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New player enters re-insurance
The reinsurance market, which has so far been dominated by a single company, the Vietnam Re-insurance Corporation, has seen the entry of a second player.
The new entrant, PVI Re, a member company of PVI (PetroVietnam Insurance Holdings), has a charter capital of VND460 billion (US$22 million).
Insurance industry insiders said however that PVI, which provides insurance to oil and gas projects as well as those in energy and marine operations, and others, had been running a reinsurance operation for the last 15 years.
It had a modest charter capital, but since it was wholly owned by PVI Holdings, they said it was not quite easy for PVI Re to increase its capital.
PVI Holdings chairman Nguyen Anh Tuan said the company hoped to increase the share of reinsurance premiums retained in the local market by reducing the amount going to companies outside the country.
Major insurance companies in Viet Nam like Bao Viet and Bao Minh have their own re-insurance operations, but share up to 70 per cent with foreign reinsurers to hedge their risks.
In the first half, according to statistics from the Vietnam Insurance Association, this 70 per cent amounted to some VND2.6 trillion ($125 million). This rate was 66 per cent last year and 64 per cent in 2009.
The remaining 30 per cent, or VND1.1 trillion (over $50 million) remained in the domestic market.
Analysts blamed this dependence on foreign companies on the limited financial and professional capacity in the country's insurance industry.
Trinh Thanh Hoan, Head of the Ministry of Finance's Insurance Management and Supervision Agency, said in its reinsurance development plan, the ministry expected to see three re-insurance companies operating by 2015.
Bao Viet, who has the second largest reinsurance turnover behind VinaRe, has no plans to set up a full-fledged reinsurance company.
vietnamnews
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