Vietnamese insurer cuts profit forecast after Typhoon Yagi

Bao Minh’s board proposed keeping its revenue target at $268m.

Vietnam’s Bao Minh Insurance Corporation has lowered its profit and dividend targets for 2024 due to increased compensation costs from super typhoon Yagi, which caused significant damage in northern Vietnam, reported the Investor.

In documents for the 2024 Extraordinary General Meeting, Bao Minh’s board proposed keeping its revenue target at $268m but reducing its pre-tax profit target by 29% to $10.6m. 

The after-tax profit to equity ratio has been revised down from 10% to 7%, whilst the minimum dividend payout ratio was cut from 10% to 7%.

The typhoon, which struck in early September, led to widespread property and vehicle losses amongst Bao Minh’s customers, sharply increasing compensation claims. 

As a result, the company’s after-tax profit in Q3 2024 fell 52% year-on-year to $2m. Net profit for the first nine months dropped 23% to $7.6m.

Bao Minh expects more claims in the coming months as the effects of typhoon Yagi persist, further straining its cash flow and investment activities whilst fulfilling policyholder obligations.

The company also faces challenges in its health insurance segment, a key part of its business, due to rising medical costs and increasing insurance fraud. 

To address these issues, the board has proposed measures such as raising premiums, limiting benefits, and discontinuing coverage for high-revenue clients showing signs of system abuse. However, these steps have yet to yield significant results.