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Vietnam’s non-life insurers profit hit by low rates

Vietnam’s economy may be well positioned for non-life insurers to improve revenue, but the low-level interest rates continue to pressure their profits, according to reports. This is because the majority of non-life insurers’ investment portfolios are bank savings and government bonds, whose interest rates are forecast to remain at low levels this year. Non-life insurers do not have a choice as current regulations require them to use at least 70% of their capital to deposit at banks or buy government bonds to ensure the insurers’ capital safety. They are also not allowed to invest significantly in real estate and stock markets, which are forecast to have positive growth this year. The non-life insurance industry increased by only 1.7% in revenue last year compared to 2020, a record low growth compared to previous years.

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