 606,097.5 680,113.9 760,157.6 849,609.0

written, % of GDP
1.1
1.3
1.3
1.2
1.3
1.3
1.3
1.3
Page 14
Total Gross Premiums Written 2011-2018 - Continued
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
1.5
2.0
2.1
2.4
2.8
3.2
3.6
4.1

written, US$, % change
y-o-y
-4.3
27.7
8.4
13.6
14.6
13.8
13.9
13.8

written, US$ per capita
17.2
21.7
23.3
26.2
29.8
33.6
38.0
42.9

written, US$bn
Source: AVI/ BMI
Total Claims
The evolution of claims expenses over recent years has been quite erratic - although the trend has clearly
been upwards. Changes from year to year have driven by the surge in life claims and payments from
extremely low base levels. They have also been influenced by sizeable industrial/commercial claims. The
Vietnamese non-life companies are heavy users of outwards reinsurance.
Table: Total Insurance Claims 2009-2012
2009
2010
2011
2012
7,780.00
9,170.70
12,666.80
14,613.70
Total insurance claims, VND, %

change y-o-y
n.a.
17.9
38.1
15.4
Total insurance claims, VND per

capita
88,209.10
102,986.30
140,876.40
160,951.70
Total insurance claims, % of GDP
0.4
0.4
0.5
0.5
Total insurance claims, US$bn
0.4
0.5
0.6
0.7
Total insurance claims, US$, %

change y-o-y
n.a.
9.7
27.9
14.2
5.4
6.8
7.7
Total insurance claims, VNDbn
Total insurance claims, US$ per capita
Source: AVI/BMI
Page 15
Life Premiums Forecast

BMI View: The latest data suggests that life insurance should grow quite rapidly, but from a very low base.
By all metrics, the segment will remain underdeveloped at the end of the forecast period. The multi-national
companies that have entered the market in the last three years clearly expect life insurance to play a key
role in organised savings in Vietnam -just as it does elsewhere in South East Asia (and, to a greater extent,
in North East Asia). This may yet happen, but is most unlikely to do so prior to 2018.
We would also note that the growth in premiums is vulnerable to setbacks from economic shocks.
Vietnamese households generally do not yet understand the benefits of life insurance, although the insurers
themselves are working to correct this. A more fundamental problem is that most households cannot afford
life insurance.
Growth May Be Volatile

Life Premiums (US$bn) And Y-o-Y Change (%)
100
50
1
2018f
2017f
2016f
2015f
-50
2014f
2012
2011
2013e
Gross life premiums written, US$bn (LHS)

Gross life premiums written, US$~ % y-o-y (RHS)
Notes: 1 "AVI/BMI" 2 "AVI/BMI"
Relative to others in South East Asia, Vietnam is, and for sometime will remain, a small opportunity for
international life insurers. Nevertheless, the segment benefits hugely from the product and distribution
Page 16
know-how and regional scale of (most of) the international companies. Particular companies have
highlighted how they have been expanding their agency forces in the country over the last two years or so.
Insurance Premiums
Life density is currently around US$10 per capita in Vietnam. Life penetration is around 0.5% of GDP. Low
figures such as these are normally associated with countries where lack of property rights and/or persistently
high inflation mean that households are very reluctant to enter into long-term contracts with life insurers.
Neither of these structural challenges are present in Vietnam. Instead, the basic problem is that too many
households are unable to afford to save via life insurance.
Table: Gross Life Premiums Written 2011-2018
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
Gross life premiums

written, VNDbn
11,380.2
18,390.8
19,223.9
20,705.6
23,504.6
26,730.1
30,299.0
34,390.6
Gross life premiums

written, VND, %
change y-o-y
-17.5
61.6
4.5
7.7
13.5
13.7
13.4
13.5
Gross life premiums

written, VND per
capita
126,567.7
202,551.8
209,685.3
223,728.8
251,691.6
283,785.7
319,065.8
359,371.6
Gross life premiums

written, % of GDP
0.4
0.6
0.5
0.5
0.5
0.5
0.5
0.5
Gross life premiums

written, % of gross
premiums written
35.7
44.7
42.7
41.5
41.5
41.7
42.0
42.3
Gross life premiums

written, US$bn
0.6
0.9
0.9
1.0
1.2
1.3
1.5
1.7
Gross life premiums

written, US$, %
change y-o-y
-23.6
59.9
3.7
10.2
14.8
14.4
14.6
14.7
Gross life premiums

written, US$ per
capita
6.1
9.7
10.0
10.9
12.4
14.0
16.0
18.2
Source: BMI/ AVI
Our expectation is that premiums will rise, but in a somewhat erratic way, through the forecast period. Total
premiums written in the segment should increase from about US$900mn now to US$1,700mn or so in 2018.
Growth will likely be much more substantial after 2018. The various multi-national insurers that have
Page 17
established operations in Vietnam are, we believe, right to see the market as an attractive opportunity - but
in the long-term. Between now and the end of the forecast period, it is likely that at least one of the majors
will have significant success with the development and distribution of micro-insurance products.
Life Insurance Drivers

There are some life insurance markets where the rapid growth of private healthcare expenditure offers a
substantial opportunity - through the provision of health insurance riders to policies and/or other product
offerings. Vietnam is not currently such a market and is unlikely to become one within the forecast period.
In essence, the overall insurance market is too underdeveloped, because of widespread poverty.
Nevertheless, we note that per capita spending on private healthcare is considerably higher than life
insurance density (i.e. per capita premiums). This suggests that, for the small minority of households who
understand and afford life insurance, there is some potential for the insurers to sell healthcare-related
products and riders.
Table: PRIVATE HEALTH EXPENDITURE 2011-2018
2011
2012f
2013e
2014f
2015f
2016f
2017f
2018f
102,984.4
120,644.8
138,626.4
160,406.7
184,723.3
210,185.0
237,652.8
267,263.9
Private health
expenditure, VND, %
change y-o-y
21.0
17.1
14.9
15.7
15.2
13.8
13.1
12.5
Private health
expenditure, US$bn
5.0
5.8
6.6
7.8
9.1
10.4
11.9
13.5
Private health
expenditure, US$bn,
% change y-o-y
12.0
15.9
13.9
18.4
16.5
14.4
14.3
13.6
Private health
expenditure, US$ per
capita
55.4
63.7
71.8
84.3
97.3
110.4
125.1
141.1
3.7
3.7
3.9
4.0
4.1
4.2
4.2
4.3
Private health
expenditure, VNDbn
Private health
expenditure, % of
GDP
Source: AVI/ BMI
For countries at Vietnam's level of development, private healthcare spending is driven principally by
changes in morbidity. In terms of Disease Adjusted Life Years (DALYs, a widely used metric) morbidity
should increase slightly over the forecast period. Rising incomes and effective child healthcare policies
Page 18
should result in a fall in DALYs for the youngest age cohorts (to 15 years). However, these declines will be
more than offset by an increase in DALYs in most older age cohorts.
Table: DISEASE ADJUSTED LIFE YEARS 2011-2018
2011
All Causes, DALYs
2012
2013e
2014f
2015f
2016f
2017f
2018f
11,898,272 11,933,865 11,968,439 12,001,992 12,034,522 12,066,030 12,096,513 12,125,971
Communicable,
maternal, perinatal
and nutritional
conditions, DALYs
3,361,708
3,366,403
3,371,022
3,375,565
3,380,031
3,384,422
3,388,736
3,392,973
Noncommunicable
diseases, DALYs
6,884,945
6,928,102
6,970,173
7,011,157
7,051,055
7,089,863
7,127,581
7,164,209
All diseases and

injuries, 0-4 yrs,
total, DALYs
1,468,354
1,399,208
1,333,074
1,270,112
1,210,424
1,154,059
1,101,023
1,051,282
All diseases and

injuries, 15-29 yrs,
total, DALYs
2,392,289
2,406,024
2,418,817
2,431,012
2,442,923
2,454,811
2,466,841
2,479,058
All diseases and

total, DALYs
2,077,024
2,123,095
2,168,709
2,212,369
2,252,764
2,288,799
2,319,618
2,344,638
All diseases and

total, DALYs
2,422,440
2,426,292
2,425,683
2,421,889
2,416,058
2,409,202
2,402,194
2,395,781
596,136
581,029
566,147
551,433
536,886
522,547
508,490
494,820
All diseases and

total, DALYs
1,425,932
1,447,547
1,467,741
1,487,452
1,507,330
1,527,762
1,548,883
1,570,589
All diseases and

injuries, 70+ yrs,
total, DALYs
1,516,097
1,550,670
1,588,268
1,627,726
1,668,137
1,708,851
1,749,463
1,789,803
All diseases and

injuries, 5-14 yrs,
total, DALYs
Source: WHO/World Bank/IMF/BMI
Life Claims
The embryonic level of development of Vietnam's life segment means that it is difficult to comment on
claims in a meaningful way. We suggest that the very rapid rise in claims and payments over recent years
has been due to the fact that the claims and payments have been rising from a very low base. We expect that
the pace of growth will moderate in the coming years.
Page 19
Table: Life Insurance Claims 2009-2012
2009
2010
2011
2012
Life insurance claims,

VNDbn
2,507.70
2,786.50
4,221.80
5,740.10

VND, % change y-o-y
n.a.
11.1
51.5
36

VND per capita
28,432.10
31,292.50
46,953.20
63,220.40
Life insurance claims

life, % of GDP
0.1
0.1
0.2
0.2

% of total claims
32.2
30.4
33.3
39.3

US$bn
0.1
0.1
0.2
0.3
Source: BMI/VI
Page 20
Non-Life Premiums Forecast

BMI View: Thanks mainly to the ongoing development of industrial and commercial lines, which account
for around 40% of all premiums written in Vietnam's non-life segment, growth should remain consistently
in double digits through the forecast period. Nevertheless, we are not looking for non-life penetration to
rise, as we see no obvious catalyst for this outcome.
By most metrics, the non-life segment will remain underdeveloped at the end of the forecast
period. Premiums will also rise in absolute terms thanks to the further growth of motor vehicle insurance,
transport insurance and property insurance.
Not Large, But Steadily Growing

Non-Life Premiums (US$bn) And Y-o-Y Growth (%)
3
15
2
2018f
2017f
2016f
2015f
2014f
2012
2011
2013e
10
Gross non-life premiums written, US$bn (LHS)

Gross non-life premiums written, US$~ % y-o-y (RHS)
Notes: 1 "AVI/BMI" 2 "AVI/BMI"
With total premiums of around US$1bn, Vietnam's non-life segment is small in absolute terms and in
relation to its counterparts in other countries in South East Asia. This will remain the case in 2018.
However, premiums should consistently sustain double-digit growth in the meantime.
Page 21
Non-Life Premiums
Having fallen over recent years, non-life penetration (premiums as a percentage of GDP has stabilised at
around 0.7%. At some stage in the future, it is reasonable to expect that some catalyst will cause penetration
to rise. However, we anticipate this will happen only after the end of the forecast period. Per capita
premiums (density) of around US$13 are indicative of most households being too poor to afford non-life
insurance. Nevertheless, the likely growth of the economy, and associated increases in industrial/
commercial lines, imply that the segment should sustain double-digit growth rates.
Table: Gross Non-Life Premiums 2011-2018
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
20,497.0
22,758.0
25,762.8
29,239.8
33,096.8
37,330.6
41,886.8
46,914.1
20.2
11.0
13.2
13.5
13.2
12.8
12.2
12.0
227,962.4
250,650.4
281,008.6
315,942.6
354,405.9
396,328.1
441,091.8
490,237.5
Gross non-life
premiums written, %
of GDP
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
Gross non-life
premiums written, %
of gross premiums
written
64.3
55.3
57.3
58.5
58.5
58.3
58.0
57.7
Gross non-life
premiums written, US
$bn
1.0
1.1
1.2
1.4
1.6
1.8
2.1
2.4
Gross non-life
$, % change y-o-y
11.3
9.9
12.3
16.2
14.5
13.4
13.4
13.1
Gross non-life
$ per capita
11.0
12.0
13.4
15.4
17.4
19.6
22.1
24.8
Gross non-life
premiums written,
VNDbn
Gross non-life
premiums written,
VND, % change y-o-y
Gross non-life
premiums written,
VND per capita
Source: BMI/ AVI
Retention ratios (net premiums as a percentage of gross premiums) are low, at around 60%. This reflects
three factors: most of the Vietnamese non-life companies lack economies of scale; some 40% of the activity
undertaken in the segment involves complex and large industrial/commercial risks; and the Vietnamese
Page 22
companies do not necessarily have ready access to global capital markets. Accordingly, net premiums
should remain significantly below - and move in line with - gross premiums through the forecast period.
Table: Net Non-Life Premiums 2011-2018
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
Net non-life premiums

written, VNDbn
15,572.3
17,074.1
15,550.7
17,595.4
19,935.3
22,478.8
25,224.7
28,251.4

written, VND, %
change y-o-y
20.0
9.6
-8.9
13.1
13.3
12.8
12.2
12.0

written, VND per
capita
173,191.5
188,049.6
169,619.4
190,121.8
213,470.9
238,651.5
265,630.6
295,218.3

written, % of GDP
0.6
0.5
0.4
0.4
0.4
0.4
0.4
0.5

written, US$bn
0.8
0.8
0.7
0.9
1.0
1.1
1.3
1.4

written, US$, %
change y-o-y
11.1
8.5
-9.7
15.8
14.6
13.4
13.4
13.1

written, US$ per
capita
8.4
9.0
8.1
9.2
10.5
11.8
13.3
14.9
Source: BMI/ AVI
Non-Life Reinsurance
The corollary of this is that Vietnam represents a currently small opportunity for reinsurers, but one that is
growing at double-digit rates. We are looking for outwards reinsurance premiums to grow from around US
$500mn in 2013 to about US$900mn in 2018. Most of this business will pertain to large scale commercial/
industrial risks, which account for well over one third or the premiums written in the non-life segment.
Table: Reinsurance Non-Life Premiums 2011-2018
Reinsurance non-life
premiums written,
VNDbn
premiums written, VND,
% change y-o-y
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
7,853.8
9,156.6
10,212.1
11,644.5
13,161.4
14,851.7
16,662.1
18,662.7
24.4
16.6
11.5
14.0
13.0
12.8
12.2
12.0
Page 23
Reinsurance Non-Life Premiums 2011-2018 - Continued
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
premiums written, VND
per capita
87,347.7
100,847.9
111,389.2
125,820.8
140,935.0
157,676.6
175,461.2
195,019.2
premiums written, % of
GDP
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
$bn
0.4
0.4
0.5
0.6
0.6
0.7
0.8
0.9
premiums written, US$,
% change y-o-y
15.1
15.4
10.6
16.7
14.3
13.5
13.4
13.1
premiums written, US$
per capita
4.2
4.8
5.3
6.1
6.9
7.8
8.8
9.8
Source: BMI/ AVI
Non-Life Claims
Except in 2011, when non-life claims jumped by about one fifth, claims costs have typically evolved quite
slowly in Vietnam. We would attribute this to the nature of the business that is written in the segment. With
large scale commercial and industrial risks accounting for about 40% of premiums written, losses are
relatively rare but, when they occur, substantial. Until motor vehicle and household lines come to dominate
the business mix of the non-life segment (an outcome which we do not expect prior to 2018), claims should
continue to grow quite slowly.
Page 24
Table: Non-Life Insurance Claims 2008-2012
2008
2009
2010
2011
Non-life insurance
claims, VNDbn
4,510.70
5,272.30
6,384.20
8,445.00
Non-life insurance
claims, VND, %
change y-o-y
n.a.
16.9
21.1
32.3
Non-life insurance
claims, VND per
capita
51,627.70
59,777.00
71,693.90
93,923.10
Non-life insurance
claims, % of GDP
0.3
0.3
0.3
0.3
Non-life insurance
claims, % of total
claims
n.a.
67.8
69.6
66.7
Source: BMI/ AVI
Page 25
Non-Life Sub-Sector Forecast

BMI View: For a non-life segment that is still, by almost all metrics, underdeveloped, Vietnam's is unusual
in that industrial/ commercial covers are relatively important. Conversely, basic motor vehicle insurance
and household property lines account for a small percentage of premiums than would otherwise be the case.
This is the consequence of the peculiar competitive landscape, in which many of the leading local non-life
companies are affiliated with, and serve, state-owned enterprises.
Looking forward, we do not see any particular reason why this should change during the forecast period.
Overall premiums have for several years been growing in line with GDP. In the absence of a clear catalyst
for penetration to rise, the relative sizes of the various sub-sectors should stay broadly unchanged.
Table: Non-Life % Breakdown 2011-2018
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
29.9
27.8
27.7
27.8
28.0
28.2
28.4
28.7
Property insurance
8.4
9.6
9.3
9.2
9.0
8.8
8.5
8.1
Transport insurance
20.6
19.7
19.8
19.8
19.8
19.8
19.8
19.7
General liability insurance
2.1
2.3
2.3
2.3
2.2
2.2
2.2
2.2
Credit/financial guarantee insurance
0.4
0.2
0.3
0.3
0.3
0.3
0.3
0.3
38.5
40.4
40.7
40.6
40.6
40.7
40.8
41.0
Motor vehicle insurance
Other insurance
Source: AVI/ BMI
Commercial and industrial covers, which are predominantly provided to the various industrial state owned
enterprises that play a dominant role in Vietnam's economy, account for about 40% of all non-life
premiums. The next largest lines by this metric are motor vehicle insurance, transport insurance and
property insurance. The non-life companies basically do not (yet) provide health insurance. Other lines,
such as general liability insurance, are miniscule. None of the sub-sectors - including the larger ones represents a substantial commercial opportunity in regional terms.
Page 26
Commercial/ Industrial Lines Well Developed...

Gross Written Premiums, Non-Life Segment (US$mn), 2013
Source: AVI/ BMI
Motor Vehicle And Transport Insurance

Motor vehicle insurance is relatively less important in Vietnam's non-life segment than in counterparts in
other low income countries. Nevertheless, motor vehicle related lines accounted for a little over one quarter
of all premiums written in the segment during 2013, and should continue to do so through the forecast
period. In essence, we are looking for steady double-digit growth in premiums over the next five years, as
the sub-sector expands in line with the non-life segment. Given the fragmentation of the competitive
landscape, we expect that the rise will be driven mainly by the increase in the numbers of vehicles on
Vietnam's roads. In short, the development of the sub-sector will be driven by volume, rather than price/
rate, increases.
Page 27
Table: Motor Vehicle Insurance 2011-2018
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
Motor
6,134,000.0 6,329,214.0 7,126,728.4 8,135,470.8 9,269,922.2 10,537,068.4 11,909,588.8 13,446,284.8
vehicle
insurance,
VNDmn
Motor
vehicle
insurance,
VND, %
change yo-y
14.1
3.2
12.6
14.2
13.9
13.7
13.0
12.9
Motor
vehicle
insurance,
US$mn
296.9
303.2
338.6
395.6
456.0
521.2
595.5
679.1
Motor
vehicle
insurance,
US$, %
change yo-y
5.6
2.1
11.7
16.8
15.3
14.3
14.2
14.0
Motor
vehicle
insurance,
% of nonlife
insurance
29.9
27.8
27.7
27.8
28.0
28.2
28.4
28.7
Source: BMI/ AVI
Accounting for around one fifth of non-life premiums, transport insurance is not much less important by
that measure than motor vehicle insurance. In other words, transport insurance accounts for a larger
percentage of activity in the segment than one might expect in a country with Vietnam's per capita incomes.
We think that this is reflective of buying of transport insurance by (predominantly) state owned enterprises and, very often, through the non-life insurance companies that are affiliated with them.
Page 28
Table: Transport Insurance 2011-2018
2011
Transport
insurance,
VNDmn
2012
2013e
2014f
2015f
2016f
2017f
2018f
4,214,000.0 4,493,131.0 5,104,693.5 5,792,681.0 6,558,509.1 7,384,425.5 8,285,054.5 9,265,397.0
Transport
insurance,
VND, %
change yo-y
18.3
6.6
13.6
13.5
13.2
12.6
12.2
11.8
Transport
insurance,
US$mn
204.0
215.3
242.5
281.7
322.6
365.3
414.3
467.9
Transport
insurance,
US$, %
change yo-y
9.5
5.5
12.7
16.1
14.5
13.2
13.4
13.0
Transport
insurance,
% of nonlife
insurance
20.6
19.7
19.8
19.8
19.8
19.8
19.8
19.7
Source: AVI/ BMI
For now, we look for steady, double-digit, gains in transport insurance premiums each year through the
forecast period. This will be driven mainly by the likely growth in road freight transport in Vietnam. Road
freight easily dominates the nation's transport system in terms of tonnes carried. We also assume that the
market will be orderly: rates/prices should increase slightly.
Table: INSURANCE KEY DRIVERS, FREIGHT TONNAGE 2011-2018
2011
2012f
2013e
2014f
2015f
2016f
2017f
2018f
Air Freight
Tonnes (000)
200.3
178.7
189.0
202.3
216.9
232.4
248.5
265.5
Air Freight
Tonnes (000),
% change yo-y
5.4
-10.8
5.8
7.0
7.2
7.1
7.0
6.8
Rail Freight
Tonnes (000)
7,285.1
7,003.5
7,292.0
7,519.6
7,759.3
8,010.4
8,269.7
8,537.8
Rail Freight
Tonnes (000),
% change yo-y
-7.3
-3.9
4.1
3.1
3.2
3.2
3.2
3.2
Page 29
INSURANCE KEY DRIVERS, FREIGHT TONNAGE 2011-2018 - Continued
2011
2012f
2013e
2014f
2015f
2016f
2017f
2018f
Road Freight
Tonnes (000)
654,127.1
722,156.4
806,648.7
902,639.9
1,010,054.0
1,126,210.3
1,253,472.0
1,392,607.4
Road Freight
Tonnes (000),
% change yo-y
11.4
10.4
11.7
11.9
11.9
11.5
11.3
11.1
Inland
Waterway
Freight
Tonnes (000)
160,164.5
168,493.0
177,454.6
186,691.3
196,424.5
206,615.1
217,144.5
228,010.9
Inland
Waterway
Freight
Tonnes (000),
% change yo-y
11.1
5.2
5.3
5.2
5.2
5.2
5.1
5.0
Source: AVI/BMI
Property Insurance
Property insurance accounts for about one tenth of the total activity in Vietnam's non-life segment. We
presume that it will achieve high single digit growth through the forecast period. This is a respectable
outcome by most standards, but is consistent with the sub-sector slipping in importance relative to the nonlife segment as a whole, and in relation to the overall economy. We are taking the view that price
competition in household and, perhaps, some commercial lines will be quite intense.
Page 30
Table: Property Insurance 2011-2018
2011
Property
insurance,
VNDmn
2012
2013e
2014f
2015f
2016f
2017f
2018f
1,723,000.0 2,185,362.0 2,399,020.6 2,700,247.3 2,994,576.8 3,279,767.9 3,554,125.0 3,815,620.6
Property
insurance,
VND, %
change yo-y
20.0
26.8
9.8
12.6
10.9
9.5
8.4
7.4
Property
insurance,
US$mn
83.4
104.7
114.0
131.3
147.3
162.2
177.7
192.7
Property
insurance,
US$, %
change yo-y
11.0
25.5
8.9
15.2
12.2
10.1
9.5
8.4
Property
insurance,
% of nonlife
insurance
8.4
9.6
9.3
9.2
9.0
8.8
8.5
8.1
Source: BMI/ AVI
In most of the countries whose insurance sectors are monitored by BMI, 'other' insurance is something of a
balancing item. It includes minor lines whose relative (and often absolute) sizes mean that we refrain (for
now) from commenting on them specifically. In Vietnam, 'other' insurance includes industrial business that
is undertaken for state owned enterprises by the non-life companies. Historically, the state owned
enterprises have worked with the insurers that are affiliated with them. This business accounts for around
40% of total premiums written in the non-life segment. That premiums in this sub-sector have held up
relative to the non-life insurance as a whole and in relation to GDP suggests to us that: it is benefiting from
investment in plant, equipment and infrastructure as Vietnam's economy develops; and, the sub-sector is
characterised by pricing discipline. We see no reason why this should not continue.
Page 31
Industry Risk Reward Ratings

Asia Risk/Reward Ratings
BMI View: Geographic diversification may be a favourable strategy for multinational pharmaceutical
companies, but it is vital that firms recognise both the rewards and the risks present in a market, whether
developed or emerging. BMI's Risk/Rewards Ratings (RRR) tool, which provides a globally comparative
and numerically based assessment of a market's attractiveness, was established to address this. In BMI's
Q214 RRRs, the Asia Pacific region scores 52 out of 100, below Western Europe (67), similar to Central
and Eastern Europe (52) but compares favourably against Americas (51) and Middle East and Africa (42)
regions.
The indicators used to assess the attractiveness of a pharmaceutical market are now visible, improving the
transparency of the rating system and enabling the identification of regional or group outperformers across
single indicators. A market's RRR score is made up of a sum of the Rewards score (Industry Rewards +
Country Rewards) and the Risks score (Industry Risks + Country Risks).
The weight assigned to each subsector (such as Industry Rewards or Industry Risks) shows its influence
within the final Rewards or Risks score and the final RRR score. The Rewards component accounts for 65%
of the final RRR, while the Risks component accounts for 35%.
Page 32
Q214 Asia Pacific Pharmaceutical Risk/Reward Ratings

Rewards And Risks Scores
Source: BMI. RRR scores out of 100, with 100 highest.
The Industry Rewards, Country Rewards, Industry Risks and Country Risks subsectors are each made up of
a number of indicators. The weighting of each indicator (such as market expenditure which is used to assess
Industry Reward or economic diligence which is used to assess Country Risk) reflects its relative
importance to the pharmaceutical industry and subsequently the relative reward or risk that each factor
poses to drug companies. In Q214, Japan is ranked as the most attractive market in the Asia Pacific region
(scoring 74.5 out of 100), followed by Australia (67.0) and Taiwan (65.7). In the same quarter, Myanmar is
ranked as the least attractive market in the region (scoring 26.9 out of 100), followed by Cambodia (32.4)
and Sri Lanka (37.0).
Page 33
With regards to assessing rewards, we identify industry-specific factors, such as the size of the
pharmaceutical market, and country-specific factors, such as the size of the pensionable population, which
represent opportunities to would-be investors. Focusing on the rewards component of the rating system,
Japan scores a total of 47.0 out of 65, the highest score in subsector. Japan's score is boosted by the large
multi-billion dollar drug market (market expenditure score of 18.0 out of 20) and large pensionable
population (pensionable population score of 8.0 out of 8), but dragged down by a declining pharmaceutical
market (sector value growth score of 0 out of 12) and a declining population (population growth score of 1.0
out of 5). Meanwhile, Myanmar scores a total of 18.5 out of 65, the lowest score in the subsector.
Page 34
Q214 Asia Pacific Pharmaceutical Rewards

Industry Rewards And Country Rewards Scores
With regards to assessing risks, we identify industry-specific dangers, such as approvals expediency, and
those emanating from the state's political and economic profile, such as bureaucracy, which call into
question the likelihood of anticipated returns being realised over the assessed time period. With regards to
the economic and political assessment, only the aspects most relevant to the pharmaceutical industry are
incorporated into the assessment. Focusing on the risks component of the rating system, Myanmar scores a
total of 8.4 out of 35, the lowest score in subsector. Compared to its peers, Myanmar's score is dragged
Page 35
down by industry characteristics such as the absence of patent respect (patent respect score of 0 out of 7)
and policy enforcement (policy enforcement score of 1.5 out of 7). Meanwhile, Singapore scores a total of
28.1 out of 35, the highest score in the subsector.
Q214 Asia Pacific Pharmaceutical Risks

Industry Risks And Country Risks Scores
In the table below, the subsector scores (ie, Industry Rewards) and full component scores (ie, Rewards)
have been expressed as a percentage of the total weight or as a percentage of the maximum score that can be
Page 36
achieved. This allows for the identification of the sub-sector or component that will most positively or
negatively affect a single market.
Q214 Asia Pacific Pharmaceutical Risk/Reward Ratings

Rewards And Risks Scores As A Percentage Of The Maximum Score
Page 37
Market Overview
Life Market Overview
BMI View: As is the case in China, the insurance sector of Vietnam is characterised by the strong presence
of companies in which the state maintains a strategic interest, whether direct or indirect. Regional life
insurance companies play a key role in that segment.
In Vietnam, the insurance sector is regulated by the Insurance Supervisory Division within the Ministry of
Finance. The insurance trade association, covering both the life and the non-life segments, is the
Association of Vietnamese Insurers (AVI).
Bao Viet, the former state-owned monopoly insurer, is the only company that is effectively a composite
insurer, active in both the non-life and the life segments. As of late 2013, the AVI identified another 14
players in the life segment. Among the major multi-nationals that have a presence across the region, AIA,
Prudential plc and Manulife all have subsidiaries in Vietnam. Also on the ground is ACE Life. Asian life
companies that are substantial in their home markets and which are present include Great Eastern, Cathay
Life, Dai-Ichi Life and Korea Life. Vietnam is one of the three foreign countries in which France's
Groupe Prvoir is active (the others being Portugal and Poland). Finally, the segment includes VCLI, an
insurance joint venture that is 45% owned by Vietcombank, 43% by BNP Paribas Cardif and 12% by
SeAbank, a local joint stock commercial bank.
Data published by the trade association in late 2013 showed that, in terms of gross written premiums, the
leading players were Prudential plc (with a 34% market share), Bao Viet (29%) and Manulife (12%)
The latest newsflow from the segment indicates that it is developing quite rapidly, if in an erratic fashion.
The widespread poverty (or, more correctly, incidence of household incomes that are too small to support
purchase of life insurance products continues to constrain the potential of the segment. The leading insurers
are competing through innovation in distribution and product development, and through enlargement of
agency forces.
Page 38
Non-Life Market Overview

BMI View: As of early 2014, it is possible to identify a number of strengths of Vietnam's non-life segment. A
significant presence of leading foreign groups ensures that there is competition in terms of innovation and
distribution. Unlike in many emerging markets where household incomes are low, the segment is not
dominated by basic lines such as motor vehicle insurance. Premiums have been increasing in line with
overall GDP and should continue to do so.
Vietnam's non-life segment is still in transition from a situation where it consisted of a state owned
monopoly (the composite group Bao Viet) to one where local private sector firms and, usually through joint
ventures, foreign groups are active.
A Fairly Fragmented Marketplace

Non-Life Market Shares (%), 2012
Source: BMI/ AVI
The three largest players accounted for nearly half of the total premiums written in 2012. However, the
remainder of the market is fragmented, with particular groups focusing on niche specialties. The insurance
Page 39
sector is overseen by the Insurance Supervisory Division within the Ministry of Finance. The trade
association is the Association of Vietnamese Insurers (AVI).
Aside from Bao Viet, there are 25 players in the non-life segment, according to the AVI. Local companies
include AAA, Agricultural Bank Insurance, Bao Minh JSC, BIC (a subsidiary of Bank for Investment
and Development of Vietnam), Bao Tin, GIC, Great Mountain JSC, Hung Vuong JSC, Military
Insurance, Petrolimex Joint Stock Insurance Company (PJICO), Nha Rong Insurance (Bao Long),
Petrovietnam Insurance (PVI), Post Office Insurance, SVIC, Union Insurance, VietinBank Insurance,
VNA Insurance, Vietnam National Reinsurance (VinaRe) and VASS. A key development in August
2011 was the announcement that HDI Gerling Industrie Versicherung, a subsidiary of Germany's Talanx,
has agreed to buy a 25% stake in PVI, a listed subsidiary of Petrovietnam, for VND1,920bn (US$92mn).
Reports in late 2011 indicated that PVI Re, a reinsurance subsidiary of PVI, will be entering the local
reinsurance market. In April 2012, Australia's IAG announced that it had reached agreement to buy a 30%
stake in AAA.
Joint ventures include Samsung Vina Insurance and Bao Viet Tokio Marine Insurance.
Foreign groups with a presence on the ground include AIG, QBE, Liberty Mutual, Fubon Insurance,
MSIG and ACE (Non-Life).
Table: Non-Life Insurance Market (US$mn) 2006-2012
2007
2008
2009
2010
2011
2012
Bo Vit
161.7
201.9
n.a.
n.a.
237.2
257.9
PVI
102.6
122.9
n.a.
n.a.
204.7
223.2
Bo Minh
100.2
114.6
n.a.
n.a.
103.6
109.5
PJICO
54.8
64.5
n.a.
n.a.
89.7
94.4
PTI
19.0
27.0
n.a.
n.a.
53.0
78.6
Samsung Vina
4.8
5.3
n.a.
n.a.
n.a.
35.1
BIC
9.2
16.1
n.a.
n.a.
n.a.
32.1
Ton Cu
10.8
11.8
n.a.
n.a.
n.a.
23.5
MIC
n.a.
8.7
n.a.
n.a.
n.a.
22.7
AAA
9.7
12.3
n.a.
n.a.
n.a.
22.7
ABIC
1.0
7.9
n.a.
n.a.
n.a.
21.8
VNI
n.a.
n.a.
n.a.
n.a.
n.a.
21.5
Liberty
0.3
2.7
n.a.
n.a.
n.a.
21.2
Page 40
Non-Life Insurance Market (US$mn) 2006-2012 - Continued
2007
2008
2009
2010
2011
2012
SVIC
n.a.
n.a.
n.a.
n.a.
n.a.
14.9
MSIG
n.a.
n.a.
n.a.
n.a.
n.a.
14.0
Baoviet Tokio Marine
7.6
10.3
n.a.
n.a.
n.a.
13.1
AIG Vit Nam
4.2
6.3
n.a.
n.a.
n.a.
13.0
Bo Long
10.2
15.4
n.a.
n.a.
n.a.
12.1
Vin ng
9.7
13.4
n.a.
n.a.
n.a.
10.8
Xun Thnh
n.a.
n.a.
n.a.
n.a.
n.a.
10.6
Source: BMI/ AVI
The development of the premiums of the various non-life companies from 2007 to 2012 highlights a
number of key features and trends. First, Vietnam's non-life segment is growing steadily in absolute terms,
even if this increase is the result of an expansion in overall GDP rather than a life in penetration. Second,
the larger companies (other than Bao Viet) have close links with state-owned enterprises that are not
naturally in the insurance businesses. These insurance subsidiaries continue to handle industrial risks for
their parents: this is an aspect of the market which makes it fairly unusual. Third, very few of the players
have scale - although a number are affiliates of regional/ global insurers who can see their Vietnam
operations in the context of a larger entity. Many of the companies that are active in the segment are writing
premiums of around US$10mn annually. They are tiny by almost all standards.
Table: Non-Life Insurance Market (%) 2006-2012
2007
2008
2009
2010
2011
2012
Bo Vit
31.1
30.5
n.a.
n.a.
23.9
23.7
PVI
19.7
18.6
n.a.
n.a.
20.6
20.5
Bo Minh
19.3
17.3
n.a.
n.a.
10.4
10.0
PJICO
10.5
9.8
n.a.
n.a.
9.0
8.7
PTI
3.6
4.1
n.a.
n.a.
5.3
7.2
Samsung Vina
0.9
0.8
n.a.
n.a.
n.a.
3.2
BIC
1.8
2.4
n.a.
n.a.
n.a.
2.9
Ton Cu
2.1
1.8
n.a.
n.a.
n.a.
2.2
MIC
n.a.
1.3
n.a.
n.a.
n.a.
2.1
AAA
1.9
1.9
n.a.
n.a.
n.a.
2.1
Page 41
Non-Life Insurance Market (%) 2006-2012 - Continued
2007
2008
2009
2010
2011
2012
ABIC
0.2
1.2
n.a.
n.a.
n.a.
2.0
VNI
n.a.
n.a.
n.a.
n.a.
n.a.
2.0
Liberty
0.1
0.4
n.a.
n.a.
n.a.
1.9
SVIC
n.a.
n.a.
n.a.
n.a.
n.a.
1.4
MSIG
n.a.
n.a.
n.a.
n.a.
n.a.
1.3
Baoviet Tokio Marine
1.5
1.6
n.a.
n.a.
n.a.
1.2
AIG Vit Nam
0.8
1.0
n.a.
n.a.
n.a.
1.2
Bo Long
2.0
2.3
n.a.
n.a.
n.a.
1.1
Vin ng
1.9
2.0
n.a.
n.a.
n.a.
1.0
Xun Thnh
n.a.
n.a.
n.a.
n.a.
n.a.
1.0
Source: BMI/AVI
The various shifts in market shares (in terms of gross premiums written) are indicative of a market that is at
a fairly embryonic state of development and which is being liberalised. Over the six years to the end of
2012, Bao Viet - the former state-owned monopoly - gradually lost market share. Not all the smaller
companies achieved increases in market share. However, some players came from nowhere to positions
with market shares in excess of 1%.
Page 42
Company Profile
AIA Group
SWOT Analysis
Strengths
Very large scale by any standard.
Strength of capital and access to global financial markets.
Strong and growing cashflows.
Unique status as the largest independent pan-Asian life insurer, with a footprint that
spans 15 markets.
Only foreign company to operate on its own (as opposed to as a JV partner) in China.
Leadership, by many metrics, in many of the markets in which AIA operates (and
crushing domination in some of these).
Continuing growth in annualised new premiums (ANP), value of new business (VONB)
and VONB margins - across almost all the markets in which AIA operates.
Diverse products, for both individual and corporate clients.
Multi-channel distribution - complements very strong proprietary agency distribution

channel in most of AIA's markets.
Weaknesses
Clear strategy to 'deliver quality growth'.
Long-standing presence in many of its markets.
Strong/improving brand in many of its markets.
There are some countries (e.g. South Korea, Taiwan and China) where AIA is still, by
many metrics, a relatively minor player.
Like all large life companies, AIA is exposed to the challenges that arise from a global
investment environment in which interest rates are, and will likely remain, low.
Opportunities
Arguably the leading beneficiary of the growth of organised savings in East and South
East Asia.
Page 43
SWOT Analysis - Continued
Clear strategies to boost profitability - as well as premium income.
Successful product innovation in many of the markets in which AIA operates.
Potential to undertake substantial acquisitions.
Well placed to benefit from improving perceptions of risk in emerging markets of

South East Asia.
Threats
Development of relationship with Nippon Life.
Potential but unlikely turmoil in regional financial markets. However, AIA has plainly
thrived in spite of the Asian financial crisis of 1997-99, the critical phase of the global
financial crisis (2008-09) and the massive financial problems of its previous
shareholder.
Given the current structure of AIA's overall business, growth and profitability would
suffer for a time in the event of political and/or economic instability in Thailand.
Robust competition, in some markets, from very large multi-national insurers, many of
which share some of AIA's strengths.
Robust competition, in some markets, from truly enormous local insurance

companies. (In China and India, the rules governing participation by foreigners
present challenges.)
At some stage, the absolute size of AIA alone will mean that it becomes significantly
more difficult to maintain growth in business and profitability at the rates that have
been achieved in recent years.
Company Overview
AIA Group (AIA) describes itself as 'the largest independent listed pan-Asian life
insurance group in the world', with a 'broad footprint spanning 15 markets in the AsiaPacific'. It is one of the three main insurance companies (the others being Alico, which
is now a part of MetLife's global operations and Chartis) whose origins date back to the
establishment of an insurance agency in Shanghai by Cornelius Vander Starr in 1919.
For a long time, AIA was an important component of American International Group
(AIG). The problems of AIG in the wake of the global financial crisis forced it to look for a
Page 44
sale. Through much of 2010, Prudential plc sought to purchase AIA, but was unable to
raise the funds that it needed. In late October 2010, AIA was listed in Hong Kong in
what was, at that time, the largest ever initial public offering (IPO).
Although AIA offers accident and health products (which we would normally consider as
part of the non-life segment) in some of the markets that it serves, it is - as its self
description indicates - overwhelmingly a life insurer. The company classifies its wide
range of products in six major groups: protection; savings; investment; retirement;
wealth management, and corporate solutions (employee benefits, credit insurance and
retirement services).
As noted above, AIA has a presence in 15 different countries across the Asia-Pacific.
AIA Vietnam has over 400 employees and more than 9,000 professional agents. It
operates in 23 cities and provinces across Vietnam. 'AIA Vietnam offers a wide range of
life insurance products and services including universal life, savings, education and
protection, each designed to meet the needs and demands of individuals, corporates
and banks customers.'
Financial Data
E AIA reported that H113 (the six months to May 31) saw very good growth in both
value of new business (VONB - the company's key performance measure) and
annualised new premiums (ANP). Across the company as a whole, VONB rose by 27%
to US$711mn, while ANP grew by 29% to US$1,527mn. Within national markets,
changes in ANP were: Hong Kong, up 34% to US$326mn; Thailand, up 9% toUS
$265mn; Singapore, down 3% to US$147mn; Malaysia, up 100% to US$152mn (thanks
to the inclusion of the businesses bought from ING); China, up 11% to US$120mn;
South Korea, up 75% to US$182mn and; other markets, up 29% to US$335mn.
Total weighted premium income rose by 16%, from US$7,305mn in H112 to US
$8,495mn in H113. Thanks to the ING acquisition, premiums rose by 106% to US
$1,002mn in Malaysia. In most markets, though, they rose by 5-10%. Investment
income amounted to US$2,465mn in H113, or 18% more than in H112.
At the end of H113, total equity amounted to US$27,172mn, or 2% more than at the
end of November 2012. Total assets rose by 9% over the six month period, to US
$146,926mn. Total investments grew by 9% to US$125,421mn.
Page 45
American International Group (AIG)

SWOT Analysis
Strengths
AIG enjoys the benefits of diversification across one of the leading US life companies
and one of the world's largest non-life insurance companies, as well as additional
businesses.
In its own right, AIG Life benefits from scale, diversity of products and diversity of
distribution channels.
In its own right, AIG is one of the largest and (in terms of product range) diversified
non-life groups.
AIG also has one of the broadest geographical footprints of any non-life company.
This includes two major markets - Japan and the UK - where AIG Property Casualty
has operations, which would count as large non-life insurers by any standard.
In Japan, in particular, AIG is unusual as it is a well established foreign company with

a leadership position in the non-life market.
AIG also has a significant presence in many emerging markets- in all parts of the
world.
AIG has low cost of capital that comes from being a large and strong financial
institution.
The restructuring of AIG is over. Management can focus on growth opportunities

once more.
Like virtually all major global non-life groups, AIG coped well with the massive
catastrophes of 2011.
Weaknesses
Many of the markets in which AIG Life and AIG operate are relatively mature.
The low interest rate environment is having an adverse impact on sales of various of
AIG Life's products. It also has implications for AIG.
Page 46
In many of the geographic markets in which AIG operates, it is a small player - often
facing competition from well-entrenched and massive local non-life companies. This
is true of Brazil, Russia, India, China and South Africa.
Opportunities
AIG Life can benefit from product innovation and (re) development of particular
distribution channels.
AIG is focusing on higher value added products and investing in new systems.
AIG Life is, par excellence, a beneficiary of the (gradual) greying of populations in the
US.
AIG is well placed to benefit from the growth in the world economy and from rising
demand for a broad variety of insurance solutions in emerging markets.
Threats
Potential, but unlikely turmoil in global financial markets.
Robust competition, in some markets, from very large local players. In the US, AIG
Life faces competition from a number of rivals that share its advantages AIG is
competing with non-life groups that are, by some measures, larger. However, AIG's
global reach sets it apart from its US peers.
A simultaneous sharp downturn in the UK economy and the Japanese economy, at a

time of volatility in financial markets would present AIG with a challenge.
Company Overview
Following its US$182bn rescue by the United States Government in 2008 and
subsequent restructuring (which resulted in a profit to tax payers of nearly US$23bn)
AIG is today one of the leading composite insurance companies in the United States,
whose non-life businesses have a global presence.
AIG Property Casualty is the leading commercial insurer in the United States and
Canada. It is also the largest foreign property/casualty company in China and Japan
and has a growing position in Latin America. It is also a significant non-life company
across Europe and in the Middle East and Africa. AIG Property Casualty has over 70mn
corporate and consumer clients globally. It notes that it provides products to 96% of
the Fortune 1000 companies, to 90% of the Fortune Global 500 companies and to 40%
of the 400 richest Americans as identified by Forbes magazine.
Page 47
Collectively, the various businesses of AIG Life and Retirement constitute one of the
United States' largest life insurance companies. It serves over 18mn customers and
works with 300,000 financial professionals who are licensed to sell life insurance and
retirement savings products. Among much else, AIG Life and Retirement is: the fifth
largest provider of life insurance and fourth of structured settlements; the leading
provider of fixed annuities through banks (a position that the company has held for 16
years); one of the leading providers of K-12 and 403(b) group retirement services; and
the fifth largest supplier of non-captive variable annuities. In addition, AIG Life and
Retirement offers structured settlement annuities and mutual funds. It also runs one of
the largest independent broker-dealer networks in the United States.
Other businesses include United Guaranty Corporation (UGC), the leading provider of
mortgage insurance in the United States and International Lease Finance Corporation
(ILFC- the largest aircraft lesser globally, in terms of the number of aircraft owned (i.e.
over 1,000 owned and managed).
AIG Property Casualty is present in 21 markets across the Asia-Pacific: Australia; China;
Guam; Hong Kong; Indonesia; Japan; South Korea; Kazakhstan; Macau; Malaysia; New
Zealand; Pakistan; Papua New Guinea; Philippines; Saipan; Singapore; Sri Lanka;
Taiwan; Thailand; Uzbekistan; and, Vietnam. In most of the major markets, it offers a
comprehensive range of both personal and corporate lines.
Recent
Developments
AIG published its results for Q213 on August 1, 2013.

AIG Property Casualty reported operating income of US$1.1bn for the quarter, or a little
more than the US$936mn of the previous corresponding period. Highlights included: a
slight rise in the combined ratio from 102.4% to 102.6%, thanks in part to costs relating
to Hurricane Sandy; 1.8% increase in net premiums to US$9.3bn, thanks to firmer
pricing and sales/marketing initiatives (such as a focus on higher value lines); a boost to
net investment income thanks in part to the contribution from alternative investments.
Net premiums written by AIG Property Casualty's commercial insurance business in
H113 amounted to US$10,779mn, or the same as in H112. Net premiums written by the
consumer insurance business in H113 amounted to US$6,922mn, or 3% less than in
H112. Operating income of the former rose by 13% to US$1,576mn: operating income
of the latter fell by 43% to US$244mn. Overall, AIG Property Casualty benefited in H113
from a better underwriting result thanks to lower claims. Net investment income rose
thanks to 'the strong performance of alternative investments and income associated
with the PICC P&C shares.'
Total net premiums written by AIG Property Casualty in H113 amounted to US
$17,700mn. Of this, US$8,983mn was derived from the Americas, while US$4,975mn
and US$3,742mn came from the Asia Pacific and Europe/Middle East/Africa (EMEA)
respectively. Commercial insurance premiums were split between the three main
Page 48
regions US$7,079mn/ US$1,107mn/ US$2,683mn respectively. Consumer insurance

premiums were split US$1,905mn/ US$3,958mn and US$1,059mn respectively
AIG Life and Retirement reported operating income of US$1.2bn for the quarter, or 23%
more than the $933mn of Q212. Virtually all major trends were positive: sales of variable
annuities and mutual funds were 'robust'; net investment income rose; fee income
increased; net flows were positive in spite of outflows from fixed annuities (which, in
turn, was partly due to the low interest rate environment; and, adroit management of
crediting rates.
At the end of June 2013, AIG Life and Retirement's assets under management were US
$294bn, or 10% more than at the end of June 2012. Premiums and deposits during the
quarter were US$6.8bn, or 24 more than in the previous corresponding period.
Page 49
Bao Viet Holdings

SWOT Analysis
Strengths
A leading player in both the non-life and the life segments.
Breadth of product range, including aviation insurance.
Has significant asset management, banking and securities operations.
Strong brand and nationwide distribution network.
Capital strength.
Backing of SCIC and, for now, HSBC (which has an 18% stake and which has
provided substantial technical assistance).
A key beneficiary of the growth of the overall economy and the increase in insurable
assets.
A key beneficiary of the continuing development or organised savings.
Strong top-line growth and rising profits in the recent past.

Weaknesses
Opportunities
Vulnerable to swings in the economy.
Vulnerable to volatility in Vietnam's financial markets.
Lack of scale in anything other than a local context.
Under-development of bancassurance and alternative channels.
Further growth in the overall market for insurance - in both major segments.
Cross selling.
Product innovation.
Further improvements to cost control and business systems.
Optimisation of the investment portfolio.
Development of strategic relationship with HSBC or another major foreign group.
Page 50
Threats
Volatile financial markets.
Potential major catastrophe losses.
Strong competition in the life segment from subsidiaries of major foreign multinationals.
Company Overview
Founded in 1965 as the state owned insurance monopoly, Bao Viet is today a listed
(since 2009) composite insurance company with additional financial services activities.
It had been corporatized in 2007.
Bao Viet Life Corporation and Bao Viet Insurance Corporation are, respectively, the life
(re)insurance and the general (re)insurance businesses. Bao Viet Fund Management
Company is the group's asset management subsidiary. Other interests include Bao Viet
Securities JSC (59.9%), Bao Viet Commercial Joint Stock Bank (52%), Bao Viet
Investment JSC (real estate investment - 95%) and Bao Viet Au Lac LLC (vocational
driving training services - 60%).
HBSC has been the sole foreign strategic partner of Bao Viet, lifting its stake in the
insurer from 8% to 18% in early 2010. HSBC maintained its 18% stake in the rights
issue of November 2010. HSBC has provided considerable technical support.
On August 9, 2012, Bao Viet issued a note of clarification to the State Securities
Commission and the Ho Chi Minh City Stock Exchange: 'According to (the company's
corporate charter), the restriction time for transferring of HSBC's shares in Bao Viet
Holdings as a strategic shareholder is five years. HSBC has confirmed to Bao Viet
Holdings that it is reviewing its strategic options with respect to its shareholding. No
decision has been made as yet and a further statement will be made if or when
appropriate.'
The other strategic shareholder is the State Capital Investment Corporation (SCIC), the
vehicle through which the government holds investments in state owned enterprises.
SCIC became a major shareholder in September 2009, when it took over a stake
previously held by Vietnam Shipbuilding Industry Corporation (Vinashin).
For its core businesses, the strategic objectives in 2011-15 are as follows:
'General insurance: to maintain the number one position in the non-life insurance
market in terms of retained premiums. By the end of 2015, direct insurance premium
(should reach) VND8,800bn. PAT is VND480bn.'
Page 51
'Life insurance: to maintain the leading position in the life insurance market in terms of
premium revenue and service quality. By end 2015, total premiums should reach
VND6,700bn. New business premiums should be VND1,350bn. PAT is VND370bn.'
Bao Viet also plans to become the leading Vietnamese retail bank, securities company
and fund management company.
Recent
Developments
In early September 2013, Bao Viet highlighted that operating conditions had been quite
challenging through the first half of the year, thanks to the slowing of overall economic
growth in Vietnam and bad debt problems for the insurer. Gross written premiums, for
both life and non-life business, rose by 10.3% to VND5,481bn in H113. Life insurance
new business premium jumped by 32% to VND708bn. Profit after tax increased by
1.6% to VND598bn.
Highlights of the first half of 2013 included: an increase in chartered capital to
VND2,000bn; the launch of the OCB Care and a new version of the Medical Care health
insurance products; and the introduction of a new life insurance financial package for
premium and corporate customers. Baoviet Securities was the principal and only
underwriter of the VND1,500bn bond issued by the State Treasury.
The company has benefited from the development of alternative distribution channels.
Bancassurance sales through Baoviet Bank were 52% higher than they had been in
H112. Sales of Baoviet insurance products to Baoviet Life clients increased by 31%.
Page 52
Manulife Financial
SWOT Analysis
Strengths
Massive scale, financial strength and access to capital from global markets
Multi-national diversification, across Canada, the US, Asia and (globally) through
Manulife Asset Management.
Leadership positions in many of the markets in which it operates.
Huge variety of products and distribution channels.
Strong brands.
Par excellence an example of a leading multi-national insurer that can benefit from
both the ageing of populations in rich countries and from the strong growth in
demand for long-term savings products in emerging markets.
Proven capability to undertake successful acquisitions - of which the US insurance

group John Hancock is the most important example.
Weaknesses
Clear and proven strategy.
Some of the markets in which Manulife operates are mature and/or highly
competitive.
A small player in (or absent from) some of the most important emerging markets in
Asia. India and South Korea stand out as key markets in which Manulife does not
have a presence.
Opportunities
Threats
Impacted, like many insurance companies, by low interest rates
Product innovation.
Further expansion by way of acquisitions.
A natural beneficiary of the relatively strong growth of emerging markets in Asia
Potential, but unlikely, turmoil in global financial markets.
Page 53
Robust competition in some markets, from companies that have many of the same
strengths as Manulife
Company Overview
Originally founded in 1887, Manulife is one of the world's largest and financially
strongest listed multi-national (mainly) life insurers. In general terms, it describes its
product and service offerings as including: individual life insurance; group life and health
insurance; long-term care insurance; retirement products; annuities; mutual funds and
banking products. Manulife Asset Management serves external institutional clients
around the world.
Manulife has four main businesses: Canada; US (John Hancock); Asia; and Manulife
Asset Management. As of Q112, Manulife's total investment assets amounted to
CAD224bn. Total assets under management (AUM) amounted to CAD512bn). The
global workforce exceeded 26,000.In Asia, Manulife is present in 11 geographic
markets, 'with a wide array of product offerings and a diversified network of distribution
channels including (around) 50,000 contracted agents, over 100 bank partnerships and
more than 500 dealers, independent agents and brokers. 'Product offerings across the
region include: traditional individual life insurance; group life & health insurance;
accident & health; investment-linked products; universal life; mutual funds; variable &
fixed annuities; group retirement products and; credit life insurance.
Operational Data
Regional operations include the following:

China: Manulife-Sinochem Life, which was originally set up in 1996 as the first foreign
invested joint venture (JV). The company has over 650,000 customers in 50 cities (in
Shanghai, Beijing, Guangdong, Zhejiang, Jiangsu, Sichuan, Shandong, Fujian,
Chongqing, Liaoning, Tianjin, Hubei and Hebei). It has 16,000 agents and employees. At
the end of 2011, AUM amounted to US1.5bn. The main products are individual lines,
group life & health and group pension.
Hong Kong: Manulife (International) Limited, Manulife Asset Management (Hong Kong)
Limited and Manulife Provident Funds Trust Company Limited are the three main
subsidiaries. Manulife has had a presence in Hong Kong since 1987, where it 'is one of
the largest financial services organisations. The company takes care of the financial and
protection needs of about 1.7mn people in Hong Kong.' There are over 5,000 agents. At
the end of 2011, AUM amounted to US$25bn. The main products are individual lines,
employee benefits and investment funds.
Japan: Manulife entered this market in 1999. There are 1,300 employees and over
3,000 agents. The company has around 1mn in-force policies in Japan. The company
Page 54
operates through a network of 120 sales offices. At the end of 2011, AUM amounted to
US$30bn. The main products are individual lines (life and medical) and individual
annuities.
Indonesia: Manulife arrived in Indonesia in 1985. The local subsidiary is 95% owned:
the other shareholder is PT Tirta Dhana Nugraha. There are over 1,250 employees and
more than 7,800 agents. In Indonesia, the company has over 1.5mn in-force policies. At
the end of 2011, AUM amounted to US$2.4bn. (However, Manulife notes that this
excludes assets from the mutual fund and pensions businesses - in accordance with
Indonesian accounting standards).
Malaysia: Manulife has been present in Malaysia since 1963. There are 230 or so
employees and nearly 2,000 agents, serving clients with nearly 300,000 in-force
certificates. At the end of 2011, AUM amounted to US$1.13bn. The main products are
insurance, unit trusts and asset management.
The Philippines: Manulife originally arrived in 1907. It employs around 600 staff, plus
well over 3,000 agents. There are around 350,000 in-force policies. As at the end of
2011, AUM amounted to US$1.1bn. The main products are life insurance, pensions and
education savings plans.
Singapore: Manulife entered the market in 1980. There are around 240 employees and
about 1,000 agents, serving clients with nearly 300,000 in-force policies. As at the end
of 2011, AUM amounted to US$3.5bn. The main products are life insurance, wealth
management and asset management.
Taiwan: Manulife entered the market in mid-1992. There are around 350 employees
and over 1,000 agents. Clients have around 157,000 in-force policies. As at the end of
2011, AUM amounted to US$2.3bn.
Thailand: Manulife first arrived in Thailand in 1951, Today it serves clients with around
40,000 in-force policies. There are over 100 employees and around 600 agents. As at
the end of 2011, AUM amounted to US$258mn. The main products are insurance and
asset management.
Vietnam: Manulife originally entered the market in 1999. Today there are over 400
employees and about 12,000 agents. There are about 360,000 in-force policies. As at
the end of 2011, AUM amounted to US$250mn. Life insurance is the main product
offering.
Cambodia: Manulife Cambodia PLC 'commenced operations in June 2012.'
Corporate
Highlights
In its comments on its performance in Asia in Q213, Manulife differentiated between the
fortunes of its wealth business in the region and those of its insurance business. Sales
of wealth products in the quarter were over US$3bn, or double those of Q212. By
contrast, insurance sales were 31% lower at US$254mn 'due to the unusually high level
of sales in advance of tax and product changes (particularly in Hong Kong and Japan,
Page 55
as well as Taiwan). Elsewhere, sales achieved single-digit growth in China and Vietnam.
Indonesia, where insurance sales in the quarter were US$33mn, or 31% more than in
Q212, was a bright spot. The growth in Indonesia was driven by increased
bancassurance sales and an increase in the size of Manulife's agency force.
Across the region, Manulife employed around 54,800 agents at the end of June 2013, or
8% more than at the end of June 2012. Bank channel sales 'on a total annualised
insurance and wealth premium equivalent basis' were up 52%.
The very strong growth in wealth sales in Q213 relative to Q212 was driven by product
innovations, which differed from market to market. In Japan, for instance, the key issue
was 'the continued success of the Strategic Income Fund and other foreign currency
denominated funds.' In Hong Kong, Manulife was a major beneficiary of the launch of
the Mandatory Provident Fund's new Employee Choice Arrangement in 2012. 'Record
mutual fund sales in China, fuelled by a new bond fund launch, along with strong
mutual fund sales in Taiwan and the continued success of unit-linked product sales in
the Philippines, were ... key contributors to the growth.'
Page 56
Prudential plc
SWOT Analysis
Strengths
Massive scale, financial strength and access to capital from global markets.
Multi-national diversification, across Asia, the United States, the UK and through
M&G and Eastspring Investments.
Huge variety of products and distribution channels.
Strong brands.
Par excellence an example of a leading multi-national insurer that can benefit from
both the ageing of populations in rich countries and from the strong growth in
demand for long-term savings products in emerging markets.
Proven capability to undertake successful acquisitions - of which the SRLC deal in

the US is the latest example.
Weaknesses
Some of the markets in which Prudential operates are mature and/or highly
competitive.
Asia.
Opportunities
Impacted, like many insurance companies, by low interest rates.
Product innovation.
Further growth in agency force in Asia.
Further growth in agent productivity in Asia.
A natural beneficiary of the relatively strong growth of emerging markets in Asia.
Page 57
Threats
Further development of Eastspring Investments' business.
strengths as Prudential plc.
Company Overview
Originally founded in 1848, Prudential plc is one of the world's largest and financially
strongest listed multi-national life insurance companies.
Globally, it has assets under management (AUM) of over GBP351bn. It serves 26mn
customers and is listed in London, New York, Singapore and Hong Kong. Around the
world, Prudential plc has over 26,000 employees. There are four main business units:
Prudential Corporation Asia; Jackson National Life Insurance Company; Prudential UK;
and, M&G, the group's principal asset management operation. In terms of APE new
business premiums, around 45% of Prudential plc's overall business is derived from
Prudential Corporation Asia. Jackson and the UK account for around 35% and 20%
respectively. In relation to new business profit, the corresponding figures are 50%, 38%
and 12%.
Prudential Corporation Asia 'is a leading international life insurer in Asia with operations
in 12 markets.' It has 'more market leading positions than any other life insurer in the
region and the region's largest onshore mutual fund manager.' It provides regular
premium savings and protection products, through agents and a growing number of
bancassurance partners. Across the region, there are over 350,000 agents and 12mn
clients.
In February 2012, the asset management operation of Prudential Corporation Asia was
rebranded as Eastspring Investments. It operates in 11 markets across the region (and,
from July 2012, in the US). It has 2,000 employees and, as of the end of Q112, AUM of
US$85bn. About half of its total AUM comes from third party clients. Eastspring is 'the
largest multinational onshore mutual fund manager in the region.'
Jackson 'is one of the largest life insurance companies in the United States, providing
retirement savings and income solutions with over 2.9mn policies and contracts in
force.' Jackson is one of the three largest providers of variable and total annuities.
Prudential UK is 'a leading life and pensions provider to approximately seven million
customers in the UK.' It has expertise in areas such as longevity, risk management and
multi-asset management' along with 'financial strength and a highly respected brand.'
Page 58
Founded over 80 years ago, 'M&G is Prudential's UK and European fund management
business with total assets under management (AUM) of GBP201bn as at December 31
2011.'
Prudential Corporation AsiaAs is discussed below, Prudential Corporation Asia is one
of the leading pan-Asian life insurance companies, with presence in 12 markets - China,
Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore,
Taiwan, Thailand and Vietnam.
Eastspring Investments, Prudential Corporation Asia's fund management business,
manages assets for Prudential Corporation Asia and for Prudential plc. It also handles
significant assets under management (AUM) for third party investors. It is 'one of the
largest by measure of Asia-sourced AUM'. As at the end of 2011, Eastspring
Investments' AUM amounted to GBP50.3bn. It has asset management operations in 11
locations - China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, Taiwan,
Vietnam and the UAE.
Across the region, Prudential Corporation Asia identifies six business: life insurance;
fund management; consumer finance (in Vietnam); retirement planning; health solutions;
and Islamic financial products (in Malaysia, Indonesia and the Gulf).
Prudential Corporation Asia's operations across the region, and their date of
establishment, are as follows:
Hong Kong (1964): is the regional head office. Prudential Corporation Asia is a leading
life company and, through Eastspring Investments, asset manager. Its JV with Bank of
China International provides administrative services for Mandatory Provident Fund
(MPF) schemes.
China (2000): Prudential Corporation has life insurance and asset management JVs
with the CITIC group.
India: The company's JVs with ICICI Bank are the largest private sector life insurer and
the largest fund manager in the country.
Indonesia (1995): Prudential Corporation Asia has grown to be the market leader in the
Indonesian life segment. Eastspring Investments is also present in the country.
Japan: PCA Life and Eastspring are active, respectively, as life insurer and asset
manager.
South Korea: PCA Life and Eastspring are active, respectively, as life insurer and asset
manager.
Malaysia (1924): Prudential Corporation Asia is one of the largest life companies in
Malaysia. It has a family takaful JV with Bank Simpanan Nasional. Eastspring
Investments is also present as asset manager and Islamic asset manager.
Philippines (1996): Pru Life (UK) provides insurance products.
Page 59
Singapore (1931): Prudential Corporation Asia has substantial life insurance and asset
management operations in the city-state.
Taiwan: PCA Life and Eastspring are active, respectively, as life insurer and asset
manager.
Vietnam: The company is one of the leading life insurance companies in Vietnam. It has
been a provider of consumer finance since 2007. It is also active as an asset manager.
Eastspring Investments also has an asset management operation in Dubai, where it
distributed funds.
In early July 2012, the government of Cambodia gave its in-principle approval for
Prudential Corporation Asia to establish an operation in that country.
Financial Data
Prudential plc delivered another very strong result in H113. New life business profit rose
by 20% to GBP659mn, while APE sales expanded by 12%. No fewer than seven of
Prudential plc's operations posted record sales in the first six months of 2013, with
strong increases in Hong Kong (up 21%), China (42%), Indonesia (17%), Singapore
(21%), Thailand (32%), the Philippines (38%), South Korea (38%) and Vietnam (28%).
Health and protection products accounted for just under one third of overall business
through the region.
Highlights of the half year included: further growth in the number and productivity of
agents; sales of participating products and the launch of a new medical product,
'PRUmyhealth lifelong crisis protector' in Hong Kong; revised product offerings in
Singapore; expanded presence in the Bumi sector in Malaysia; good growth in
bancassurance sales across the region (except in Taiwan); and a boost to sales in
South Korea ahead of a one-off change which restricts some of the policyholder tax
benefits associated with life policies in that country.
Prudential plc continues to invest in markets where its presence 'has not been as strong
in the past.' The integration of Thanachart Life in Thailand is going well: sales through
the branch network of Thanachart Bank are ahead of plans. Thanks in part to its
relationship with Acleda, the largest bank in Cambodia, Prudential plc's new business in
that country (which commenced operations in January 2013) is also making ground.
Prudential plc has also opened a representative office in Myanmar.
Meanwhile, 'Eastspring Investments saw net third party inflows of GBP2.0bn, 371%
higher than last year, mainly due to the appeal of Taiwan's US high-yield bond funds,
Japan's Asia Oceania equity fund, bond funds in India and new bond funds in China.
'Over the year to June 30, 2013, the assets under management (AUM) of Eastspring
Investments rose by 15% to GBP62bn.
Page 60
PVI Holdings
SWOT Analysis
Strengths
A leading player in the non-life segment, with dominant position in the energy and
marine sub-sectors.
Blue chip corporate clients.
Capital strength, with backing of PetroVietnam, OIC and Talanx.
Growing rapidly and profitably.
A major player in reinsurance in Vietnam.
Capital strength.
A key beneficiary of the growth of the overall economy and the increase in insurable
assets.
Partnerships with major foreign insurers provides access to know-how.

Weaknesses
Opportunities
Threats
Vulnerable to swings in the economy, if they affect the energy and marine sectors.
Vulnerable to volatility in Vietnam's financial markets.
Lack of scale in anything other than a local context.
Relative lack of presence in personal lines.
Further growth in the overall market for non-life insurance.
Development of PVI Sun Life JV.
Product innovation.
Further improvements to cost control and business systems.
Optimisation of the investment portfolio.
Development of diversified financial services business.
Volatile financial markets.
Page 61
Company Overview
Potential major catastrophe losses.
PetroVietnam Insurance Corporation (PVI) was established in 1996 as a captive insurer

for PetroVietnam, the state-owned oil and gas company. According to its website, 'PVI
currently holds nearly all of the energy market (insurance) share.' It also accounts for
30% of marine insurance premiums written in Vietnam and about 40% of the property/
engineering insurance market. PVI's share of the overall non-life market has varied over
the last few years, but has generally been in excess of 20%.
Unsurprisingly, given the nature of its business, PVI's customers include major stateowned enterprises (such as shipbuilder Vinashin) and the local subsidiaries of
international energy companies (such as Gazprom, Conoco Phillips and Chevron). The
company claims to have consistently achieved faster growth and lower loss ratios than
major rivals in the non-life market such as Bao Minh, Bao Viet and PJICO.
PVI was the only Vietnamese insurer to be rated by AM Best (as of early 2012, at B+). It
was also the 'only local insurer to accept foreign risks including risks in Singapore,
Malaysia, Japan and Russia.'
The lines offered by PVI are dominated by oil & gas and marine insurance. It also offers
property insurance, liability/workers' compensation insurance, motor insurance and
personal lines (including personal accident, travel and voluntary medical insurance).
PVI is also a significant non-life reinsurer. Since 2010, PVI has been 'an Offshore Facility
with the Lloyd's market and an Onshore Facility with leading international reinsurers
having limits of liability of US$450mn and US$1,540mn respectively.'
Like other Vietnamese insurers, PVI is now a listed public company (since 2006). Oman
Investment Fund (OIF) is a strategic shareholder, with a 10.4% stake in PVI. It is hoped
that OIF's involvement will facilitate the transformation, over the longer term, of PVI into
a 'combined finance-insurance institution.' Talanx Group, the German multinational
giant, is also a strategic investor in PVI and has a 25% stake. PetroVietnam Group and
PetroVietnam Finance Corp. speak for 39.1% and 7.6% of the equity respectively. Red
River Holdings/Temasia Capital are the fifth largest shareholder, with a 4.3% stake. The
free float is 13.6%.
Associated companies of PVI include: Petrovietnam Sapa Travel JSC; PVI Services
JSC; Petrovietnam Hospital JSC; PV2 Investment JSC; Nangluongmoi Trading &
Communication JSC; and Viet Xuan Investment JSC.
Page 62
Recent
Developments
Total assets rose from VND8,195bn at the end of 2011 to VND10,771bn at the end of
last year. Short term investment assets increased from VND4,183bn to VND5,276bn.
Long term investment assets slipped slightly, from VND1,444bn to VND1,219bn.
Direct insurance premiums rose from VND4,251bn in 2011 to VND4,659bn in 2012.
Inwards reinsurance premiums increased from VND459bn to VND613bn. Outwards
reinsurance premium rose from VND2,478bn to VND2,941bn. Operating profit increased
from VND409bn to VND560bn.
The shareholders at the end of the period were: Vietnam Oil & Gas Group (35.5%);
Talanx (31.8%); Funderburk Lighthouse Group (11.6%); Petrovietnam Finance JSC
(6.2%) and; other shareholders (14.9%).
Page 63
Sun Life Financial

SWOT Analysis
Strengths
Massive scale, financial strength and access to capital from global markets
A leading North American life insurance company, with international presence through
SLF Asia and SLF UK and, globally, through MFS.
Huge variety of products and distribution channels - including the largest force of
career agents in Canada.
Strong brands.

Weaknesses
Some of the markets in which Sun Life Financial operates are mature and/or highly
competitive.
Asia.
Opportunities
Impacted, like many insurance companies, by low interest rates.
Product innovation.
A potential major beneficiary of the relatively strong growth of emerging markets in

Asia
Threats
strengths as Sun Life Financial.
Page 64
Company Overview
Originally founded in 1865, Sun Life Financial is one of the world's largest and
financially strongest listed international life insurers. It describes its main product
offerings as including life and disability insurance, savings, investment management,
retirement and pension products and services. It works with both individual and
corporate clients.
SLF Asia 'operates in five markets - the Philippines, Hong Kong, Indonesia, India and
China - through subsidiaries, joint ventures and strategic investments.' The company's
goal is to 'gain scale in each of the markets where (it) operates and develop into a
significant long-term revenue and earnings growth operation.'
SLF Asia's regional head office is in Hong Kong. The various operations include: Sun
Life Everbright Life Insurance (JV - China); Sun Life Hong Kong Limited; Birla Sun life
Insurance Company Limited and Birla Sun Life Asset Management Company Limited
(JVs - India); PT Sun Life Financial Indonesia and PT CIMB Sun Life; Sun Life
(Philippines).
Financial Data
Q213 was a positive period for Sun Life Financial's various businesses across the
region. In the Philippines, where Sun Life was the largest life insurance company in
terms of premiums in 2012, insurance sales in the quarter were 131% more than they
had been in Q212. Wealth sales at the group's asset management business in the
Philippines were up by over 300%. The PVI Sun Life Insurance Company JV began
operation in Vietnam.
Page 65
Demographic Forecast
Demographic analysis is a key pillar of BMI's macroeconomic and industry forecasting model. Not only is
the total population of a country a key variable in consumer demand, but an understanding of the
demographic profile is key to understanding issues ranging from future population trends to productivity
growth and government spending requirements.
The accompanying charts detail Vietnam's population pyramid for 2013, the change in the structure of the
population between 2013 and 2050 and the total population between 1990 and 2050, as well as life
expectancy. The tables show key datapoints from all of these charts, in addition to important metrics
including the dependency ratio and the urban/rural split.
Population Pyramid
2013 (LHS) And 2013 Versus 2050 (RHS)
Source: World Bank, UN, BMI
Page 66
Population Indicators
Population (mn, LHS) And Life Expectancy (years, RHS), 1990-2050
Source: World Bank, UN, BMI
Table: Vietnam's Population By Age Group, 1990-2020 ('000)
1990
1995
2000
2005
2010
2013e
2015f
2020f
68,910
76,020
80,888
84,948
89,047
91,680
93,387
97,057
0-4 years
9,315
9,323
7,128
6,898
7,229
7,152
7,012
6,575
5-9 years
8,606
9,212
9,253
7,023
6,791
7,052
7,181
6,968
10-14 years
7,857
8,541
9,162
9,117
6,899
6,619
6,757
7,147
15-19 years
7,359
7,788
8,492
9,050
9,011
7,686
6,866
6,726
20-24 years
6,644
7,222
7,673
8,333
8,874
9,148
8,936
6,802
25-29 years
6,006
6,470
7,065
7,471
8,112
8,528
8,772
8,837
30-34 years
5,138
5,890
6,352
6,910
7,286
7,703
8,022
8,680
35-39 years
3,888
5,065
5,803
6,242
6,763
7,011
7,208
7,940
40-44 years
2,463
3,826
4,994
5,719
6,147
6,472
6,685
7,127
45-49 years
2,017
2,409
3,753
4,935
5,648
5,894
6,054
6,589
50-54 years
1,968
1,959
2,346
3,700
4,855
5,306
5,521
5,926
55-59 years
2,046
1,891
1,885
2,237
3,542
4,278
4,677
5,330
60-64 years
1,669
1,934
1,790
1,734
2,068
2,795
3,352
4,444
65-69 years
1,412
1,522
1,771
1,610
1,562
1,673
1,906
3,104
70-74 years
1,028
1,216
1,322
1,530
1,399
1,360
1,379
1,695
Total
Page 67
Vietnam's Population By Age Group, 1990-2020 ('000) - Continued
1990
1995
2000
2005
2010
2013e
2015f
2020f
75-79 years
752
819
984
1,080
1,263
1,219
1,167
1,160
80-84 years
430
536
597
732
815
919
964
900
85-89 years
224
261
336
385
483
517
546
654
90-94 years
71
108
132
177
210
245
268
306
95-99 years
16
25
41
53
74
83
89
115
100+ years
12
17
21
24
30
e/f = BMI estimate/forecast. Source: World Bank, UN, BMI
Table: Vietnam's Population By Age Group, 1990-2020 (% of total)
1990
1995
2000
2005
2010
2013e
2015f
2020f
0-4 years
13.52
12.26
8.81
8.12
8.12
7.80
7.51
6.77
5-9 years
12.49
12.12
11.44
8.27
7.63
7.69
7.69
7.18
10-14 years
11.40
11.23
11.33
10.73
7.75
7.22
7.24
7.36
15-19 years
10.68
10.25
10.50
10.65
10.12
8.38
7.35
6.93
20-24 years
9.64
9.50
9.49
9.81
9.97
9.98
9.57
7.01
25-29 years
8.72
8.51
8.73
8.79
9.11
9.30
9.39
9.11
30-34 years
7.46
7.75
7.85
8.13
8.18
8.40
8.59
8.94
35-39 years
5.64
6.66
7.17
7.35
7.60
7.65
7.72
8.18
40-44 years
3.57
5.03
6.17
6.73
6.90
7.06
7.16
7.34
45-49 years
2.93
3.17
4.64
5.81
6.34
6.43
6.48
6.79
50-54 years
2.86
2.58
2.90
4.36
5.45
5.79
5.91
6.11
55-59 years
2.97
2.49
2.33
2.63
3.98
4.67
5.01
5.49
60-64 years
2.42
2.54
2.21
2.04
2.32
3.05
3.59
4.58
65-69 years
2.05
2.00
2.19
1.89
1.75
1.83
2.04
3.20
70-74 years
1.49
1.60
1.63
1.80
1.57
1.48
1.48
1.75
75-79 years
1.09
1.08
1.22
1.27
1.42
1.33
1.25
1.19
80-84 years
0.62
0.70
0.74
0.86
0.91
1.00
1.03
0.93
85-89 years
0.32
0.34
0.42
0.45
0.54
0.56
0.58
0.67
90-94 years
0.10
0.14
0.16
0.21
0.24
0.27
0.29
0.32
95-99 years
0.02
0.03
0.05
0.06
0.08
0.09
0.10
0.12
Page 68
Vietnam's Population By Age Group, 1990-2020 (% of total) - Continued
100+ years
1990
1995
2000
2005
2010
2013e
2015f
2020f
0.00
0.00
0.01
0.01
0.02
0.02
0.03
0.03
Table: Vietnam's Key Population Ratios, 1990-2020
Dependent ratio, % of total working age

Dependent population, total, '000
1990
1995
2000
2005
2010 2013e
75.8
71.0
61.3
50.8
42.9
41.4
2015f
2020f
41.3
41.9
29,712 31,567 30,734 28,617 26,741 26,860 27,293 28,655
Active population, % of total
56.9
Active population, total, '000
58.5
62.0
66.3
70.0
70.7
70.8
70.5
39,198 44,453 50,154 56,331 62,306 64,820 66,094 68,402
Youth population, % of total working age
65.8
Youth population, total, '000
60.9
50.9
40.9
33.6
32.1
31.7
30.2
25,778 27,076 25,544 23,038 20,918 20,822 20,950 20,690
Pensionable population, % of total working age

Pensionable population, total, '000
10.0
10.1
10.3
9.9
9.3
9.3
9.6
11.6
3,934
4,491
5,190
5,579
5,823
6,037
6,343
7,965
Table: Vietnam's Rural And Urban Population, 1990-2020
1990
1995
2000
2005
2010
2013e
2015f
2020f
Urban population, % of total
20.3
22.2
24.4
27.3
30.4
32.3
33.6
36.9
Rural population, % of total
79.7
77.8
75.6
72.7
69.6
67.7
66.4
63.1
Urban population, total, '000
13,958
16,867
19,716
23,175
27,064
29,632
31,384
35,771
Rural population, total, '000
54,952
59,153
61,172
61,773
61,983
62,048
62,003
61,286
Page 69
Methodology
Industry Forecast Methodology
BMI's industry forecasts are generated using the best-practice techniques of time-series modelling and
causal/econometric modelling. The precise form of model we use varies from industry to industry, in each
case being determined, as per standard practice, by the prevailing features of the industry data being
examined.
Common to our analysis of every industry, is the use of vector autoregressions. Vector autoregressions
allow us to forecast a variable using more than the variable's own history as explanatory information. For
example, when forecasting oil prices, we can include information about oil consumption, supply and
capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own
history is often the most desirable method of analysis. Such single-variable analysis is called univariate
modelling. We use the most common and versatile form of univariate models: the autoregressive moving
average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality
is poor. In such cases, we use either traditional decomposition methods or smoothing methods as a basis for
analysis and forecasting.
BMI mainly uses OLS estimators and, in order to avoid relying on subjective views and encourage the use
of objective views, BMI uses a 'general-to-specific' method. BMI mainly uses a linear model, but simple
non-linear models, such as the log-linear model, are used when necessary. During periods of 'industry
shock', for example poor weather conditions impeding agricultural output, dummy variables are used to
determine the level of impact.
Effective forecasting depends on appropriately selected regression models. BMI selects the best model
according to various different criteria and tests, including but not exclusive to:
R2 tests explanatory power; adjusted R2 takes degree of freedom into account;
Testing the directional movement and magnitude of coefficients;
Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value); and
All results are assessed to alleviate issues related to auto-correlation and multi-co linearity.
Page 70
Sector-Specific Methodology
BMI's insurance reports provide detailed insight into insurance markets globally, examining both the
present conditions in and prospects for each market. Incorporating the most up-to-date information available
from sources such as industry regulators, trade associations, comparable information from other countries
and BMI's own economic and risk data, our analysts provide a comprehensive picture of the insurance
sector. The principal focus of the reports is on gross written premiums, to which 'premiums' refers unless
otherwise stated.
The following are considered in our reporting of the sector:
BMI considers health insurance to be included in the non-life sector. As such, in instances where sources
report health insurance as part of the life sector, the required adjustments are made to conform to our
standardised definitions.
Where a market contains a significant inward reinsurance sector, these accepted premiums are considered
as part of the non-life sector and are classed within the 'Other' category of our non-life breakdown.
Life insurance contains all long-term savings products that are legally structured as insurance products
and therefore do not contain pension plan contributions and other long-term saving schemes that are not
legally constituted as being within the insurance sector
Life
In projecting life insurance premiums, the following are considered:
The likely development of population
The likely development of life density (life premiums per capita)
Wider macroeconomic trends
In some instances, further factors are considered, including:
Maturity of the life insurance sector
Competitive and regulatory environments
Life density in nearby markets at similar levels of development
Non-Life
In projecting non-life insurance premiums on a line-by-line basis, the following are considered:
The likely development of nominal GDP
Page 71
The likely development of non-life penetration (non-life premiums as a percentage of GDP)
Autos sector data, typically passenger car fleet size
Banking sector data, typically Client Loans figures
Shipping/Freight data, typically freight tonnage
Household stratification data, typically number of permanent properties
Healthcare data, typically private health expenditure
In some instances, further factors are considered, including:
Maturity of the non-life insurance sector
Competitive and regulatory environments
Non-life penetration in nearby markets at similar levels of development
Reinsurance and Net Premiums
When forecasting the size of reinsurance markets, the following are considered:
Historic levels of reinsurance coverage in both life and non-life sectors
Projected development of the life and non-life sectors
Prevalence of reinsurance in similar markets
Where applicable, 'net premiums' refers to net written premiums and is considered as gross written
premiums, less the cost of reinsurance. In some instances, source data is reported according to different
definitions of 'net premiums'. In these cases, this data is used and forecasts for net premiums and
reinsurance are made separately.
When forecasting net premiums independently of the reinsurance market, the following are considered:
Historic levels of net premiums in both life and non-life sectors
Projected development of the life and non-life sectors
At a general level we approach our forecasting from both a micro and macro perspective, taking into
account the expansion plans of relevant domestic and international firms, as well as wider economic
outlook. In this regard, BMI macro variable projections, such as output, consumption, investment, policy,
and GDP growth are employed.
Page 72
Burden of Disease
The 'burden of disease' in a country is forecasted in disability-adjusted life years (DALYs) using BMI's
Burden of Disease Database, which is based on the World Health Organization's burden of disease
projections and incorporates World Bank and IMF data.
Risk/Reward Rating Methodology

BMI's Risk/Reward Ratings (RRR) provide a comparative regional ranking system evaluating the ease of
doing business and the industry-specific opportunities and limitations for potential investors in a given
market.
The RRR system divides into two distinct areas:
Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state
characteristics that may inhibit its development. This is further broken down into two sub categories:
Industry Rewards (this is an industry specific category taking into account current industry size and
growth forecasts, the openness of market to new entrants and foreign investors, to provide an overall
score for potential returns for investors).
Industry Rewards (this is a country specific category, and the score factors in favourable political and
economic conditions for the industry).
Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic
profile that call into question the likelihood of anticipated returns being realised over the assessed time
period. This is further broken down into two sub categories:
Industry Risks (this is an industry specific category whose score covers potential operational risks to
investors, regulatory issues inhibiting the industry, and the relative maturity of a market).
Industry Risks (this is a country specific category in which political and economic instability,
unfavourable legislation and a poor overall business environment are evaluated to provide an overall
score).
We take a weighted average, combining market and country risks, or market and country rewards. These
two results in turn provide an overall risk/reward rating, which is used to create our regional ranking system
for the risks and rewards of involvement in a specific industry in a particular country.
For each category and sub-category, each state is scored out of 100 (100 being the best), with the overall
risk/reward rating a weighted average of the total score. Importantly, as most of the countries and territories
Page 73
evaluated are considered by BMI to be 'emerging markets', our rating is revised on a quarterly basis. This
ensures that the rating draws on the latest information and data across our broad range of sources, and the
expertise of our analysts.
BMI's approach in assessing the risk/reward balance for infrastructure industry investors globally is
fourfold:
First, we identify factors (in terms of current industry/country trends and forecast industry/country
growth) that represent opportunities to would-be investors.
Second, we identify country and industry-specific traits that pose or could pose operational risks to
would-be investors.
Third, we attempt, where possible, to identify objective indicators that may serve as proxies for issues/
trends to avoid subjectivity.
Finally, we use BMI's proprietary Country Risk Ratings (CRR) in a nuanced manner to ensure that only
the aspects most relevant to the infrastructure industry are incorporated. Overall, the system offers an
industry-leading, comparative insight into the opportunities/risks for companies across the globe.
Sector-Specific Methodology
In constructing these ratings, the following indicators have been used. Almost all indicators are objectively
based.
Table: Indicators
Rewards
Insurance market rewards
Rationale
Non-life premiums, 2014 (US$mn)
Indicates overall sector attractiveness. Large markets more attractive than small
ones.
Growth in non-life premiums, five

years to end-2018 (US$mn)
Indicates growth potential. The greater the likely absolute growth in premiums the
better.
Non-life penetration, %
Premiums expressed as % of GDP. An indicator of actual and (to an extent)

potential development of non-life insurance. The greater the penetration the
better.
Non-life segment measure of

openness
Measure of market's accessibility to new entrants. The higher the score the better.
Life premiums, 2014 (US$mn)
Indicates overall sector attractiveness. Large markets more attractive than small
ones.
Growth in life premiums, five years to Indicates growth potential. The greater the likely absolute growth in premiums the
end-2018 (US$mn)
better.
Life penetration, %
Premiums as % of GDP. An indicator of actual and (to a certain extent) potential

development of life insurance. The greater the penetration the better.
Page 74
Indicators - Continued
Rewards
Life segment measure of openness
Measure of market's accessibility to new entrants. The higher the score the better.
Country rewards
GDP per capita (US$)
A proxy for wealth. High-income states receive better scores than low-income
states.
Active population
Those aged 16-64 in each state, as a % of total population. A high proportion

suggests that market is comparatively more attractive.
Corporate tax
A measure of the general fiscal drag on profits.
GDP volatility
Standard deviation of growth over 7-year economic cycle. A proxy for economic
stability.
Financial infrastructure
Measure of financial sector's development, a crucial structural characteristic given

the insurance industry's reliance on risk calculation.
Risks
Regulatory framework
Regulatory framework and
development
Subjectively evaluates de facto/de jure regulations on development of insurance

sector.
Regulatory framework and

competitive landscape
Subjectively evaluates impact of regulatory environment on the competitive

landscape.
Country risk (from BMI's Country Risk Ratings)

Long-term financial risk
Evaluates currency volatility.
Long-term external risk
State's vulnerability to externally induced economic shock, which tend to be

principal triggers of economic crises.
Policy continuity
Evaluates the risk of sharp change in broad direction of government policy.
Legal framework
Strength of legal institutions. Security of investment key risk in some emerging

markets.
Bureaucracy
Denotes ease of conducting business in a state.
Source: BMI
Weighting
Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal
weight. Consequently, the following weighting has been adopted:
Page 75
Table: Weighting of Indicators
Component
Rewards
Weighting, %
70, of which
- Industry rewards
65
- Country rewards
35
Risks
30, of which
- Industry risks
40
- Country risks
60
Source: BMI
Page 76

BMI Vietnam Insurance Report Q2 2014

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Q2 2014

Vietnam Insurance Report Q2

Part of BMIs Industry Report & Forecasts Series

Business Monitor International

2014 Business Monitor International

Vietnam Insurance Report Q2 2014

Industry Forecast .............................................................................................................. 14

Total Claims ......................................................................................................................................... 15

Life Premiums Forecast ............................................................................................................................ 16

Life Insurance Drivers ............................................................................................................................ 18

Life Claims ........................................................................................................................................... 19

Non-Life Premiums Forecast ..................................................................................................................... 21

Non-Life Reinsurance ............................................................................................................................. 23

Non-Life Claims ..................................................................................................................................... 24

Non-Life Sub-Sector Forecast .................................................................................................................... 26

Motor Vehicle And Transport Insurance ..................................................................................................... 27

Property Insurance ................................................................................................................................. 30

Industry Risk Reward Ratings .......................................................................................... 32

Market Overview ............................................................................................................... 38

Business Monitor International

Vietnam Insurance Report Q2 2014

Company Profile ................................................................................................................ 43

Prudential plc ......................................................................................................................................... 57

Demographic Forecast ..................................................................................................... 66

Business Monitor International

Vietnam Insurance Report Q2 2014

BMI Industry View

Business Monitor International

Vietnam Insurance Report Q2 2014

Key BMI Forecasts

In 2014, total premiums will rise by 13.6% to US$2.4bn.

Life premiums will grow by 10.2% to US$1.0bn.

Non-Life premiums will rise by 16.2% to US$1.4bn.

Commercial and industrial lines will rise by 16.0% to US$0.6bn.

Business Monitor International

Vietnam Insurance Report Q2 2014

Vietnam Insurance SWOT Analysis

There are clear signs of pricing discipline in the non-life segment.

Many Vietnamese households are too poor to use life insurance.

Growth in the non-life segment is patchy.

Business Monitor International

Vietnam Insurance Report Q2 2014

Vietnam Insurance SWOT Analysis - Continued

Business Monitor International

Vietnam Insurance Report Q2 2014

The Communist Party of Vietnam remains committed to market-oriented reforms and

Vietnam has allowed legislators to become more vocal in criticising government

Macroeconomic instabilities continue to weigh on public acceptance of the one-party

Business Monitor International

Vietnam Insurance Report Q2 2014

The heavily-managed and weak currency reduces incentives to improve quality of

Urbanisation will continue to be a long-term growth driver. The UN forecasts the

Prolonged macroeconomic instability could prompt the authorities to put reforms on

Business Monitor International

Vietnam Insurance Report Q2 2014

Vietnam remains one of the world's most corrupt countries. According to

Vietnam is increasingly attracting investment from key Asian economies, such as

Business Monitor International

Vietnam Insurance Report Q2 2014

Table: Total Gross Premiums Written 2011-2018

Total gross premiums

Total gross premiums

354,530.1 453,202.2 490,693.9 539,671.3 606,097.5 680,113.9 760,157.6 849,609.0

Total gross premiums