VIETNAM NATIONAL REINSURANCE CORPORATION
020 ANNUAL REPORT 2020
CONTENTS
Annual report 2020
VINARE IS THE LEADING REINSURER AND A SOLID SUPPORTER FOR SUSTAINABLE DEVELOPMENT IN VIETNAM INSURANCE MARKET 04 Message from the Chairman 07 2020 - The year in review
08
22
30
Connecting the
Connecting the
Connecting the
Overview of vinare
Business environment
Business results 2020 & Business plan 2021
10
Historical milestones
24
33
Business results 2020
12
Organization
Message from the Chief Executive Officer
37
Solvency margin
26
Business environment
38
Business plan 2021
29
Development strategy
39
Risk management
TRUST
14
Board of Directors
16
Board of Control
17
Board of Management
18
Shareholding structure
20
Key financial indicators (2016 - 2020)
POTENTIALS
VALUES
020 40 Connecting with
ESG
48 Connecting with
SUSTAINABILITY
58 Connecting with
TRANSPARENCY
Corporate governance
Sustainable development report
Financial statements
42 Corporate Governance Framework
50 VINARE impacts on sustainable development
60 Consolidated financial statements
45 Report of the Board of Directors 47 Report of the Board of Control
51 Sustainable development goals between 2020 - 2025
119 Separate financial statements
52 Sustainable development strategy 54 Sustainable development plan 2021 55 Contributions to social developments
3
VINARE
CONNECTING THE MARKET VINARE AIMS TO BECOME THE PROFESSIONAL REINSURER AND INVESTOR IN THE MARKET, AS WELL AS A SOLID FACILITATOR FOR THE INSURANCE INDUSTRY, CLOSELY CONNECTING WITH ALL THE MARKET PLAYERS TO PROMOTE SUSTAINABLE DEVELOPMENT.
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ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Message from the Chairman
Dear shareholders, Connecting the trust - 26 years growing along with the insurance market
6,738
Throughout the past 26 years, embracing the challenges of international integration and competition, VINARE has positioned itself as a facilitator for the sustainable development of the insurance industry in Vietnam and strengthened our financial and underwriting capacity at the same time. We consistently pursue the strategy of sustainable development, upholding underwriting disciplines, risk management and profitability, thus, what we have achieved so far are very encouraging.
(VND Billion) TOTAL ASSETS
1,310
Connecting the potentials - expanding international cooperation in search for growth opportunities Over the last five years, VINARE recorded an average growth rate of 10.6% yearon-year in terms of gross written premium and 28.6% in terms of net written premium. On a parallel line, investment income posted average growth rate of 13% year-on-year, driving the growth of profit before tax to 7.2% on an annual basis. Total investment assets reached VND4,023 billion by the end of 2020. We duly honor our commitment to paying claims and tax duties in full and fair manner and to performing our social responsibilities.
(VND Billion) CHARTER CAPITAL
2,939
Connecting the values - strengthening financial and governance capability
(VND Billion) EQUITY CAPITAL
2.45
(VND Billion) GROSS PREMIUM (USD 106 million) in 2020
VINARE is proud of its ever-growing financial capacity with total assets reaching VND 6,738 billion, charter capital VND1,310 billion and equity capital VND2,939 billion as at 2020 financial year end. VINARE is the larger of the two domestic reinsurers in Vietnam with gross premium written of VND 2.45 trillion (USD 106 million) in 2020. We benefit from long-standing relationships with a number of local cedants, several of which hold stakes in VINARE, providing us with a competitive advantage for market access. Our underwriting portfolio is diversified by line of business with more than 70% of premium written domestically.
Connecting with transparency - enhancing confidence in VINARE share With our outstanding achievements in business operation and contributions to the insurance industry over the past 26 years, VINARE has been honored with many awards by the State, the Government and the Ministry of Finance, the most notable of which were the First, Second, Third Class Labor Orders, the Third Class Independence Order and many other accolades. VINARE was enlisted among Top 30 Transparent Enterprises of Hanoi Stock Exchange for many consecutive years. VINARE was among Top 500 most profitable companies and Top 5 most profitable insurance companies in the List Profit500 by Vietnam Report and VietnamNet for several consecutive years.
Message
Overview of VINARE
Business environment
Business results 2020 and business plan 2021
Corporate governance
Sustainable development report
Financial statements
5
Message from the Chairman
Connecting with ESG commitments It has always been our commitment that our corporate governance ensures an environment of confidence, transparency and accountability, which are essentials for building long-term development, financial stability and business morality. Thus, our philosophy is that sustainability is our way of doing business on the foundation of environmental, social and governance commitments.
VINARE on a new height With the close direction of the Board of Directors, the Board of Control, the valuable cooperation of our partners and shareholders, and the support from the Government in insurance industry development policies, together with the efforts of all VINARE employees, I am confident that VINARE is well-positioned and wellprepared to achieve new successes.
Dear shareholders, Connecting the sustainable elements into long-term strategy and daily business activities Following the Government’s strategy on developing the insurance market during the period 2011-2020 and the master plan for restructuring the stock and insurance market to 2020 and further to 2025, VINARE has set out a development strategy at a new high level with a positive action plan, in which VINARE is strongly committed to providing long-term solutions and services of international quality to our local and regional clients, actively participating in the Government's insurance schemes, accompanying and supporting Vietnamese insurance industry towards sustainable and efficient growth and assuming social responsibilities to support the socio-economic development of the country. As such, we have set out a relative ambitious set of targets for the period 2020 - 2024: Average gross written premium growth of 9%/year, Maximum average combined ratio of 98%, Minimum average pre-tax profit growth of 7%/year, Minimum dividend payout ratio of 12%/year and Minimum average return on equity of 10%. The charter capital shall be raised to VND 2 trillion by 2024.
6
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
On behalf of the Board of Directors, I would like to express my sincere thanks for all the assistance and cooperation of related authorities, stakeholders and partners of VINARE. Especially, I would like to express my great appreciation for all the efforts and achievements that VINARE’s staff achieved in 2020. The year 2021 will be essential for the new five-year period of development, I wish VINARE to achieve outstanding achievements and outperform the targets assigned by the Board of Directors and the General Meeting of Shareholders.
I wish all of you happiness, health and prosperity./.
NGUYEN ANH TUAN
Chairman
2020 - The year in review
NĂNG LỰC TÀI CHÍNH (FSR)
B++
NĂNG LỰC TÍN DỤNG DÀI HẠN CỦA TỔ CHỨC PHÁT HÀNH (ICR)
bbb+
International credit rating reaffirmed with Financial Strength Rating of “B++” and Issuer Credit Rating of “bbb+” (AM Best) in May 2020.
Board of Directors and Board of Control term 2020 - 2024 elected at the Annual General Meeting of Shareholders on 11th June 2021.
Mr. Nguyen Anh Tuan granted approval by the Ministry of Finance to be the Chairman of Vietnam National Reinsurance Corporation as from 22nd July 2020.
DOANH NGHIỆP NIÊM YẾT ĐẠT CHUẨN CÔNG BỐ THÔNG TIN RÊN THỊ TRƯỜNG CHỨNG KHOÁN T
Mr. Mai Xuan Dzung granted approval by the Ministry of Finance to be the Chief Executive Officer of Vietnam National Reinsurance Corporation as from 17th November 2021.
Investor Relation Award 2020 granted to Vietnam National Reinsurance Corporation for full compliance with information disclosure requirements on the stock market in 2020.
Best Photo Award in the Photo Contest "Beauty of Civil Servants of the Ministry of Finance" in 2020.
Chairman Nguyen Anh Tuan elected Deputy Chairman of Vietnam Insurance Association of the Term 2020 - 2025 on 18th December 2020.
The Youth Union joined the Voluntary Blood Donation Festival 2020 co-organized by the Ministry of Finance and the Institute of Hematology on 9th December 2020.
Certificate of Merit awarded by the Hanoi Tax Department for fulfillment of tax duties.
Message
Overview of VINARE
Business environment
Business results 2020 and business plan 2021
Corporate governance
Sustainable development report
Financial statements
7
TOTAL ASSETS (VND Billion)
EQUITY CAPITAL (VND Billion)
6,976
2,939
Connecting the trust
GROSS WRITTEN PREMIUM (VND Billion)
CHARTER CAPITAL (VND Billion)
2,447.7
1,310
OVERVIEW OF VINARE Historical milestones Organization Board of Directors Board of Control Board of Management Shareholding structure Key financial indicators (2016 - 2020)
10 12 14 16 17 18 20
Historical milestones
THROUGHOUT THE PAST
26
YEARS,
embracing the challenges of international integration and competition, VINARE has positioned itself as a facilitator for the sustainable development of the insurance industry in Vietnam and strengthened our financial and underwriting capacity at the same time.
2006 - 2008 2004 1999 - 2001 1994
2006
1999 Founding of VINARE as the first domestic reinsurance company with initial capital of VND40 billion. Compulsory reinsurance scheme (ended in 2005).
Honored with the Third Class Labour Order by the President of State.
2001 The head quarter building at 141 Le Duan, Hanoi was inaugurated and put into operation.
10
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Successfully equitized and started operation as a shareholding company with charter capital of VND500 billion. 13 direct insurers as strategic shareholders committed to ceding business to VINARE. Honored with the Second Class Labour Order by the President of State on its 10th Anniversary.
The first enterprise of the insurance industry to be listed on the stock exchange and the tenth to be listed on Hanoi Stock Trading Center.
2007 - 2008 Increased the paidup capital to VND672 billion. Swiss Re became the strategic partner (25% stake).
2019 - 2020 2017 - 2018 2014 - 2016 2009 - 2013
2019 2014 Issued bonus shares to increase charter capital to VND1,310 billion.
2009 Awarded with the First Class Labour Order by the President of State on its 15th Anniversary.
2011 Issued bonus shares to increase the paidup capital to VND1,008 billion.
Received Third Class Independence Order of the State on the 20th anniversary of establishment. Maintained Financial Strength Rating of “B++” and Issuer Credit Rating of “bbb”.
2015-2016
Maintained Financial Strength Rating of “B++” and Issuer Credit Rating of “bbb+”. Awarded with the “Vietnam Excellent Brand 2017” by Vietnam Economic Times. “Best Reinsurance Brand” in Vietnam 2017 by Global Brands Magazine.
Financial Strength Rating of “B++” and Issuer Credit Rating upgraded to “bbb+”.
2018
Corporate organisation restructuring.
2020 Honored with the Investor Relation Award 2020 for full compliance with information disclosure requirements on the stock market in 2020.
VINARE was honored among Top 500 most profitable companies 2018; ranked 5/15 most profitable insurance companies in the List Profit 500 by Vietnam Report. Maintained Financial Strength Rating of “B++” with positive evaluation.
New IT system (WebXL) in operation. Assigned Financial Strength Rating of “B++” (Good) and Issuer Credit Rating of “bbb” by A.M. Best Asia-Pacific Ltd.
Overview of VINARE
VINARE was honored among Top 30 Transparent Enterprises of Hanoi Stock Exchange in 2017 for the fourth consecutive time.
D e v e l o p m e n t Strategy for 2015 – 2020 approved by General Meeting of Shareholders.
2012-2013
Message
2017
Honored with the Government's Emulation Flag for outstanding achievements in business activities.
Awarded with the “Vietnam Excellent Brand 2018” by Vietnam Economic Times.
Business environment
Business results 2020 and business plan 2021
Corporate governance
Sustainable development report
Financial statements
11
Organization
BOARD OF DIRECTORS GENERAL MEETING OF SHAREHOLDERS
Development Stategy Committee
Board of Control
Human Resource Committee
Compensation Committee
12
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Compliance Committee
CHAIRMAN
BOARD OF MANAGEMENT Invesment Management Committee Business Management Committee
CHIEF EXECUTIVE OFFICER Internal Control Committee
Deputy CEO
Investment
Property
Engineering
Accounting - Finance
Marine
Business & Claims Administration
Human Resource - General Affairs
Special Lines
Risk Management
Administration
IT
Public Sector Business Development
Marketing
Ho Chi Minh Branch
Message
Overview of VINARE
Business environment
Business results 2020 and business plan 2021
Corporate governance
Sustainable development report
Financial statements
13
BOARD OF DIRECTORS 2020
Mr. NGUYEN XUAN VIET Deputy Chairman
14
Mr. NGUYEN ANH TUAN Executive Chairman
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Mr. JARED ORCHARD Deputy Chairman
Mr. MAI XUAN DZUNG Member
Mr. DAO NAM HAI Member
Message
Overview of VINARE
Mr. NGUYEN DINH AN Member
Business environment
Business results 2020 and business plan 2021
Mr. VU ANH TUAN Member
Corporate governance
Mr. PHAM PHAN DZUNG Independent Member
Sustainable development report
Financial statements
15
BOARD OF CONTROL
Mr. TRAN TRUNG TINH Head
Mr. VU NGOC VUONG Member
16
Ms. LE THI THANH HIEN Member
Mr. DAO MANH DUONG Member
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Mr. TUSHAR CHATTERJEE Member
BOARD OF MANAGEMENT
Mr. MAI XUAN DZUNG Chief Executive Officer
Message
Overview of VINARE
Mr. NGUYEN MANH LINH Deputy Chief Executive Officer
Business environment
Business results 2020 and business plan 2021
Ms. LUU THI VIET HOA Chief Accountant
Corporate governance
Sustainable development report
Financial statements
17
Shareholding structure
131,075,937,000
PAID-UP CHARTER CAPITAL:
PG Insurance Corporation
(VND)
8.52%
Others
40.36%
SCIC
25.00%
Swiss Re
2.50%
Bao Minh Insurance Corporation
6.43%
Bao Viet Fund
8.01%
131,075,937 (SHARES)
Bao Viet Holding
9.18%
Shareholder
Capital contribution (VND)
Share amount
Shareholding stake (%)
1
State Capital Investment Corporation (SCIC)
529,060,350,000
52,906,035
40.36
2
Swiss Re
327,689,890,000
32,768,989
25.00
3
Bao Viet Holding
120,268,200,000
12,026,820
9.18
4
Bao Viet Fund
104,956,000,000
10,495,600
8.01
5
Bao Minh Insurance Corporation
84,275,100,000
8,427,510
6.43
6
PG Insurance Corporation
32,773,650,000
3,277,365
2.50
7
Others
46,072,230,000
4,607,223
8.52
1,310,759,370,000
131,075,937
100.00
No.
Total
18
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Criteria
SHAREHOLDING STRUCTURE
Share amount
1. Total number of share
131,075,937
Openly traded common stock
131,075,795
Restricted common stock
142
2. Number of shares by types
131,075,937
Openly traded common stock
131,075,795
Restricted common stock
142
Shareholder
SHAREHOLDER STRUCTURE
Share amount
1. Institutions
127,786,887
97.49%
a Local
91,767,893
70.01%
State Capital Investment Corporation
52,906,035
40.36%
Others
38,861,858
29.65%
b Overseas
36,018,994
27.48%
2. Individuals
3,289,050
2.51%
3,028,211
2.31%
260,839
0.20%
131,075,937
100%
Local Overseas Total
Shareholder
MAJOR SHAREHOLDERS
Share amount
Overview of VINARE
Shareholding stake
1 State Capital Investment Corporation (SCIC)
52,906,035
40.36%
2 Swiss Re
32,768,989
25.00%
3 Bao Viet Holding
12,062,820
9.18%
4 Bao Viet Fund
10,495,600
8.01%
8,427,510
6.43%
5 Bao Minh Insurance Corporation
Message
Shareholding stake /charter capital
Business environment
Business results 2020 and business plan 2021
Corporate governance
Sustainable development report
Financial statements
19
Key financial indicators (2016 - 2020)
CONSOLIDATED FINANCIAL STATEMENTS (Unit: VND billion) Items
2016
2017
2018
2019
2020
1,656
1,651
1,803
2,221
2,448
Net written premium
562
587
785
1,191
1,497
Revenue from investment & other activities
231
297
365
337
380
Accumulated technical reserves (net)
839
910
1,072
1,314
1,543
Charter capital
1,310
1,310
1,310
1,310
1,310
Total assets
6,350
6,472
6,667
6,994
6,976
Pre-tax profit
287
311
358
344
377
After-tax profit
240
259
302
287
311
ROA (%)
3.78
4.01
4.53
4.10
4.46
ROE (%)
8.81
9.64
10.24
9.24
9.89
1,777
1,918
2,204
2,118
2,314
2016
2017
2018
2019
2020
1,656
1,651
1,803
2,221
2,448
Net written premium
562
587
785
1,191
1,497
Revenue from investment & other activities
239
304
355
357
390
Accumulated technical reserves (net)
839
910
1,072
1,314
1,543
Charter capital
1,310
1,310
1,310
1,310
1,310
Total assets
6,239
6,314
6,456
6,773
6,738
Pre-tax profit
271
285
316
332
357
After-tax profit
224
234
261
275
291
ROA (%)
3.58
3.70
4.05
4.05
4.32
ROE (%)
8.44
9.05
9.30
9.40
9.90
Gross written premium
EPS (VND)
SEPARATE FINANCIAL STATEMENTS (Unit: VND billion) Items
Gross written premium
20
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
KEY FINANCIAL INDICATORS (Consolidated Financial Statements) GROSS WRITTEN PREMIUM (VND billion) 1,656
2,500
NET WRITTEN PREMIUM (VND billion) 1,651
1,803
2,221
2,448
1,600
562
587
785
1,191
1,497
2016
2017
2018
2019
2020
6,350
6,472
6,667
6,994
6,976
2016
2017
2018
2019
2020
240
259
302
287
311
2016
2017
2018
2019
2020
1,400 2,000
1,200 1,000
1,500
800 1,000
600
2,448
400
500
2016
2017
2018
2019
2020
REVENUE FROM INVESTMENT AND OTHER ACTIVITIES (VND billion) 231
400
297
365
337
380
1,497
200
TOTAL ASSETS (VND billion) 7,000 6,000
300
5,000 4,000
200
3,000
380
2,000
100
6,976
1.000
2016
2017
2018
2019
2020
PRE-TAX PROFIT (VND billion)
AFTER-TAX PROFIT (VND billion) 287
400
311
358
344
377
400
300
300
200
200
377 Message
100
2016
Overview of VINARE
2017
2018
Business environment
2019
2020
Business results 2020 and business plan 2021
311
100
Corporate governance
Sustainable development report
Financial statements
21
TOTAL MARKET PREMIUM VOLUME (VND Billion)
182,357
NON-LIFE PREMIM VOLUME (VND Billion)
54,797
Connecting the potentials
BUSINESS ENVIRONMENT Message from the Chief Executive Officer Business environment Development strategy
24 26 29
VINARE
BUILDING UP ON A NEW HEIGHT
THE FACT THAT WE STILL REMAINED FINANCIALLY ROBUST HAVING OVERCOME THE CHALLENGES IN 2020 PROVES THAT WE ARE RESILIENT AND CAPABLE OF CONQUERING NEW HEIGHTS.
24
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Message from the Chief Executive Officer payout for fiscal year 2020 was proposed at 15% compared with the initial projection of 12%.
2,448 357 (VND Billion) GROSS WRITTEN PREMIUM posted ì 10.2% year-on-year growth
(VND Billion) PRE-TAX PROFIT grew ì 7.6% against 2019 (Separate Financial Statement)
Dear shareholders, 2020 was a special year History will have a full long chapter added about the unprecedented happenings in 2020 all over the world. As for VINARE, let’s go over what we have accomplished in such a tumultuous year. 2020 was a special year for Vietnam Vietnam was among the top-growth economies in the world in 2020 thanks to successful control of Covid-19 pandemic. Although there were several economic and political upheavals in the world, Vietnam was able to maintain stable macroeconomic indicators with international trade turnover and disbursed foreign direct investment experiencing the highest year-on-year increase ever. 2020 was also a special year for Vietnam insurance industry Total market premium volume amounted to VND 185,354 billion, representing an increase of 15.7% year-on-year and a penetration of approximately 3% of GDP. The non-life market, however, only recorded a growth rate of 3.7% with premium volume estimated at VND 54,797 billion due to the impact of the pandemic causing disruptions in various sectors of the economy. Just like the previous years, intensive competition and worsening loss situation remained a significant concern and took their tolls on the underwriting profitability of many insurers. 2020 was also an eventful year for VINARE It can be concluded that 2020 was a successful year for VINARE taking into account the slowdown of the non-life market due to the pandemic and several severe catastrophic events. Gross premium written posted 10.2% year-on-year growth to reach VND 2,448 billion whilst pre-tax profit grew 7.6% to VND 357 billion.
The fact that we still remained financially robust having overcome the challenges in 2020 proves that we are resilient and capable of conquering new heights. 2021 will come with more challenges The economy is forecasted to bounce back with a growth rate of 6 - 6.5% while the non-life sector is expected to grow 3 - 5% year-on-year. However, the impacts of the pandemic on VINARE business operation will be more pronounced in 2021. Therefore, we have opted for a more cautious business plan in anticipation of the great challenges ahead. With the focus remaining on underwriting profitability, we are willing to give up some less profitable business, resulting in the top line declining by 18% against 2020. However, pre-tax profit target is expected to grow steadily at 5.5% and the shareholders may expect a minimum dividend payout ratio of 12%. VINARE - building up on a new height Building up on a solid foundation, VINARE will continue to focus on a number of tasks aiming for a sustainable growth: Firstly, we will continue to focus our resources on promoting the public sector business such as Public Assets Insurance, Agriculture Insurance, NatCat Insurance and the likes. Secondly, the governance structure will be strengthened with a third-line defense of internal audit. The establishment of Internal Audit is not only a move to ensure compliance with new legal requirement but is also a step to improve the efficiency of the operational structure. Thirdly, our services to clients will be more customized with a view to expand our market share and enhanced our connection with the local market. On behalf of the Board of Management, I would express my heartfelt thanks to the Board of Directors, particularly the Executive Chairman, as well as the Board of Control for the valuable supports in these challenging times. We also highly appreciate the cooperation and support from all the stakeholders, including the Ministry of Finance, our clients and partners and shareholders.
I wish all of you health, happiness and success./.
Investment income remained a significant driver of overall earnings, increasing 15.6% against the previous year. Pre-tax profit registered a growth of 7.6% with an absolute amount of VND 357 billion just as expected by the Board of Directors and the General Meeting of Shareholders. MAI XUAN DZUNG
Our solvency margin remained at five times the minimum margin stipulated by the Ministry of Finance. Dividend Message
Overview of VINARE
Business environment
Business results 2020 and business plan 2021
Chief Executive Officer Corporate governance
Sustainable development report
Financial statements
25
Business environment
VIETNAM
ECONOMY
2020
Like other economies in the world, Vietnam was heavily impacted by Covid pandemic. However, with the pandemic kept in close control, the economy began to recover towards the end of the year with quarterly growth of 3.68%, 0.39%, 2.69% and 4.48% respectively.
GDP GROWTH POSTED
2.91%
Overall year-on-year GDP growth posted 2.91% in 2020 which was the lowest level of the past decade for Vietnam. However, amid the grey picture of the world economy, the positive growth placed Vietnam among the top growing economies. Growth was relatively spread even across various economic sectors with
26
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
7.03%
6.33% 6.98%
6.68%
6.21%
9.64%
7.57%
2.41%
1.36%
2015
2016
Agro, forestry, fishery
7.30%
7.44%
6.81% 8.00% 2.90% 2017
Industry and construction
7.08% 8.85% 3.76% 2018
Services
7.02% 8.90%
2.01% 2019
GDP
Source: GSO
agro - forestry - fishery growing by 2.68%, industry and construction by 3.98% and services by 2.43%, backed by the early rebound of domestic activities and robust export performance, particularly higher-tech exports of electronics. As such, export turnover grew 6.5% to 281.5 billion USD whilst import turnover grew 3.6% to 262.4 billion USD. Public investment disbursement grew highest for the last ten years at 14.5% against 2019 and remained a key growth-driver for the economy. However, inflation was kept relatively stable at 3.23%. The pandemic certainly had a dampening effect on Vietnam’s previously record-breaking FDI growth rate with total registered capital in 2020 declining by 25% against 2019. Although the country was not immune to the global economic downturn, the prospects for recovery remain positive and are the brightest among Asian countries.
VIETNAM
INSURANCE MARKET
2020
THE COVID-19 PANDEMIC HAD A MAJOR IMPACT ON ALMOST ALL ECONOMIC SECTORS IN 2020 AND THE INSURANCE INDUSTRY WAS NOT AN EXCEPTION.
ACCORDING TO PRELIMINARY FIGURES BY THE ASSOCIATION OF VIETNAMESE INSURERS, OVERALL MARKET PREMIUM VOLUME INCREASED AROUND 15% YEAR-ON-YEAR LARGELY DRIVEN BY THE LIFE SECTOR.
The non-life sector, which is more correlated to economic activities, merely posted a growth rate of 3.7% against 2019. Overall non-life sector growth was decreasing over the quarters, from 12% in Quarter 1 to 2.8% in Quarter 2, 1.7% in Quarter 3 and finally -1% in Quarter 4. In particular, international trade related lines like Aviation or Marine were impacted most heavily with Aviation down by 4%, Marine Cargo by 14% and Hull and P&I by 6.1%. Engineering and Property, however, recorded relatively high growth rate of 9% and 5% respectively thanks to increasing public investment and the imposition of compulsory fire and explosion insurance. Personal products were also affected with Personal Accident/ Health estimated to fall 2% against a growth of 20% last year, in which Personal Accident Insurance for bank loan holders alone fell 23.4%. The volatility and falling interest rates within the financial market widely impacted insurers from earnings and solvency perspectives. Both government bond yield and interest rates steadily decreased since the beginning of 2020 and this trend is expected to remain in the near future.
Top 6 non-life players 2020
2019
Company
Gross written premium
Market share
Gross written premium
Market share
Bao Viet
9,300,932
16.97%
10,297,042
19.51%
-9.7%
PVI
7,546,615
13.77%
7,297,184
13.78%
3.4%
PTI
5,999,986
10.95%
5,692,726
10.76%
5.4%
Bao Minh
4,053,000
7.40%
3, 874,338
7.40%
4.6%
PJICO
3,479,000
6.35%
3,066,198
5.80%
13.5%
MIC
3,150,380
5.75%
2,506,601
4.74%
25.7%
Message
Overview of VINARE
Business environment
Business results 2020 and business plan 2021
Corporate governance
Sustainable development report
Growth
Financial statements
27
Business environment
COMPETITION AND LOSSES Non-technical competition was still going on in almost every business line, especially those with the involvement of brokers. Rates continued on the downturn trend for traditional commercial lines, especially for Cat 1 and 2 of Property, civil construction projects of Engineering and Marine Cargo. The first half of 2020 witnessed a series of heavy losses, notably Thanh Chi Warehouse (estimated loss USD 15 million), CX Technology (USD 3.2 million) or Indochine Foamtech (USD 7.1 million), to name just a few. With increased frequency and severity, Property losses posed an obvious threat on underwriting profitability and an imminent pressure on renewal negotiation.
Non-life premiums written Unit: VND billion) 60,000
31,894
36,866
41,594
46,653
52,843
54,797
2014
2015
2016
2017
2018
2019
2020
40,000
20,000
Natural catastrophe losses also caused a number of major losses to Property and Engineering in October and November with estimated loss amount of VND370 billion.
28
27,522
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
0
DEVELOPMENT STRATEGY TO BECOME A PROFESSIONA REINSURER IN VIETNAM
OUR VISION
• Being a leading reinsurer in Vietnam and the region and a professional investor. • Providing long-term solutions and services of international quality. • Supporting Vietnam insurance industry, aiming for a sustainable and efficient market growth. • Assuming social responsibility to support the socio-economic development and international competitiveness of Vietnam. OPTIMUM PROFIT TO INVESTORS
OUR VALUE PROPOSITIONS
IMPROVING INSURANCE MARKET EFFICIENCY AND PROFITABILITY
• Risk and capital management; • Training and knowhow transfer; • Insurance and reinsurance market information. SUSTAINED INSURANCE MARKET GROWTH
• Providing reinsurance capacity as required; • Supporting new insurance product development. ACTIVE INVOLVEMENT IN PROMOTING SUSTAINABLE DEVELOPMENT OF VIETNAM
GROWTH
9% 98% 7% 12% 10%
• Average gross written premium growth
GROWTH TARGETS 2020 - 2024
• Maximum average Combined Ratio • Minimum average pre-tax profit growth • Minimum dividend payout ratio • Minimum average ROE CHARTER CAPITAL to be increased to VND2,000 billion by 2024.
SUSTAINABLE DEVELOPMENT
Contributing to the sustainable development of Vietnam insurance market through raising awareness on insurance, providing reinsurance capacity and supporting the development of insurance products for the large number of citizens. Actively participating in sustainable development of Vietnam.
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GROSS WRITTEN PREMIUM (VND Billion)
NET WRITTEN PREMIUM (VND Billion)
2,447.7
1,496.9
Connecting the values
PRE-TAX PROFIT (VND Billion)
357.2
DIVIDEND PAYOUT RATIO
15%
BUSINESS RESULTS 2020 & BUSINESS PLAN 2021 Business results 2020 Solvency margin Business plan 2021 Risk management
33 37 38 39
32
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
BUSINESS RESULTS 2020 In the context of declining growth of the insurance market due to Covid-19 pandemic and heavy losses caused by natural disaster, VINARE still managed to achieve growth both in the top line and the bottom line. In addition, VINARE continued to provide values added to the market through professional training services, surveys and risk assessment for major business accounts. OBSERVATIONS ON BUSINESS RESULTS 2020 The growth in gross written premium was negatively affected by heavy decreases in various Marine lines, which could be ascribed to the pandemic impacts on international trade. Specifically, Marine Cargo, Marine Hull and P&I registered a decline of 16.8%, 29.4%, and 6% respectively. Miscellaneous (consisting of Motor, Money, Public Liability and some other minor lines of business) also recorded a reduction of 13.4%.
GROSS WRITTEN PREMIUM increased ì10.2% against 2019
2,447.7 (UNIT: VND BILLION)
The negative effect, however, was remedied by strong growth in Personal Accident Insurance for bank loan holders which grew 61.8% and Engineering which grew 16.7% against 2019. After several years of dwindling growth, the Engineering sector finally regained its momentum thanks to increasing public investment and a surge in sustainable energy projects. Property slightly increased by 1.7% in 2020 after a strong surge in 2019 thanks to the impact of Decree 23 on compulsory fire and explosion insurance. No premium from Agriculture Insurance Scheme as per Decree 58 and Decision 22 was recorded in 2020 due to several challenges in deployment. As insurers suspended selling Fishing Insurance due to heavy losses, Fishing registered a reduction of 52.5%.
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33
Business results 2020 Gross written premium and net written premium by lines 2020
Unit: VND million
Gross written premium
Lines of business
Net written premium
2020
2019
2020 vs 2019
2020
2019
2020 vs 2019
Engineering
244,718
209,773
116.7%
138,043
125,214
110.2%
Property
679,402
668,250
101.7%
262,167
233,984
112.0%
Energy
3,108
3,109
99.9%
244
866
28.2%
Aviation
4,609
4,171
110.5%
1,903
1,266
150.3%
124,836
150,049
83.2%
99,820
117,587
84.9%
Hull
40,984
58,195
70.4%
29,350
33,047
88.8%
P&I
201,415
214,403
93.9%
49,700
52,938
93.9%
Personal accidents for bank loan holders
835,202
516,061
161.8%
835,202
516,061
161.8%
Miscellaneous
287,406
331,803
86.6%
66,741
79,153
84.3%
Life
1,268
2,558
49.6%
1,268
2,558
49.6%
Agriculture
3,833
25,276
15.2%
933
1,977
47.2%
13,660
28,750
47.5%
6,988
20,786
33.6%
7,264
8,850
82.1%
5,534
5,534
100.0%
2,447,705
2,221,248
110.2%
1,496,905
1,190,970
125.7%
Cargo
Fishing boat K-care Total
Claim Criteria
2020
2019 2020 vs 2019 (%)
Claim payment for inward R/I (1)
950,313
1,075,928
88.3%
Claims recovered from outward R/I (2)
579,287
669,723
86.5%
59,766
72,113
75.9%
430,792
478,318
90.1%
Increase in claim reserve (3) Net claim payment (4 = 1-2+3)
CLAIMS INCURRED FELL
Both the frequency and severity of losses saw a decline in 2020. However, there were two especially large Property losses in 2020 worth over 10 million USD and three other losses that triggered the XOL cover.
î
Natural disasters were the causes of many losses of Engineering, Property and Marine with Engineering being the most heavily affected with total net liability of VND30 billion.
9.9%
OR VND47.5 BILLION AGAINST LAST YEAR
34
ĐVT: Triệu đồng
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Large losses in 2020 (10 large losses in terms of VINARE’s net retention)
Unit: USD
Losses
Date of Loss
Line of Business
100% Loss
VINARE’s share
VINARE’s Retention
Dak Mi 3 HPP
28/10/2020
Property
4,160,012
2,080,018
600,000
Pacific Grace-C/W Ken Breeze
06/11/2020
P&I
2,300,000
2,070,000
278,300
Thanh Chi Warehouse
09/04/2020
Property
15,543,181
1,670,466
600,000
CJ Food
10/11/2020
Property
15,000,000
1,253,205
600,000
Plei Kan HPP CECR
11/10/2020
Engineering
1,277,393
1,250,567
111,978
Cx Technology
30/04/2020
Property
3,275,862
818,966
491,379
Royal 18-C/W Seaspan Bellwether
18/07/2020
P&I
1,000,000
800,000
108,000
Vinalines Diamond
02/04/2020
P&I
804,684
643,747
86,906
REVN
05/01/2020
Property
2,155,172
631,694
314,362
Alutec Vina
27/01/2020
Property
707,543
474,054
28,302
Hansae TG
14/10/2020
Property
3,043,478
460,877
276,526
Hurricane losses in 2020
Unit: VND billion Estimated 100% losses
Net retention of VINARE
80 80 160
14 10 24
Engineering Property Total
100 110 210
9 14 23
Total
370
47
Hurricane No. 6 (10-14/10/2020) Engineering Property Total Hurricane No. 9 (28-29/10/2020)
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35
Business results 2020
Chief Accountant - Chairman - Deputy Chief Executive Officer - Chief Executive Officer
OBSERVATIONS ON FINANCIAL INVESTMENT ACTIVITIES 2020
VN-INDEX REACHING
1,103.87 (POINTS)
Like all the players in the insurance market, VINARE also faced the pressure of falling interest rates and volatilities in the stock market.
The State Bank implemented a loose monetary policy in 2020 in order to support economic recovery, leading to a fall in interest rates across the market averaging between 1.5% to 2.0% per year. At the same time, Government bond yields also decreased in both primary and secondary market with average primary yield now standing at 2.83% compared with 4.6% in 2019. After a sharp plunge in the first quarter, the stock market gradually recovered and posted high growth towards the end of the year with VN-Index reaching 1,103.87 points, increasing 14.87% compared with the end of 2019 and 66% from the bottom in March 2020. Total investment assets as at 31st December 2020 increased VND98 billion against the year beginning. Allocation in deposit increased to 73.7% of the total whilst allocation in bonds, entrustments and private equities decreased slightly due to expired contracts. In Quarter 4, VINARE invested VND139 billion into corporate bonds with better returns to alleviate the impacts of falling interest rates.
Investment portfolio (31/12/2020) Portfolio
31/12/2020
01/01/2020
+/-
Weighted
Deposits
2,965,000
2,690,000
275,000
73.7%
Bonds
249,100
270,000
(20,900)
6.2%
Equities
542,354
588,155
(45,801)
13.5%
Securities, fund certificates & entrusted investment
195,000
255,000
(60,000)
4.8%
Office leasing
8,031
9,409
(1,378)
0.2%
Real estates
13,304
13,304
0
0.3%
Non-termed deposits
52,900
101,616
(48,716)
1.3%
4,025,690
3,927,483
98,205
100.0%
Total 36
Unit: VND billion
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
3,470,235
3,380,397
3,681,563
4,025,690
3,927,483
Investment portfolio returns 2016 - 2020 8.77% 7.93% 7.28%
6.80% 6.41% 5.28%
260,249
4.52%
301,543
348,633
4.20%
213,464
233,041
2.00% 1.22%
2016
2017
2018
2019
2020
2016
2017
2018
Investment income
Deposits Bonds Equities Entrusted investment Office leasing & Real estates Non-termed deposits
2019
ROI
2020
5Y. Gov. Bonds
Total investment and other income increased 15.6% against the previous year to VND348.7 billion. The average return on investment was 8.77%. Investment income & office leasing 2020
Unit: VND million 2020
2019
2020 vs 2019
2020 plan
2020 vs 2020 plan
197,432
179,593
109.9%
187,592
105.2%
Bonds
19,703
18,680
105.5%
27,470
71.7%
Equities
132,146
86,615
152.6%
78,276
168.8%
Securities, fund certificates & entrusted investment
1,643
10,771
15.3%
25,339
6.5%
Office leasing
6,926
12,348
56.1%
10,000
69.3%
0
0
Others, Foreign exchange difference
(9,217)
(6,464)
142.6%
(8,700)
105.9%
Total Investment income
348,633
301,543
115.6%
320,000
108.9%
Portfolio
Deposits
Real estates
0
SOLVENCY MARGIN Decree 73/2016/ND-CP and Circular 50/2017/ TT-BTC stipulate the method of calculation of the solvency margin of an insurance enterprise as follows:
Indicator
2020
2019
2,939
2,921
850
678
1,886
1,973
374
298
- Absolute value
1,511
1,675
- Percentage
504%
663%
1.
1. A company’s Minimum Solvency Margin is the larger figure of the followings:
Balance of total assets value and liabilities
2.
• 25% of net written premium at the time of calculation;
Asset values deducted upon solvency calculation
3. Solvency Margin of VINARE
• 12.5% of gross inward reinsurance premium at the time of calculation.
4. Minimum Solvency Margin required
2. A company’s Solvency Margin is the balance of the total value of assets (after certain deductions based on types of assets) and the total value of liabilities at the time of calculation.
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BUSINESS PLAN 2021 In spite of several adverse developments in the world and regional economic and trade landscape, Vietnam economy is forecast to maintain its momentum of growth with GDP growth target set at 6 - 6.5%. The key momentum drives will be increasing public investment disbursement into a few mega-size projects, digitalization of the economy and development of e-trading. The insurance market will see worse impact from Covid-19 in 2021 due to the prolonged impacts of the pandemic. Falling interest rates and volatility of the stock market will take their toll on investment returns of insurers. The hardening trend of the international market also put pressure on local insurers. VINARE will continue the underwriting policy which upholds tightening underwriting disciplines and prioritizing underwriting profitability. Thus, VINARE will focus more on core traditional business lines with relatively good results in local markets whilst selectively write business from overseas. At the same time, VINARE will actively leverage the partnership with primary local players to write new business and develop new products. The business plan in 2021 reflects a 6%-growth in core lines of business and a significant reduction in Personal Accident which generated only a narrow profit margin for the last few years and proved to be highly volatile. The assets allocation plan reflects a bold move towards the bond market in order to make up for the falling bank interest rates. Business plan 2021
Unit: VND million 2021 Plan
2020 Performance
Growth
1,709,253 310,000
1,612,503 835,202
6.0% -62.9%
377,000
357,214
5.5%
377,000
358,366
5.2%
N/A
(1,152)
12% N/A
15%
435,000
414,767
Gross written premium
• Core lines of business • Personal Accident Profit before tax
• Excluding foreign exchange difference • Foreign exchange difference Projected dividend payment
• Cash • Bonus share Gross written premium
15%
Projected allocation of investment assets 2021
Unit: VND million
2021
2020
+/_
Proportion (31/12/2021)
2,715,000
2,965,000
(250,000)
66.2%
Bonds
500,000
249,100
+250,900
12.2%
Equities
513,000
542,354
Investment portfolio
Deposits
Securities, fund certificates & entrusted investment
(29,354)
12.5%
+80,000
6.7%
275,000
195,000
Office leasing
7,031
8,031
(1,000)
0.2%
Real estates
9,304
13,304
(4,000)
0.2%
80,665
52,900
+27,765
2.0%
4,100,000
4,025,690
+74,310
100.0%
Current deposits Total 38
5.0%
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
RISK MANAGEMENT VINARE RISK LANDSCAPE
BUSINESS RISKS
OPERATIONAL RISKS
OTHER RISKS
Reinsurance risks
Human resource
Solvency
Finance/investment risks
Procedures
Strategy
Credit risks
System
Legal
External impacts
Reputation
Newly arising risks Emerging risks in 2020 • Continued heavy losses in Property and Hull • Under-expected growth of insurance market in terms of pace and quality • Behind-schedule deployment of government-initiated insurance schemes like Agriculture, Fishing, Nat Cat, etc. • Government policy for insurance industry development • Investment and finance market risks Message
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39
NUMBER OF EMPLOYEES (Employees)
101
INCREASE IN HUMAN RESOURCES IN 2020
2%
Connecting with ESG
CORPORATE GOVERNANCE Corporate Governance Framework Report of the Board of Directors Report of the Board of Control
42 45 47
Corporate governance framework
Corporate governance is a key factor in ensuring efficient growth and sustainable long-term development and building the company’s reputation during the past 26 years.
PRINCIPLES OF CORPORATE GOVERNANCE IN VINARE
PRINCIPLES OF CORPORATE GOVERNANCE IN VINARE
42
1
Ensuring an effective governance structure
2
Ensuring shareholders' interests and fair treatment for all shareholders
3
Ensuring the roles and interests of stakeholders
4
Ensuring transparency in every action and conduct of the company
5
Ensuring effective operation of the Board of Directors and the Board of Control
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
VINARE corporate governance is implemented based on five pillars
CORE VALUES
TRANSPARENCY
RESPONSIBILITY Overseeing the management of business and affairs of the company in the best interests of the company and stakeholders
Disclosure of material matters concerning financial, social and environmental position of the company in a truthful and timely manner
ACCOUNTABILITY
FAIRNESS
Effective and formal corporate reporting and risk management, obligation and responsibility to account for the company’s actions and conduct
Protection of shareholders’ interests and equal treatment for all shareholders, including minor and foreign shareholders.
SUSTAINABILITY Long-term and sustainable interests for shareholders and engagement of ESG elements.
Corporate governance for sustainable growth
1.
Solid corporate governance structure
VINARE corporate governance structure comprises of the General Meeting of Shareholders, the Board of Directors, Committees under the Board of Directors, the Board of Control and the Board of Management.
2.
International governance standards
Compliance with OECD framework and practices on corporate governance, and ASEAN corporate governance scorecards.
3.
Compliance with legal requirements and practices in Vietnam
Compliance with legal requirements and practices in Vietnam applied to listed companies.
4.
Strict application across the system
Strict application of corporate governance principles in every activity and business conduct.
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Corporate Governance Framework
VINARE CORPORATE GOVERNANCE STRUCTURE
1.
2.
3.
BOD Composition
BOD Operation
Strategy, action plan & supervision
• Composition & organisation • Instruction and training
• Morality and relationship of Directors
• Remuneration
• Strategic Development Committee
• Succession planning
• Compensation Committee • Human Resource Committee
• Vision and mission • Strategy, business plan • Effective control of operation and governance • IT strategy • Human resource management
4.
5.
6.
Effective risk and compliance management
Transparency & Disclosure
Responsibility (social, moral & environmental)
• Risk management system
• Financial reporting
• Code of conduct
• Internal control system
• Business reporting
• Business morality • Staff relationship/Safety/Health • Social responsibility
44
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Report of the Board Of Directors COMMITTEE ACTIVITIES
Strategic Development Committee
Remuneration and Compensation Committee
The Strategic Development Committee coordinated the preparation and development of the fiveyear business plan 2020 - 2024.
The Remuneration and Compensation Committee coordinated the construction of the salary scheme for the position of Executive Chairman.
Human Resource Committee
The Human Resource Committee coordinated the appointment of the Chief Executive Officer and the preparation of the Regulation on succession planning, appointment, re-appointment and dismissal of management officers.
KEY DECISIONS
1
To approve the performance targets and business solutions for 2020 - 2024 period;
2
To approve the composition of the Board of Directors and the Board of Control of the term 2020 - 2024;
3
To elect Mr. Nguyen Anh Tuan to be the Executive Chairman with the responsibility of directing and coordinating with the Board of Management in daily business operation;
4
To approve the task assignments of members of the Board of Directors Term 2020 - 2024;
5
To approve the criteria and standards to be applied for the Chief Executive Officer position;
6
To appoint Mr. Mai Xuan Dzung to be the Chief Executive Officer;
7
To approve the 2021 reinsurance program;
8
To approve the rebuilding of the reinsurance management software system.
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Report of the Board Of Directors
SUPERVISION ACTIVITIES All issues relating to the decision making authority of the Board of Directors were discussed and communicated to the Board of Management. Under the closely direction of the Executive Chairman, the Board of Management focused on a number of prioritized tasks:
1
To strengthen connection with local players to seek new business opportunities and optimize reinsurance capacity;
2
To increase allocation of investment assets in more profitable channels;
3
To maintain and strengthen financial and governance capacity;
4
To ensure the best working facilities and high-tech equipment for the employees.
The Board of Management strictly followed all resolutions of the Annual General Meeting of Shareholders and Board of Directors. All proposals of the Board of Management were studied and discussed by the Board of Directors and addressed accordingly. The Chief Executive Officer directed the management team and the entire staff to follow all the decisions of the Board of Directors and to comply with all regulatory requirements and internal regulations. 46
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Report of the Board of Control
In 2020, the Board of Control carried out all the functions and mandates set out in the Charter of Organization and Operation:
1
Convened periodical meetings, reviewed and submitted to the General Meeting of Shareholders (GSM) to approve 2019 financial statements and to select the independent auditing company in 2020, attended 2020 Annual GSM as well as all the Board meetings;
2
Oversaw the performance of the Board of Directors and the Board of Management in corporate governance and management;
3
Examined the rationality, legitimacy, honesty and prudence in management and direction, accounting, statistics and the preparation of financial statements;
4
Inspected the reports on business results, the interim and yearly financial statements;
5
Coordinated with the Board of Management and all the functioning departments.
Based on the financial statements and the report on business results in 2020, the Board of Control has the following observations: ON BUSINESS OPERATION
1
VINARE has fulfilled the business plan 2020 assigned by the General Meeting of Shareholder;
2
VINARE has strictly adhered to financial regulations and made proper and cautious provisions.
ON CORPORATE GOVERNANCE
1
The Board of Directors and the Board of Management clearly stated their viewpoints and closely monitored day-to-day operation;
2
All the decisions of the Board of Directors were thoroughly discussed and fully communicated to the Board of Management and the Board of Control;
2
The Board of Management strictly followed all resolutions and direction from the Board of Directors.
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INVESTMENT INTO THE ECONOMY 2020 (VND Billion)
3,849
CONTRIBUTED TO THE GOVERNMENT’S BUDGET (VND Billion)
78.9
Connecting with sustainability
SUSTAINABLE DEVELOPMENT REPORT VINARE impacts on sustainable development Sustainable development goals between 2020 - 2025 Sustainable development strategy Sustainable development plan 2021 Contributions to social developments
50 51 52 54 55
VINARE impacts on sustainable development
17 UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS 2020 - 2030
17 17 17
SUSTAINABLE SUSTAINABLE SUSTAINABLE DEVELOPMENT DEVELOPMENT DEVELOPMENT GOALS GOALS GOALS OFOF THE OFTHE THE UNITED UNITED UNITED NATIONS NATIONS NATIONS
IMPACT ON THE ECONOMY
IMPACT ON SOCIAL DEVELOPMENT
IMPACT ON ENVIRONMENT
Contribution towards economic development.
Creation of jobs.
Minimizing effects from waste discharge and fuel consumption.
Contribution towards local community development.
Providing protection against risks to clients.
Leading role in government-initiated insurance schemes.
50
17 17 17 17 17
SUSTAINABLE SUSTAINABLE SUSTAINABLE SUSTAINABLE SUSTAINABLE DEVELOPMENT DEVELOPMENT DEVELOPMENT DEVELOPMENT DEVELOPMENT GOALS GOALS GOALS GOALS GOALS OFOFTHE OF THE OF OF THE UNITED THE UNITED THE UNITED UNITED UNITED NATIONS NATIONS NATIONS NATIONS NATIONS
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Contribution towards overall community development.
Greenizing business activities. Raising awareness of environment protection.
ECONOMY
ENVIRONMENT
SOCIETY
SUSTAINABLE DEVELOPMENT GOALS BETWEEN 2020 - 2025 According to the 17 sustainable development goals of the United Nations, VINARE selects and integrates six goals into the sustainable development strategy for the period 2020-2025 which are:
Message
1
Promoting sustainable, long-term and effective economic growth; creating jobs and raising productivity (SD8).
2
Eradicating poverty in any form anywhere (SD1).
3
Ensuring healthy life and increased welfare for everyone (SD3).
4
Ensuring quality education and providing more education opportunities for everyone (SD4).
5
Ensuring responsible production models and consumption (SD12).
6
Climate actions (SD13).
Overview of VINARE
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51
SUSTAINABLE DEVELOPMENT STRATEGY
Contributing to the sustainable development of Vietnam insurance market through raising awareness on insurance, providing reinsurance capacity and supporting the development of insurance products for the large number of citizens Actively participating in sustainable development of Vietnam
52
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
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53
Sustainable development plan 2021
SUSTAINABLE DEVELOPMENT PLAN 2021
1
Setting up strategy, development target and action plan, and regularly evaluating and adapting during the execution process.
2
Strengthening internal risk management to ensure efficient and sustainable growth.
3
Raising awareness on risk management in the insurance/reinsurance market via activities like training and transfer of risk management and protection techniques; providing and evaluating information on insurance and reinsurance market and related issues.
4
Providing new products to the market to meet the community’s demand for insurance protection.
5
Placing reinsurance in a secured and efficient manner for VINARE and clients to safeguard financial capability and to ensure recoveries and claim payment in a timely manner.
6
Providing consultation on effective reinsurance programme for primary insurers.
7
Providing consultation on regulation policy towards a sustainable development for the insurance industry.
8
Providing training on reinsurance expertise for the insurance market.
9
Positively participating in risk protection programme for the community. VINARE is the leading reinsurer for the Pilot Agriculture Insurance Scheme as per Decree 58/2018/NDDCP of the Government and the Fishery Insurance program as per Decree 17/2018/ND-CP of the Government. Co-ordinating with Insurance Supervisory Authority (Ministry of Finance) and the World Bank to prepare for the deployment of Nat Cat Insurance in Vietnam.
10 54
Allocating a proper budget for charities and other community activities.
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
CONTRIBUTIONS TO SOCIAL DEVELOPMENTS
In 2020, VINARE staff joined efforts in a charity program to build houses for the poor households in Dak Glei district, Kon Tum province worth VND60 million. Aiming at helping families with financial difficulties and low income to relieve their burdens and reduce the imbalance between urban and rural areas, VINARE considers this one of the key policies in which the Corporation is willing to join effort with the Government and the Ministry of Finance. The Trade Union visited and presented charity gifts to disadvantaged households and students of a primary school in a remote mountainous community in Yen Bai province. The Trade Union and the Youth Union also made contributions to the Fire and Explosion Prevention Fund; donated saving accounts and helped building benevolent houses for disadvantaged children. VINARE also donated saving accounts to poor residents of Cua Nam ward, Hoan Kiem district, Hanoi, where the head office is located. In addition, VINARE provided a separate budget for other charitable activities and participated in the annual “Blood Donation” campaign.
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CORPORATE CULTURE OF
VINARE 101
Employees
31st December 2021, Number of employees
é
2%
increased 2% compared with 2019
56
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
95% of the employees are satisfied with the salary and benefit scheme
HUMANS
AS FUNDAMENTAL VALUES FOR DEVELOPMENT
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TOTAL DIVIDEND PAYMENT 2011-2019 (VND Billion)
1,700
PROJECTED DIVIDEND PAYMENT 2020 (VND Billion)
196.5
Connecting with transparency
PRE-TAX PROFIT 2020 (VND Billion)
INVESTMENT PORTFOLIO (31/12/2020) (VND Billion)
357.2
4,025.6
FINANCIAL STATEMENTS Consolidated financial statements Separate financial statements
60 119
Vietnam National Reinsurance Corporation CORPORATE INFORMATION Establishment and Operation Licence
Board of Directors
Board of Supervision
No. 28/GP/KDBH dated 15 November 2004 issued by the Ministry of Finance for a period of 50 years from the date of the initial Establishment and Operation Licence. The Establishment and Operation Licence has been amended several times and the latest amendment No. 28/ GPDC4/KDBH was issued on 12 August 2014. Mr. Nguyen Anh Tuan Chairman (appointed on 11 June 2020) Mr. Le Song Lai Chairman (resigned on 11 June 2020) Mr. Nguyen Xuan Viet Deputy Chairman Mr. Pham Cong Tu Member (resigned on 27 October 2020) Mr. Dao Nam Hai Member Mr. Pham Sy Danh Member (resigned on 11 June 2020) Mr. Pham Phan Dung Member (appointed on 11 June 2020) Mr. Jared Orchad Member (appointed on 11 June 2020) Mr. Mai Xuan Dung Member Mr. Nguyen Dinh An Member Mr. Vu Anh Tuan Member Mr. Tran Trung Tinh Mr. Vu Ngoc Vuong Ms. Le Thi Thanh Hien Mr. Tushar Chatterjee Mr. Dao Manh Duong Mr. Tran Phan Viet Hai
Board of Management
Mr. Mai Xuan Dung
Mr. Pham Cong Tu Mr. Nguyen Manh Linh Legal Representative
Mr. Mai Xuan Dung Mr. Pham Cong Tu
60
Chief Supervisor Member Member Member (appointed on 11 June 2020) Member (appointed on 11 June 2020) Member (resigned on 11 June 2020) Chief Executive Officer (appointed on 17 November 2020) Deputy Chief Executive Officer (resigned on 17 November 2020) Chief Executive Officer (resigned on 17 November 2020) Deputy Chief Executive Officer Chief Executive Officer (appointed on 17 November 2020) Chief Executive Officer (resigned on 27 October 2020)
Registered Office
7th Floor, 141 Le Duan, Hoan Kiem District, Hanoi, Vietnam
Auditor
Branch of PwC (Viet Nam) Limited in Hanoi
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
STATEMENT OF THE RESPONSIBILITY OF THE BOARD OF MANAGEMENT OF THE CORPORATION IN RESPECT OF THE CONSOLIDATED FINANCIAL STATEMENTS The Board of Management of Vietnam National Reinsurance Corporation (“the Corporation”) is responsible for preparing the consolidated financial statements which give a true and fair view of the financial position of the Corporation and its subsidiary as at 31 December 2020 and the results of its operations and its cash flows for year then ended. In preparing these consolidated financial statements, the Board of Management is required to:
• select suitable accounting policies and then apply them consistently; • make judgments and estimates that are reasonable and prudent; and • prepare the consolidated financial statements on a going concern basis unless it is inappropriate to presume that the Corporation will continue in business. The Board of Management is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the financial position of the Corporation and its subsidiary and which enable consolidated financial statements to be prepared which comply with the basis of accounting set out in Note 2 to the consolidated financial statements. The Board of Management is also responsible for safeguarding the assets of the Corporation and hence for taking reasonable steps for the prevention and detection of fraud or error. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS We hereby, approve the accompanying consolidated financial statements as set out on pages 6 to 71 which give a true and fair view of the consolidated financial position of the Corporation and its subsidiary as at 31 December 2020 and of the results of operations and cash flows of the Corporation and its subsidiary for the year then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Corporate Accounting System and applicable regulations on preparation and presentation of financial statements of reinsurance companies established and operating in compliance with the laws of Vietnam. On behalf of the Board of Management
_________________________________ Mai Xuan Dung Chief Executive Officer Hanoi, SR Vietnam 22 March 2021
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Independent separate auditor’s report
Report reference number: HAN 2632
INDEPENDENT AUDITOR’S REPORT TO SHAREHOLDERS OF VIETNAM NATIONAL REINSURANCE CORPORATION We have audited the accompanying consolidated financial statements of Vietnam National Reinsurance Corporation (“the Corporation”) and its subsidiary which were prepared on 31 December 2020 and approved by the Board of Management of the Corporation on 22 March 2021. The consolidated financial statements comprise the consolidated balance sheet as at 31 December 2020, the consolidated income statement and the consolidated cash flow statement for the year then ended, and explanatory notes to the consolidated financial statements including significant accounting policies, as set out on pages 64 đến trang 118. Responsibility of the Board of Management The Board of Management of the Corporation is responsible for the preparation and the true and fair presentation of these consolidated financial statements of the Corporation and its subsidiary in accordance with Vietnamese Accounting Standards, the Vietnamese Corporate Accounting System and applicable regulations on preparation and presentation of consolidated financial statements of reinsurance companies established and operating in compliance with the laws of Vietnam and for such internal control which the Board of Management determines as necessary to enable the preparation and fair presentation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the consolidated financial statements based on our audit. We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require that we comply with ethical standards and requirements and plan and perform the audit in order to obtain reasonable assurance as to whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including an assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Corporation’s preparation and true and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Corporation and its subsidiary. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Auditor’s Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position as at 31 December 2020, the consolidated financial performance and consolidated cash flows of the Corporation and its subsidiary for the year then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Corporate Accounting System and applicable regulations on the preparation and presentation of consolidated financial statements of reinsurance companies established and operating in compliance with the laws of Vietnam.
Branch of PwC (Vietnam) Limited in Hanoi 16th floor, Keangnam Hanoi Landmark Tower, Lot E6, Cau Giay Urban Area, Me Tri Commune, Nam Tu Liem District, Hanoi, Vietnam T: +84 24 3946 2246, www.pwc.com/vn 62
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Emphasis of Matter We draw attention to Note 7(a) - Other short-term receivables to the consolidated financial statements. in which a receivable amount of VND 53,513,866,700 represents the investments contributed by the Corporation and the subsidiary under the Business Co-operation Contract No. 02/2010/HDDC dated 1 July 2010 signed with Thang Long Investment and Trade Group Joint Stock Company ("the Investor"), to construct Tincom Plaza Project (now Skyview Plaza Project), (“the Project”). In accordance with Decision No. 14/2019/QDST-KDTM dated 15 November 2019 by the Thanh Xuan District Court, Debt Settlement Agreement signed between the subsidiary and the Investors on 31 August 2020 and Minute of balance reconciliation and confirmation dated 31 December 2020 between the subsidiary and the Investor, the total amount of the principal and interest up to 31 December 2020 that the Investor has to either pay in cash or offset by apartments of the Project to the subsidairy, is at VND 132,633,052,958, comprising of VND 60,149,250,000 of principal (Note 7(a)- Other short-term receivables) and VND 72,483,802,958 of interest (Note 40- Contingent assets). The recoverable amount of the principal amount is determined by the Board of Management by offsetting with the fair value of the apartments which will be handed by the Investor to the subsidiary when the construction is completed and on the basis that the Corporation and the subsidiary continue paying 30% of the value of the apartments, equivalent to VND 42,939,960,000 for apartments in HH3 buliding and 5% of the value of the apartments, equivalent to VND 581,701,750 for apartments in HH2 building in order to eligble for apartment handover in accordance with the apartment purchase agreements signed between the subsidiary and the Investor in 2020. The principal receivable amount is expected to be realised when the aforementioned apartments are handed over to and sold by the Corporation and the subsidiary. Our opinion is not qualified in respect of this matter. Other Matters The consolidated financial statements of the Corporation and its subsidiary for the financial year ended 31 December 2019 were audited by another auditor whose audit report dated 5 March 2020 expressed an unqualified audit opinion. The independent auditor’s report is prepared in Vietnamese and English. Should there be any conflict between the Vietnamese and English versions, the Vietnamese version shall take precedence.
For and on behalf of Branch of PwC (Vietnam) Limited in Hanoi.
_________________________________ _________________________________ Nguyen Phi Lan Deputy General Director Audit Practising Licence No. 0573-2018-006-1 Authorised signatory
Bui Phuong Hanh Audit Practising Licence No. 3823-2021-006-1
Report reference number: HAN 2632 Hanoi, 17 March 2021
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63
Consolidated balance sheet
Form B 01 - DNPNT/HN
As at 31/12/2020 VND
31/12/2019 VND
4,893,422,736,475
5,844,725,307,673
55,424,073,810
103,163,125,222
55,424,073,810
103,163,125,222
2,053,240,931,318
2,792,546,231,902
4(a)
173,907,022
173,907,022
Provision for diminution in value of trading securities
4(a)
(173,907,022)
(173,907,022)
123
Investments held-to-maturity
4(b)
2,053,240,931,318
2,795,615,165,741
124
Provision for impairment of short-term financial investments
4(b)
-
(3,068,933,839)
130
Short-term receivables
700,282,516,268
978,807,649,823
131
Short-term trade accounts receivable
564,034,646,896
813,498,418,453
563,619,791,897
608,720,497,533
131.2 - Other trade accounts receivable
414,854,999
204,777,920,920
132
Short-term prepayments to suppliers
106,018,000
62,550,480
136
Other short-term receivables
7(a)
166,095,471,952
191,911,542,585
137
Provision for doubtful debts – short-term
6
(29,953,620,580)
(26,664,861,695)
140
Inventories
8
36,417,776,783
40,500,614,410
141
Inventories
40,964,900,921
45,047,738,548
149
Provision for decline in value of inventories
(4,547,124,138)
(4,547,124,138)
150
Other current assets
585,394,346,564
418,865,030,529
151
Short-term prepaid expenses
580,190,581,169
413,364,664,958
580,190,581,169
406,888,443,007
-
6,476,221,951
5,203,765,395
5,500,365,571
1,462,663,091,732
1,510,842,655,787
Code
ASSETS
Note
100
CURRENT ASSETS
110
Cash and cash equivalents
111
Cash
120
Short-term investments
121
Trading securities
122
3
5
131.1 - Insurance receivables
9(a)
151.1 - Deferred commission expenses 151.2 - Other short-term prepaid expenses 152
Value Added Tax to be reclaimed
14(a)
190
Reinsurance assets
191
Unearned premium reserve for outward reinsurance
18(a)
470,264,225,140
508,147,652,582
192
Claim reserve for outward reinsurance
18(a)
992,398,866,592
1,002,695,003,205
The notes on pages 72 to 118 are an integral part of these consolidated financial statements. 64
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
As at 31/12/2020 VND
31/12/2019 VND (Reclassified)
2,082,317,191,954
1,149,656,517,136
Long-term receivables
36,303,139,726
23,304,767,125
Other long-term receivables
36,303,139,726
23,304,767,125
Code
ASSETS
Note
200
LONG-TERM ASSETS
210 218
218.1 - Insurance deposits
2.11
22,000,000,000
22,000,000,000
218.2 - Other long-term receivables
7(b)
14,303,139,726
1,304,767,125
8,020,286,076
4,684,443,147
8,020,286,076
4,684,443,147
29,980,897,654
25,795,808,154
(21,960,611,578)
(21,111,365,007)
-
-
32,434,195,934
32,434,195,934
(32,434,195,934)
(32,434,195,934)
8,031,430,158
9,408,782,725
34,055,061,893
34,055,061,893
(26,023,631,735)
(24,646,279,168)
15,652,813,679
17,142,387,324
14,036,123,679
14,036,123,679
1,616,690,000
3,106,263,645
2,000,881,548,394
1,084,413,654,319
220
Fixed assets
221
Tangible fixed assets
222
Historical cost
223
Accumulated depreciation
227
Intangible fixed assets
228
Historical cost
229
Accumulated amortisation
230
Investment properties
231
Historical cost
232
Accumulated depreciation
240
Long-term assets in progress
241
Long-term work in progress
242
Construction in progress
250
Long-term investments
252
Investments in associates and joint ventures
4(c)
297,645,573,026
274,951,845,713
253
Investments in other entities
4(c)
357,354,024,845
403,155,876,046
254
Provision for impairment of long-term financial investments
4(d)
-
(94,817,694)
255
Held-to-maturity investments
4(d)
1,345,881,950,523
406,400,750,254
260
Other long-term assets
13,427,973,921
10,702,482,496
261
Long-term prepaid expenses
9(b)
5,569,640,588
2,844,149,163
268
Other long-term assets
7(b)
7,858,333,333
7,858,333,333
270
TOTAL ASSETS
6,975,739,928,429
6,994,381,824,809
10(a)
10(b)
11
12
The notes on pages 72 to 118 are an integral part of these consolidated financial statements. Message
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Consolidated balance sheet (Continued)
Form B 01 - DNPNT/HN As at
Code
RESOURCES
300
Note
31/12/2020 VND
31/12/2019 VND
LIABILITIES
3,830,456,981,846
3,887,040,153,264
310
Short-term liabilities
3,828,953,753,466
3,884,243,615,709
311
Short-term trade accounts payable
581,516,210,025
825,996,707,924
580,352,904,664
613,498,599,822
311.2 - Other trade accounts payable
1,163,305,361
212,498,108,102
312
Short-term advances from customers
1,503,634,974
1,882,361,089
313
Tax and other payables to the State
16,220,037,904
17,896,496,743
314
Payables to employees
25,352,582,932
21,508,923,286
315
Short-term accrued expenses
302,524,570
-
319
Other short-term payables
15(a)
51,429,072,572
48,492,213,904
15(a)
102,957,752,564
111,386,015,883
13
311.1 - Insurance payables
319.1 - Deferred commission income
14(b)
321
Provision for short-term liabilities
16
21,468,757,438
12,909,096,840
322
Bonus and welfare fund
17
22,690,170,128
18,970,301,148
329
Technical reserves
18
3,005,513,010,359
2,825,201,498,892
329.1 - Unearned premium reserves for inward reinsurance
1,196,704,406,560
1,077,521,983,191
329.2 - Claim reserves for inward reinsurance
1,636,743,500,588
1,590,506,312,001
172,065,103,211
157,173,203,700
1,503,228,380
2,796,537,555
1,503,228,380
2,796,537,555
329.3 - Catastrophe reserves 330
Long-term liabilities
337
Other long-term payables
400
OWNERS’ EQUITY
3,145,282,946,583
3,107,341,671,545
410
Capital and reserves
3,145,282,946,583
3,107,341,671,545
411
Owners’ capital
1,310,759,370,000
1,310,759,370,000
1,310,759,370,000
1,310,759,370,000
15(b)
19
411a - Ordinary shares with voting rights 412
Share premium
19
566,368,537,309
566,368,537,309
418
Investment and development fund
20
211,573,836,051
211,573,836,051
419
Compulsory reserve
20
131,075,937,000
131,075,937,000
421
Undistributed earnings
20
891,887,455,949
852,773,676,716
421a - Undistributed post-tax profits of previous years
588,621,802,716
578,594,879,212
421b - Post-tax profit of current year
303,265,653,233
274,178,797,504
33,617,810,274
34,790,314,469
6,975,739,928,429
6,994,381,824,809
429
Non-controlling interests
440
TOTAL RESOURCES
20
_______________________ _______________________ _______________________ Nguyen Thanh Cong Luu Thi Viet Hoa Preparer Chief Accountant
Mai Xuan Dung Chief Executive Officer 22 March 2021
The notes on pages 72 to 118 are an integral part of these consolidated financial statements. 66
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
As at Code
OFF BALANCE SHEET ITEMS
1.
Foreign currencies
Currency unit
31/12/2020
31/12/2019
United States Dollar
USD
1,834,964,63
3,690,944.67
Australian Dollar
AUD
345,15
345.15
Japanese Yen
JPY
43,775,00
43,775.00
Singapore Dollar
SGD
3,419,87
498.16
Great Britain Pound
GBP
5,770,51
5,770.51
Euro
EUR
115,531,26
127,138.70
_______________________ _______________________ _______________________ Nguyen Thanh Cong Luu Thi Viet Hoa Preparer Chief Accountant
Mai Xuan Dung Chief Executive Officer 22 March 2021
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Consolidated income statement
Form B 02 - DNPNT/HN
PART I - COMPREHENSIVE CONSOLIDATED INCOME STATEMENT For the year ended Code
Note
2020 VND
2019 VND (Reclassified)
1,578,398,460,337
1,236,537,905,553
14,164,995,805
13,954,420,816
365,586,847,756
321,098,695,596
641,715,981
1,515,996,401
(1,485,160,867,556)
(1,139,889,342,515)
(7,605,566,971)
(1,606,162,584)
10
Net income from insurance business
11
Investment income from investment properties
12
Financial income
13
Other income
20
Total insurance expenses
21
Cost of investment properties
22
Financial expenses
29
(41,806,408,317)
(56,787,234,485)
23
General and administrative expenses
30
(84,657,729,594)
(66,065,341,829)
24
Other expenses
(1,205,969,139)
(1,180,411,468)
25
Profit having from associates
38,838,017,475
36,609,701,752
50
Net accounting profit before tax
377,193,495,777
344,188,227,237
51
Business income tax (“BIT”) - current
(66,121,705,916)
(57,564,870,285)
52
BIT- deferred
-
-
60
Net profit after tax
311,071,789,861
286,623,356,952
70
Basic earnings per share
2,314
2,118
28
34
21
_______________________ _______________________ _______________________ Nguyen Thanh Cong Luu Thi Viet Hoa Preparer Chief Accountant
Mai Xuan Dung Chief Executive Officer 22 March 2021
The notes on pages 72 to 118 are an integral part of these consolidated financial statements. 68
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
PART II - COMPREHENSIVE CONSOLIDATED INCOME STATEMENT BY ACTIVITIES For the year ended Code
2020 VND
2019 VND (Reclassified)
2,328,522,737,462
2,018,063,530,162
2,447,705,160,831
2,221,248,294,242
119,182,423,369
203,184,764,080
(988,683,109,085)
(1,025,624,314,273)
(950,799,681,643)
(1,030,278,614,236)
(37,883,427,442)
4,654,299,963
1,339,839,628,377
992,439,215,889
Note
1
Insurance premium income
22
1.2
- Inward reinsurance premium
1.3
- Increase in unearned premium reserves for inward reinsurance
2
Outward reinsurance premium
2.1
- Outward reinsurance premium
2.2
- (Decrease)/increase in unearned premium reserves for outward reinsurance
3
Net insurance premium income
4
Commission income from outward reinsurance and other insurance income
238,558,831,960
244,098,689,664
4.1
- Commission income from outward reinsurance
216,930,820,188
222,442,099,623
4.2
- Other insurance income
21,628,011,772
21,656,590,041
10
Net income from insurance business
1,578,398,460,337
1,236,537,905,553
11
Claim expenses
25
(950,313,250,918)
(1,075,927,565,712)
11.1
- Gross claim expenses
25
(950,313,250,918)
(1,075,927,565,712)
12
Recoverables from outward reinsurance
25
579,287,329,344
669,723,131,637
13
Increase/(decrease) in inward claim reserves
25
59,871,801,757
(74,250,457,020)
14
Increase/(decrease) in outward claim reserves
25
105,536,227
(146,364,312,427)
15
Net claim expenses
25
(430,792,187,104)
(478,318,289,482)
16
Increase/(decrease) in catastrophe reserves
14,891,899,511
(34,127,288,514)
17
Other insurance expenses
(1,039,476,780,941)
(695,698,341,547)
17.1
- Commission expenses
26
(1,002,846,259,958)
(668,970,621,756)
17.2
- Other insurance expenses
27
(36,630,520,983)
(26,727,719,791)
18
Total insurance expenses
(1,485,160,867,556)
(1,139,889,342,515)
19
Gross insurance profit
93,237,592,781
96,648,563,038
20
Income from investment properties
14,164,995,805
13,954,420,816
21
Cost of investment properties
(7,605,566,971)
(1,606,162,584)
22
Profit from investment properties
6,559,428,834
12,348,258,232
23
24
The notes on pages 72 to 118 are an integral part of these consolidated financial statements. Message
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Consolidated income statement (Continued)
Form B 02 - DNPNT/HN
PART II - COMPREHENSIVE CONSOLIDATED INCOME STATEMENT BY ACTIVITIES (Continued) For the year ended Code
Note
2020 VND
2019 VND (Reclassified)
23
Financial income
28
365,586,847,756
321,098,695,596
24
Financial expenses
29
(41,806,408,317)
(56,787,234,485)
25
Profit from financial activities
323,780,439,439
264,311,461,111
26
General and administrative expenses
(84,657,729,594)
(66,065,341,829)
30
Operating profit
338,919,731,460
307,242,940,552
31
Other income
641,715,981
1,515,996,401
32
Other expenses
(1,205,969,139)
(1,180,411,468)
40
Net other (expense)/income
(564,253,158)
335,584,933
40.1
Profit sharing from associates
38,838,017,475
36,609,701,752
50
Net accounting profit before tax
377,193,495,777
344,188,227,237
51
Business income tax (“BIT”) - current
(66,121,705,916)
(57,564,870,285)
52
BIT- deferred
-
-
60
Net profit after tax
311,071,789,861
286,623,356,952
312,244,294,056
288,085,060,920
(1,172,504,195)
(1,461,703,968)
2,314
2,118
30
34
Attributable to: 61
Shareholders of the Corporation
62
Non-controlling interests
70
Basic earnings per share
21
_______________________ _______________________ _______________________ Nguyen Thanh Cong Luu Thi Viet Hoa Preparer Chief Accountant
Mai Xuan Dung Chief Executive Officer 22 March 2021
The notes on pages 72 to 118 are an integral part of these consolidated financial statements. 70
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Consolidated cash flow statement
Form B 03 - DNPNT/HN
(Direct method)
For the year ended Code
2020 VND
2019 VND
574,997,091,053
576,934,658,888
(437,534,364,332)
(344,231,365,167)
Note CASH FLOWS FROM OPERATING ACTIVITIES
01
Proceeds from inward and outward reinsurance activities
02
Cash paid for inward and outward reinsurance activities
03
Cash paid to employees
(44,125,159,885)
(42,719,487,169)
05
BIT paid
(67,641,470,965)
(56,770,816,820)
06
Cash received from other operating activities
8,229,266,254
5,679,021,174
07
Cash paid for other operating activities
(29,539,293,174)
(34,234,833,285)
20
Net cash inflows from operating activities
4,386,068,951
104,657,177,621
(2,641,835,855)
(2,490,942,645)
(2,146,460,954,990)
(1,438,810,460,000)
1,911,604,517,959
1,179,085,520,133
45,801,851,201
59,210,487,951
CASH FLOWS FROM INVESTING ACTIVITIES 21
Purchases of fixed assets and other long-term assets
23
Purchases of debt instruments of other entities
24
Proceeds from sales of debt instruments of other entities
26
Proceeds from divestment in other entities
27
Dividends and interest received
401,818,699,523
294,643,723,600
30
Net cash outflows from investing activities
210,122,277,838
91,638,329,039
CASH FLOWS FROM FINANCING ACTIVITIES 36
Dividends paid, profits distributed to owners
(262,150,813,160)
(157,090,344,240)
40
Net cash outflows from financing activities
(262,150,813,160)
(157,090,344,240)
50
Net (decrease)/increase in cash and cash equivalents
(47,642,466,371)
39,205,162,420
60
Cash and cash equivalents at beginning of year
103,163,125,222
63,803,229,276
61
Effect of foreign exchange differences
(96,585,041)
154,733,526
70
Cash and cash equivalents at end of year
55,424,073,810
103,163,125,222
3 3
_______________________ _______________________ _______________________ Nguyen Thanh Cong Luu Thi Viet Hoa Preparer Chief Accountant
Mai Xuan Dung Chief Executive Officer 22 March 2021
The notes on pages 72 to 118 are an integral part of these consolidated financial statements. Message
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Notes to the consolidated financial statements for the year ended 31 december 2020
1
Form B 09 - DNPNT/HN
GENERAL INFORMATION Vietnam National Reinsurance Corporation (“the Corporation”) is a joint stock company established in SR Vietnam pursuant to the Establishment and Operation Licence No. 28/GP/KDBH dated 15 November 2004 issued by the Ministry of Finance. The Establishment and Operation Licence has been amended several times and the latest amendment No. 28/GPDC4/KDBH was issued on 12 August 2014. Shares of the Corporation were officially listed for trading at the Hanoi Stock Exchange on 13 March 2006. The principal activities of the Corporation are to provide inward/outward reinsurance services and to carry out financial investment activities. The normal business cycle of the Corporation is 12 months. As at 31 December 2020, the Corporation had one subsidiary and one associate as disclosed in Note 4(c) – Investments in other entities. The details are as follows: Principal activities
Place of incorporation % of ownership and operation
Investment
Hanoi, Vietnam
63.9%
60%
Insurance
Hanoi, Vietnam
25%
25%
% of voting rights
Subsidiary Vinare Investment Joint Associate Samsung Vina Insurance Company Limited
As at 31 December 2020, the Corporation and its subsidiary had 101 employees (as at 31 December 2019: 100 employees). 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1
Basis of preparation of the consolidated financial statements
The consolidated financial statements have been prepared in accordance with Vietnamese Accounting Standards, the Vietnamese Corporate Accounting System and applicable regulations on preparation and presentation of consolidated financial statements of reinsurance companies established and operating in compliance with the laws of Vietnam. The consolidated financial statements have been prepared under the historical cost convention except for investments in associates and business combinations as presented in Note 2.5. The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Vietnam. The accounting principles and practices utilised in Vietnam may differ from those generally accepted in countries and jurisdictions other than Vietnam. The consolidated financial statements in the Vietnamese language are the official statutory financial statements of the Corporation and its subsidiary. The consolidated financial statements in the English language have been translated from the Vietnamese version. 2.2
Fiscal year
The Corporation and its subsidiary’s fiscal year is from 1 January to 31 December.
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ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
2.3 Currency
The consolidated financial statements are measured and presented in the Vietnamese Dong (“VND”). The Corporation and its subsidiary determine accounting currency based on the currency which is mainly used in collection of inward reinsurance premiums, payment of outward reinsurance premiums, inward/outward reinsurance commissions transactions; which is normally used for inward/outward premiums price listing and receiving payments; which is mainly used in claims payments/receipts; which has a significant impact on cost of labor, cost of reinsurance commission, and other reinsurance expenses and normally used as payments of those costs. In addition, the Corporation and its subsidiary also use this currency to raise financial resources from business operation and savings. 2.4
Exchange rates
Transactions arising in foreign currencies are translated at an exchange rate which is the rate approximating the average transfer exchange rate of the buying and selling rates of the commercial bank(s) where the Corporation and its subsidiary regularly trade. The Corporation and its subsidiary ensure that the disparity of the approximate exchange rate does not exceed +/- 1% compared with the average transfer exchange rate and does not materially impact the financial position and result of operations during the fiscal year. The average transfer exchange rate is determined monthly based on the average between the daily buying transfer rate and selling transfer rate of the commercial bank(s). Foreign exchange differences arising from these translations are recognised in the consolidated income statement. Monetary assets and liabilities denominated in foreign currencies at the consolidated balance sheet date are translated at the transfer rate at the balance sheet date of the commercial bank(s) where the Corporation and its subsidiary regularly trade. The transfer rate is the buying rate or selling rate of the commercial bank(s). Foreign exchange differences arising from these translations are recognised in the consolidated income statement. 2.5
Basis of consolidation
Subsidiaries Subsidiaries are all entities over which the Corporation has the power to govern the financial and operating policies in order to gain future benefits from their activities generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Corporation controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Corporation. They are de-consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Corporation. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Corporation’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the consolidated income statement. Inter-company transactions, balances and unrealised gains and losses on transactions between the group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Corporation.
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Notes to the consolidated financial statements (Continued) for the year ended 31 december 2020
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.5
Basis of consolidation (Continued)
Form B 09 - DNPNT/HN
Subsidiaries (Continued)
Non-controlling transactions and interests The Corporation applies a policy for transactions with non-controlling interests as transactions with external parties to the Corporation. Non-controlling interests (“NCI”) are measured at their proportionate share of the acquiree’s identifiable net assets at date of acquisition. Associates Associates are all entities over which the Corporation and its subsidiary have significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associate is accounted for using the equity method of accounting and are initially recognised at cost. The Corporation and its subsidiary’s investments in associates include goodwill identified on acquisition, net of any accumulated impairment loss. The Corporation and its subsidiary’s share of its associates’ post-acquisition profits or losses is recognised in the consolidated income statement. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Corporation’s share of losses in a associate equals or exceeds its interest in the associate, the Corporation and its subsidiary do not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Corporation and its subsidiary. Unrealised gains and losses on transactions between the Corporation and associates are eliminated to the extent of the Corporation and its subsidiary’s interest in the associates. 2.6 Form of records applied
The Corporation and its subsidiary use general journal to record its transactions. 2.7
Cash and cash equivalents
Cash and cash equivalents comprise of cash on hand, cash at bank, cash in transit, demand deposits and other short-term investments with an original maturity of three months or less. 2.8
Receivables
Receivables represent trade receivables from customers, other trade receivables and other receivables which are classified based on their nature as follows:
• Reinsurance receivables are trade receivables arising from reinsurance transactions including receivables from inward reinsurance, receivables from outward reinsurance, receivables from reinsurance activities;
reinstatement premium receivables and other
• Other trade receivables are receivables arising from sales and providing services other than insurance transactions; and
• Other receivables are non-trade receivables and receivables not relating to providing services.
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ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Provision for doubtful debts is made for each outstanding amount based on overdue days in payment according to the initial payment commitment (exclusive of the payment rescheduling between parties), or based on the estimated loss that may arise. When making provision for a bad debt of a debtor who has both receivables and payables, based on the record of debt reconciliation sent to customers, the Corporation and its subsidiary shall make provision for the remaining amount after clearing the payables of its debtor. Bad debts are written off when identified. Receivables are classified into long-term and short-term receivables on the separate balance sheet based on the remaining period from the consolidated balance sheet date to the maturity date. 2.9 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined by the weighted average method and includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the normal course of business, less the estimated costs of completion and selling expenses. The Corporation and its subsidiary apply the perpetual system for inventories. Provision is made, where necessary, for obsolete, slow-moving and defective inventory items. The difference between the provision of this period and the provision of the previous period are recognised as an increase or decrease of operating expenses in the year. 2.10 Investments
(a)
Investments held-to-maturity Investments held to maturity are investments which the Board of Management of the Corporation and its subsidiary has positive intention and ability to hold until maturity. Investments held-to-maturity include term deposits, certificates of deposit, bonds which the issuer is required to buy back in the future, investments in entrustment funds with a pre-determined settlement date agreed with fund management companies in accordance with the entrustment contract and other investments held-to-maturity. Those investments are initially accounted for at cost. Subsequently, the Board of Management reviews all outstanding investments to determine the amount of provision to recognise at the year end. Provision for diminution in value of investments held-to-maturity is made when there is evidence that the investment is uncollectible in whole on in part. Changes in the provision balance during the fiscal year are recorded as an increase or decrease in financial expenses. A reversal, if any, is made only to the extent the investment is wholly or partly restored to its original cost, but in any case the reversal not exceeds the corresponding provision previously made. For investments in enstrustment funds, the Board of Management makes provision for impairment of an investment when the carrying amount of the investment exceeds the value of that investment stated in the net asset value report at the balance sheet date provided by the entrustment funds.
(b)
Investments in associates Investments in associates are accounted for using the equity method when preparing the consolidated financial statements.
(c)
Investments in other entities Investments in other entities are investments in equity instruments of other entities without controlling rights or cocontrolling rights, or without significant influence over the investee. These investments are accounted for initially at cost. Subsequently, the Board of Management reviews all outstanding investments to determine the amount of provision to recognise at the year end.
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Notes to the consolidated financial statements (Continued) for the year ended 31 december 2020
2
Form B 09 - DNPNT/HN
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.10 Investments (Continued)
(d)
Provision for investments in other entities Provision for investments in other entities is made when there is a diminution in value of the investments at the year end. For investments in shares listed on stock exchanges, shares of the public companies registered for trading on the Unlisted Public Company Market (“UPCoM”), the Board of Management bases on the closing price of the trading session on the reporting date (or the preceding session if there is no transaction on the reporting date) to record provision at the year end. For other investments, provision for diminution in value is made when the investees make losses, except when the loss is anticipated by the Board of Management before the date of investment. The Board of Management reviews the financial position and business performance in the audited financial statements of the current period or the latest period for all outstanding investments to determine the amount of provision to recognise at the year end. Changes in the provision balance during the fiscal year are recorded as an increase or decrease in financial expenses. A reversal, if any, is made only to the extent the investment is wholly or partly restored to its original cost, but in any cases the reversal not exceed the corresponding provision previously made.
2.11 Insurance deposits
The Corporation is obliged to make a deposit equal to 2% of the legal capital, and the deposit shall bear interest in accordance with the agreement with the bank to which it is made and shall be refundable at the end of contract term. The Corporation may only use its insurance deposits to meet its commitment to insurance purchasers in case of liquidity deficit and upon written approval of the Ministry of Finance. 2.12 Fixed assets
Tangible and intangible fixed assets Fixed assets are stated at historical cost less accumulated depreciation or amortisation. Historical cost includes any expenditure that is directly attributable to the acquisition of the fixed assets bringing them to their suitable condition for their intended use. Expenditure incurred subsequently which has resulted in an increase in the future economic benefits expected to be obtained from the use of fixed assets, can be capitalised as an additional historical cost. Otherwise, they are charged to the consolidated income statement when incurred.
Depreciation and amortisation Fixed assets are depreciated and amortised using the straight-line method so as to write off the historical cost of the fixed assets over their estimated useful lives. The principal annual rates of each asset class are as follows: Buildings and structures Motor vehicle Office equipment Other tangible fixed assets Reinsurance technical software
4% 17% 25% 20 - 25% 20%
Disposals Gains or losses on disposals are determined by comparing net disposal proceeds with the carrying amount of the fixed assets and are recognised as income or expense in the consolidated income statement.
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ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Construction in progress Construction in progress represents the cost of assets in the course of construction for operation, rental or administrative purposes, or for purposes not yet determined are carried at cost, including necessary cost to newly build, repair, renovate, expand or re-engineering such as construction costs; costs of tools and equipments. Depreciation of these assets, on the same basis as other fixed assets, commences when they are ready for their intended use. 2.13 Leased assets
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the consolidated income statement on a straight-line basis over the period of the lease. 2.14 Investment properties
The historical cost of an investment property represents the amount of cash or cash equivalents paid or the fair value of other consideration given to acquire the investment property at the time of its acquisition or completion of construction. Expenditure incurred subsequently which has resulted in an increase in the expected future economic benefits from the use of investment properties can be capitalised as an additional historical cost. Otherwise, they are charged to the consolidated income statement when incurred.
Depreciation Investment properties are depreciated under the straight-line method to write off the historical cost of the assets over their estimated useful lives. The estimated useful lives of the investment properties is 25 years.
Disposals Gains or losses on disposals are determined by comparing net disposal proceeds with the carrying amount of investment properties and are recognised as income or expense in the consolidated income statement. 2.15 Business cooperation contract
A business cooperation contract (“BCC”) is a cooperation contract between the Corporation and its subsidiary and other parties to carry out specific business activities without establishing a new legal entity. These activities are jointly controlled by the parties under the BCC or controlled by one of the parties. The BCC is based on jointly controlled assets or jointly controlled operations. The parties in a BCC may agree to share revenues, products or profits after tax. 2.16 Prepaid expenses
Prepaid expenses include deferred commission expenses, costs of tools, supplies issued for consumption and other expenses which are expected to provide future economic benefits to the Corporation and its subsidiary. Prepaid expenses are recorded at cost. Deferred commissions are determined by the Corporation at the balance sheet date using the proportional method corresponding to unearned reinsurance premium reserve (Note 2.21(a)) as follows: Term of reinsurance contract
Type of contract
1 year or less
Over 1 year
Cargo insurance (road, sea, inland waterways, rail and air)
25%
55%
Others
50%
55%
For other prepaid expenses, the prepaid expenses are allocated using a straight-line basis over their estimated useful lives.
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Notes to the consolidated financial statements (Continued) for the year ended 31 december 2020
2
Form B 09 - DNPNT/HN
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.17 Payables
Classifications of payables are based in their natures as follows:
• Insurance payables are payables arising from reinsurance transactions; • Other trade accounts payable are trade payables arising from purchase of goods and services other than insurance transactions; and
• Other payables are non-trade payables and not relating to purchase of goods and services. Payables are classified into long-term and short-term payables on the consolidated balance sheet based on the remaining period from the consolidated balance sheet date to the maturity date. 2.18 Accrued expenses
Accrued expenses include liabilities for goods and services received in the period but not yet paid due to pending invoice or insufficient records and documents. Accrued expenses are recorded as expenses in the reporting period. 2.19 Provision
Provisions is recognised when the Corporation and its subsidiary have a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provision is not recognised for future operating losses. Provisions are measured at the expenditures expected to be required to settle the obligations. If the time value of money is material, provision will be measured at the present value using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as a financial expense. Changes in the provision balance during the fiscal year are recorded as an increase or decrease in operating expenses. 2.20 Provision for severance allowances
In accordance with Vietnamese labour laws, employees of the Corporation and its subsidiary who have worked regularly for full 12 months or longer, are entitled to a severance allowance. The working period used for the calculation of severance allowance is the period during which the employee actually works for the Corporation and its subsidiary less the period during which the employee participates in the unemployment insurance scheme in accordance with the labour regulations and the working period for which the employee has received severance allowance from the Corporation and its subsidiary. The severance allowance is accrued at the end of the reporting period on the basis that each employee is entitled to half of an average monthly salary for each working year. The average monthly salary used for calculating the severance allowance is the employee contract's average salary for the six-month period prior to the balance sheet date. This allowance will be paid as a lump sum when the employees terminate their labour contracts in accordance with current regulations. The Corporation and its susidiary do not recognise the provision for severance allowances as the Corporation and its subsidiary apply Circular No. 180/2012/TT-BTC of the Ministry of Finance dated 24 October 2012.
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ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
2.21 Technical reserves
Technical reserves are provided in accordance with the assumptions and methodologies, which are determined by the Corporation’s appointed actuary, registered with and approved by the Ministry of Finance (“MoF”) and other regulations and guidances in:
• Circular No. 50/2017/TT-BTC dated 15 May 2017 issued by the Ministry of Finance (to replace Circular No.125/2012/ TT-BTC);
• Official letter No. 2713/BTC-QLBH dated 12 March 2018 issued by the Ministry of Finance. and effective from the financial year ending 31 December 2017;
• Official letter No. 2134/BTC-QLBH dated 22 February 2019 issued by the Ministry of Finance and effective from the financial year ended 31 December 2019;
• Circular No. 01/2019/TT-BTC issued by the Ministry of Finance on 2 January 2019 (amending Circular 50/2017/ TT-BTC); and
• Circular No. 89/2020/TT-BTC issued by the Ministry of Finance on 11 November 2020 (amending Circular 50/2017/ TT-BTC).
The Corporation’s technical reserves include: (a)
Unearned premium reserves
Non-life reinsurance Provision for unearned premium reserves for inward and outward reinsurance is calculated on the total inward/outward reinsurance premium as follows: Term of reinsurance contract
Type of contract
1 year or less
Over 1 year
Cargo insurance (road, sea, inland waterways, rail and air)
25%
55%
Others
50%
55%
Life reinsurance
• For reinsurance contract with a term of 1 year or less, the Corporation applies a prorated method equal to 50% of the total premium in the fiscal year for each life reinsurance contract.
• For reinsurance contract with a term of more than 1 year with the payment term under 1 year, renewed annually and signed before the effective date of Circular 50/2017/TT-BTC, the Corporation applied the calculation method at the rate of 50% of the total premium in the fiscal year for each life reinsurance contract.
• For reinsurance contract with a term of more than 1 year and signed after the effective date of Circular 50/2017/ TT-BTC, the Corporation sets up the mathematical reserves in accordance with the applicable regulations.
(b)
Claim reserves
• Claims reserves for the losses which were notified but not yet settled at the end of the fiscal year are provided for
each insurance case based on the estimated claim payable which has been notified or submitted but has not been settled at the year end.
• Claims reseves for the losses incurred but not yet reported or not yet fully reported (“IBNR”) are provided for at 5% of aggregated inward/outward reinsurance premium for each insurance line in the year.
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Notes to the consolidated financial statements (Continued) for the year ended 31 december 2020
2
Form B 09 - DNPNT/HN
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.21 Technical reserves (Continued)
(c)
Catastrophe reserves This reserve is made at a rate of 1% of the retained premium for each insurance line until it reaches 100% of the premium retained in the year.
(d)
Equalisation reserves Equalisation reserves are made for each type of reinsurance as follow:
• Health-care reinsurance: The Corporation makes equalisation reserves annually at the rate of 1% of the retained premium for all transactions until it reaches 100% of retained premium of the Corporation in the year.
• Life reinsurance: The Corporation makes equalisation reserves annually at the rate of 1% of the profit before tax of the Corporation until it reaches 5% of the life inward premium received in the year. On 28 December 2005, the Ministry of Finance issued Decision 100/2005/QD-BTC governing the publication of four new accounting standards, one of which is Vietnamese Accounting Standard (“VAS”) 19 – Insurance Contracts. Following the issuance of this Standard, provision for catastrophe reserves is no longer required since it represents “possible claims under contracts that are not in existence at the reporting date”. However, since the Ministry of Finance has not issued detailed guidance for the implementation of VAS 19 and in accordance with the provision set out in Decree 73/2016/ND-CP issued by the Government of Vietnam on 1 July 2016 (“Decree 73”) regarding financial regulations for insurance companies, the Corporation continues providing annually for catastrophe reserves with the applicable rate mentioned above. (e)
Mathematical reserves For health reinsurance contract with contract term of more than 1 years, the mathematical reserve is made as follows:
• For health reinsurance contract (except health reinsurance contract that cover only death, permanent total disability): - For reinsurance contract with contract term of more than 1 year: Apply the calculation method using the coefficient 1/8; - For reinsurance contract with a term of more than 1 year with the payment term under 1 year, renewed annually: Apply the calculation method at the rate of 50% of the total premium of the fiscal year. In all cases, the Corporation must ensure that the result of the calculation is not lower than the 1/8 coefficient.
• For health reinsurance contracts that cover only death, permanent total disability, the Corporation applies the method of daily premium provision according to the general formula as follows:
Unearned premiums reserves =
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ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Insurance premium x Number of unexpired days of insurance policy or reinsurance agreement Total days of insurance policy or reinsurance agreement
2.22 Deferred commission income
Deferred commission income is determined by the Corporation at the balance sheet date using the prorated method corresponding with unearned premiums reserves (Note 2.21(a)) as follows: Term of reinsurance contract
Type of contract
1 year or less
Over 1 year
Cargo insurance (road, sea, inland waterways, rail and air)
25%
55%
Others
50%
55%
2.23 Swap contract
Swap contract is agreement to settle in cash at a future date based on predetermined foreign exchange rate. As at inception date of agreement, the Corporation pays an original amount denominated in foreign currency to the counterparty and records this amount in account receivables. Simultaneously, the Corporation records an amount denominated in VND received from the counterparty in account payables. Gain/loss from swap contract is recognised in the consolidated income statement over the terms of the agreement. 2.24 Capital and reserves
Owners’ capital is recorded according to the actual amounts contributed. Undistributed earnings record the Corporation and its subsidiary’s results (profit or loss) after business income tax at the reporting date. 2.25 Appropriation of profit
Profit after business income tax can be distributed to shareholders upon approval at General Meeting of Shareholders, and after appropriation to other funds in accordance with the Corporation and its subsidiary’s charter and Vietnamese regulations. The Corporation’s and its subsidiary’s funds are as below: (a) Compulsory reserve fund In accordance with Article 77 of the Decree No.73/2016/ND-CP dated 1 July 2016, the Corporation is required to make an annual appropriation to the compulsory reserve fund at 5% of after-tax profit until the fund reaches 10% of the charter capital. (b)
Investment and development fund The investment and development fund is appropriated from profit after business income tax of the Corporation and approved by shareholders in the General Meeting of Shareholders. The fund is used to expand the scale of business or in-depth investment of the Corporation. Based on Resolution No. 07/NQ-DHDCD/2006 dated 28 April 2006 and No.08/NQ-DHDCD/2008 dated 28 April 2008, the investment and development fund is appropriated at the rate of 2% of annual profit after tax and approved by shareholders at the Annual General Meeting of Shareholders.
(c)
Bonus and welfare fund The bonus and welfare fund is appropriated from the Corporation's profit after business income tax and subject to shareholders approval at the General Meeting of Shareholders. This fund is presented as a liability on the consolidated balance sheet.
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Notes to the consolidated financial statements (Continued) for the year ended 31 december 2020
2
Form B 09 - DNPNT/HN
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.26 Revenue recognition
(a)
Inward reinsurance premium Reinsurance premiums are recognised as revenue at the point of time when all of the following two (2) conditions are met:
• The insurance contract has been entered into by the Corporation and the insurers; and • Statement of accounts of reinsurance transactions is confirmed between the Corporation and the insurers. This recognition is in line with Circular 50/2017/TT-BTC for reinsurance enterprises. For excess of loss reinsurance contract, the Corporation recognises reinstatement premium. This is the amount the insurers have to pay to restore the coverage up to the contract’s original limit. The basis for recognition of reinstatement premium is the confirmed statement of accounts between the Corporation and the insurers for the losses which have been compensated for. At the year end of the fiscal year, the Corporation accrues reinstatement premium for losses that have occurred but have not been compensated for. (b)
Commission income Commission income represents commissions received or receivable from reinsurers. They are calculated on the basis of gross premiums ceded and are recorded in the same quarterly reporting period that the original insurance premium or corresponding reinsurance premium is recognised.
(c)
Interest income Interest income is recognised on an accruals basis.
(d)
Dividends income Income from dividends is recognised when the Corporation and its subsidiary have established the receiving right from investees.
2.27 Outward reinsurance premium ceded
Outward reinsurance premium is recorded in the consolidated income statement as a reduction in gross premiums written. Outward reinsurance premiums ceded is recognised at the point of time when all of the following two (2) conditions are met:
• The insurance contract has been entered into by the Corporation and the re-insurers; and • Statement of accounts of reinsurance transactions is confirmed between the Corporation and the re-insurers. Outward reinsurance does not relieve the Corporation of its liabilities to its insured customers in the event that any reinsurer is unable to meet its obligations under reinsurance agreements. For excess of loss reinsurance contract, the Corporation recognises reinstatement premium payables. This is the amount the Corporation has to pay to restore the coverage up to the contract’s original limit. The basis for recognition of reinstatement premium is the confirmed statement of accounts between the Corporation and the re-insurers for the losses which have been compensated for. At the end of the fiscal year, the Corporation accrues reinstatement premium for losses that have occurred but have not been compensated for. 2.28 Commission expenses
Commission expenses represent fee payments to ceding insurance companies of the Corporation. They are calculated on the basis of gross inward reinsurance premium.
82
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
2.29 Claim expenses
Claim settlement expenses for inward reinsurance are recorded as incurred following the statement of accounts the insurers send to the Corporation and the acceptance by the Corporation. 2.30 Claims to be recovered from reinsurers
Claims incurred are recovered from reinsurers according to the terms in the respective reinsurance agreements. 2.31 Financial expenses
Financial expenses are expenses incurred in the period for financial activities including expenses or losses relating to financial investment activities; provision for diminution in value of investments in other entities; losses incurred on selling foreign currencies; losses from foreign exchange differences. 2.32 General administration expenses
General and administration expenses represent expenses that are incurred for administrative purposes. 2.33 Current and deferred income tax
Income tax include all Income tax which are based on taxable profits including profits generated from production and trading activities in other countries with which the Socialist Republic of Vietnam has not signed any double taxation agreement. Income tax expense comprises current tax expense and deferred tax expense. Current income tax is the amount of Income tax payable or recoverable in respect of the current year taxable profits at the current year tax rates. Current and deferred Income tax should be recognised as an income or an expense and included in the profit or loss of the period, except to the extent that the income tax arises from a transaction or event which is recognised, in the same or a different period, directly in equity. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of occurrence affects neither the accounting nor the taxable profit or loss. Deferred income tax is determined at the tax rates that are expected to apply to the financial year when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the consolidated balance sheet date. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. 2.34 Related parties
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Corporation, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Corporation and its subsidiary. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Corporation and its subsidiary that gives them significant influence over the Corporation and its subsidiary, key management personnel, including the Board of Directors, the Board of Supervision, the Board of Management of the Corporation and its subsidiary and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering its related party relationships, the Corporation and its subsidiary consider the substance of the relationships, not merely the legal form.
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Notes to the consolidated financial statements (Continued)
Form B 09 - DNPNT/HN
for the year ended 31 december 2020
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.35 Accounting estimates
The preparation of consolidated financial statements in conformity with Vietnamese Accounting Standards, the Vietnamese Corporate Accounting System and applicable regulations on preparation and presentation of financial statements of reinsurance companies established and are operating in compliance with the laws of Vietnam requires the Board of Management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the financial year. The areas involving significant estimates and assumptions in the consolidated financial statements are as follows:
• Provision for doubtful debts (Note 2.8, Note 6 and Note 7); • Deferred commissions (Note 2.16 and Note 9(a)); • Technical reserves (Note 2.21 and Note 18); • Unearned commission revenue (Note 2.22 and Note 15); and • Reinstatement premium receivable and reinstatement premium payables (Note 2.26(a), Note 2.27 and Note 16). Such estimates and assumptions are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Corporation and its subsidiary and that are believed to be reasonable under the circumstances. 3
CASH AND CASH EQUIVALENTS
Cash on hand Cash in bank
84
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
31/12/2020 VND
31/12/2019 VND
978,027,728
1,263,421,000
54,446,046,082
101,899,704,222
55,424,073,810
103,163,125,222
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Fair value VND
As at 31/12/2020
-
Fair value VND
131,544,679,778 (*)
2,053,240,931,318
(*)
106,740,931,318
10,000,000,000
1,936,500,000,000 1,936,500,000,000
Cost VND
173,907,022
Cost VND
As at 31/12/2020
-
-
-
-
Provision VND
(173,907,022)
Provision VND
Fair value VND
As at 31/12/2019
-
Fair value VND
2,795,615,165,741
137,315,165,741
110,000,000,000
(*)
134,246,231,902
(*)
2,548,300,000,000 2,548,300,000,000
Cost VND
173,907,022
Cost VND
As at 31/12/2019
(3,068,933,839)
(3,068,933,839)
-
-
Provision VND
(173,907,022)
Provision VND
(946,660,396) (3,259,068,682)
30,000,000,000
110,000,000,000
BVF
(780,163,418)
50,000,000,000
SSIAM
(1,532,244,868)
30,000,000,000
Management fee for enstrusment fund VND
VCBF
Historical cost VND
106,740,931,318
29,053,339,604
49,219,836,582
28,467,755,132
Net book value at 31/12/2020 VND
131,544,679,778
35,419,086,085
55,323,886,576
40,801,707,117
Net asset value as at 31/12/2020 VND
-
-
-
-
Provision VND
iii. Investments under enstrustment contracts with Vietcombank Fund Management (“VCBF”), SSI Asset Management Limited Company (“SSIAM”), Bao Viet Fund Management Company (“BVF”) with the pre-determined remaining maturities within 12 months from 31 December 2020. The Corporation bears all risks related to the entrusted investments. Details are as follows:
ii. Bonds issued by the Ho Chi Minh City People’s Committee with remaining maturities within 12 months from 31 December 2020 and coupon rate of 8.3% per annum. The Corporation has not determined the fair value of these investments to disclose on the financial statements because they do not have quoted prices and Vietnamese Accounting Standards does not provide detailed guidance on the methods to determine fair value. The fair value of such investments may be different from their carrying value.
i. Deposits at local commercial banks with original terms of more than 3 months and remaining maturities within 12 months from 31 December 2020, interest rates ranging from 4.9% to 8% per annum.
Enstrusted investments (iii)
Short-term bonds (ii)
Short-term deposits (i)
(b) Short-term investments
Shares of Thang Long Telecommunications Joint Stock Company
(a) Trading securities
4 INVESTMENTS
86
(*)
654,999,597,871
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
274,951,845,713
297,645,573,026
36,609,701,752
258,842,891,150
31/12/2019 VND
(*)
(*)
(*)
Provision VND
Closing balance
38,838,017,475
274,951,845,713
31/12/2020 VND
678,107,721,759
403,155,876,046
274,951,845,713
Fair value VND
(20,500,747,189)
Cost VND
(16,144,290,162)
-
-
-
Provision VND
As at 31/12/2019
Dividends received
Profit sharing from associates
Opening balance
Movements in investments in associates during the year were as follows:
(*)
357,354,024,845
(*)
Fair value VND
Investments in other entities
Cost VND
As at 31/12/2020
297,645,573,026
Investments in other entities
(c)
Investments in associates
INVESTMENTS (Continued)
4
Notes to the consolidated financial statements (Continued)
for the year ended 31 december 2020
Form B 09 - DNPNT/HN
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87
Fair value VND
406,400,750,254
(*)
(*)
108,305,932,560
(*)
133,000,000,000
Fair value VND
(94,817,694)
-
(94,817,694)
-
-
Provision VND
-
-
-
-
-
-
-
-
Provision VND
Bonds of local commercial banks in Vietnam with remaining maturities of 1 to 5 years from 31 December 2020 and interest rates ranging from 6.9% to 8.5% per annum.
-
5,000,000,000
108,400,750,254
160,000,000,000
133,000,000,000
Cost VND
As at 31/12/2019
(*)
809,046,225,000
(*)
100,800,000,000
(*)
(*)
69,346,368,000
156,000
Fair value VND
ii.
(*)
1,345,881,950,523
-
-
-
-
Provision VND
403,155,876,046
275,000,000,000
30,000,000,000
32,000,000,000
17,600,000,000
10,139,800,000
38,416,000,000
76,046
Cost VND
Deposits at local commercial banks with remaining maturities of more than 12 months from 31 December 2020 and interest rates ranging from 4.9% to 7.1% per annum.
(*)
102,209,875,777
(*)
5,000,000,000
78,781,950,523
239,100,000,000
1,023,000,000,000 1,023,000,000,000
Cost VND
As at 31/12/2020
-
357,354,024,845
(*)
-
-
-
-
-
-
-
Provision VND
229,198,148,799 1,048,901,133,600
(*)
133,760,000,000
(*)
(*)
78,236,928,000
173,200
Fair value VND
As at 31/12/2019
i.
Other investments to Bao Viet Prospect Equity Fund
Enstrusted investments (iii)
Long-term bonds (ii)
Long-term deposits (i)
(d) Held-to-maturity investments
Tien Phong Commercial Joint Stock Bank
30,000,000,000
Hung Vuong Insurance Joint Stock Company
17,600,000,000
Global Insurance Joint Stock Company
32,000,000,000
10,139,800,000
Sai Gon – Ha Long Hotel
Agriculture Bank Insurance Joint Stock Company
38,416,000,000
76,046
Post and Telecommunication Joint Stock Insurance Corporation
Petrolimex Joint Stock Insurance Corporation
Cost VND
As at 31/12/2020
Investments in other entities include investments in other companies over which the Corporation and its subsidiary do not have the right to control or have significant influence. Details of investments are as follows:
88
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Other investments to Bao Viet Prospect Equity Fund
Enstrusted investments (iii)
Long-term bonds (ii)
Provision VND
-
Fair value VND
(*) (*)
1,345,881,950,523
102,209,875,777
(*)
5,000,000,000
78,781,950,523
239,100,000,000
1,023,000,000,000 1,023,000,000,000
Cost VND
As at 31/12/2020
(*)
-
-
-
-
-
406,400,750,254
5,000,000,000
108,400,750,254
160,000,000,000
133,000,000,000
Cost VND
(*)
(*)
108,305,932,560
(*)
133,000,000,000
Fair value VND
(*)
809,046,225,000
(*)
100,800,000,000
(*)
(*)
69,346,368,000
156,000
Fair value VND
As at 31/12/2019
403,155,876,046
275,000,000,000
30,000,000,000
32,000,000,000
17,600,000,000
10,139,800,000
38,416,000,000
76,046
Cost VND
As at 31/12/2019
(94,817,694)
-
(94,817,694)
-
-
Provision VND
-
-
-
-
-
-
-
-
Provision VND
for the year ended 31 december 2020
Long-term deposits (i)
(d) Held-to-maturity investments
(*)
-
-
30,000,000,000
Hung Vuong Insurance Joint Stock Company
133,760,000,000
-
357,354,024,845
32,000,000,000
Agriculture Bank Insurance Joint Stock Company
(*)
-
-
-
Provision VND
-
17,600,000,000
Global Insurance Joint Stock Company
(*)
78,236,928,000
173,200
Fair value VND
229,198,148,799 1,048,901,133,600
10,139,800,000
Global Insurance Joint Stock Company
Tien Phong Commercial Joint Stock Bank
38,416,000,000
76,046
Post and Telecommunication Joint Stock Insurance Corporation
Petrolimex Joint Stock Insurance Corporation
Cost VND
As at 31/12/2020
Investments under enstrustment contracts with Vietcombank Fund Management (“VCBF”), with the pre-determined remaining maturities of more than 12 months from 31 December 2020. The Corporation bears all risks related to the entrusted investments. Details are as follows:
Held-to-maturity investments (Continued)
(d)
iii.
INVESTMENTS (Continued)
4
Notes to the consolidated financial statements (Continued) Form B 09 - DNPNT/HN
i.
Deposits at local commercial banks with remaining maturities of more than 12 months from 31 December 2020 and interest rates ranging from 4.9% to 7.1% per annum.
ii.
Bonds of local commercial banks in Vietnam with remaining maturities of 1 to 5 years from 31 December 2020 and interest rates ranging from 6.9% to 8.5% per annum.
iii.
Investments under enstrustment contracts with Vietcombank Fund Management (“VCBF”), with the predetermined remaining maturities of more than 12 months from 31 December 2020. The Corporation bears all risks related to the entrusted investments. Details are as follows:
VCBF
Cost VND
Management fee for enstrusment fund VND
Net book value at 31/12/2020 VND
Net asset value as at 31/12/2020 VND
Provision VND
80,000,000,000
(1,218,049,477)
78,781,950,523
102,209,875,777
-
As at 31 December 2020 and 31 December 2019, the Company has not determined the fair value of these investments to disclose on the consolidated financial statements because they do not have quoted prices and Vietnamese Accounting Standards do not provide detailed guidance on the methods to determine fair value. The fair value of such investments may be different from their carrying value. 5
TRADE ACCOUNTS RECEIVABLE 31/12/2020 VND
31/12/2019 VND
Receivable from insurance contracts
563,619,791,897
608,720,497,533
- Receivable from inward reinsurance - Receivable from outward reinsurance - Reinstatement premium receivable - Other receivables from reinsurance activities Other trade receivables - Receivable from currency swap contracts - Other receivables
294,365,347,246 245,467,645,205 19,240,694,610 4,546,104,836 414,854,999 414,854,999 564,034,646,896
308,835,473,393 280,656,327,862 15,092,609,931 4,136,086,347 204,777,920,920 203,368,000,000 1,409,920,920 813,498,418,453
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Notes to the consolidated financial statements (Continued)
Form B 09 - DNPNT/HN
for the year ended 31 december 2020
6
PROVISION FOR DOUBTFUL DEBTS As at 31/12/2020 Overdue trade accounts receivable VND
Trade accounts payable VND
Short-term trade accounts receivable 1) Vass Assurance Corporation
6,338,175,073
(364,391,214)
2) Willis (Singapore) Pte Ltd
9,032,237,681
(2,010,899,783)
3) Xuan Thanh Insurance Joint Stock Corporation
9,156,880,622
(6,311,616,731)
4) PVI Insurance Corporation
1,690,331,228
(661,095,787)
11,044,918,540
(6,614,703,756)
37,262,543,144
(15,962,707,271)
10,077,541,667
-
3,745,742,517
-
13,823,284,184
-
5) Othes Other short-term receivables 1) Contrexim Complex Project 2) Hanoi Paragon Project Total short-term provision for doubtful debts
As at 31/12/2019 Overdue trade accounts receivable VND
Trade accounts payable VND
9,352,140,770
(3,775,663,913)
10,069,238,049
(4,829,229,413)
3) Munich Re Syndicate Singapore Pte Ltd
3,750,498,489
(3,180,747,779)
4) J.B.Boda & Co Ltd
2,981,179,049
(158,422,520)
5) Othes
8,059,595,983
(4,129,562,399)
34,212,652,340
(16,073,626,024)
10,077,541,667
-
3,745,742,517
-
13,823,284,184
-
Short-term trade accounts receivable 1) Vass Assurance Corporation 2) Willis (Singapore) Pte Ltd
Other short-term receivables 1) Contrexim Complex Project 2) Hanoi Paragon Project Total short-term provision for doubtful debts
90
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
As at 31/12/2020 Net overdue trade accounts receivable VND
Provision VND
Recoverable amount VND
Number of overdue days
5,973,783,859
(5,142,121,071)
831,662,788
Above 6 months
7,021,337,898
(6,758,122,294)
263,215,604
Above 2 years
2,845,263,891
(1,082,919,165)
1,762,344,726
Above 6 months
1,029,235,441
(1,019,142,310)
10,093,131
Above 1 year
4,430,214,783
(3,251,754,311)
1,178,459,472
Above 6 months
21,299,835,872
(17,254,059,151)
4,045,775,721
-
(10,077,541,667)
-
Above 3 years
-
(2,622,019,762)
1,123,722,755
From 2 - 3 years
-
(12,699,561,429)
1,123,722,755
(29,953,620,580)
As at 31/12/2019 Net overdue trade accounts receivable VND
Provision VND
Recoverable amount VND
Number of overdue days
5,576,476,857
(4,885,481,091)
690,995,766
Above 6 months
5,240,008,636
(4,686,142,842)
553,865,794
Above 1 years
569,750,710
(241,240,222)
328,510,488
Above 6 months
2,822,756,529
(2,050,743,674)
772,012,855
Above 6 months
3,930,033,584
(3,046,686,908)
883,346,676
Above 6 months
18,139,026,316
(14,910,294,737)
3,228,731,579
-
(10,077,541,667)
-
Above 3 years
-
(1,677,025,291)
2,068,717,226
From 2-3 years
-
(11,754,566,958)
2,068,717,226
(26,664,861,695)
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Notes to the consolidated financial statements (Continued) for the year ended 31 december 2020
7
Form B 09 - DNPNT/HN
OTHER RECEIVABLES
(a) Short-term 31/12/2020 VND
31/12/2019 VND
75,219,600,002
98,070,375,343
1,771,630,137
3,311,260,274
Premium withheld by insurance companies
20,366,418,458
15,002,723,514
Investment cooperation contract deposit related to Tincom plaza project (i)
53,513,866,700
60,149,250,000
Principal receivable from the investment to Contrexim Complex project (ii)
7,500,000,000
7,500,000,000
Interest receivables from the investment to Contrexim Complex project (ii)
2,577,541,667
2,577,541,667
Receivable from the investment to Hanoi Paragon project (iii)
3,745,742,517
3,745,742,517
Accrued short-term deposit interest income Accrued short-term bond interest income
Others
1,400,672,471
1,554,649,270
166,095,471,952
191,911,542,585
(10,077,541,667)
(10,077,541,667)
(2,622,019,762)
(1,677,025,291)
(12,699,561,429)
(11,754,566,958)
153,395,910,523
180,156,975,627
Provision for doubtful debts – short-term - Contrexim Complex project (ii) - Hanoi Paragon project (iii)
(i)
Tincom Plaza Project The amount represents the investments made by the Corporation and the subsidiary under the Business Co-operation Contract No. 02/2010/HDDC-Tincom Plaza dated 1 July 2010 between the subsidiary and Thang Long Investment and Trade Group Joint Stock Company ("Thang Long Company”/“the Investor"), to construct Tincom Plaza Project (now Skyview Plaza Project), (“the Project”) at No. 360 Giai Phong Street. The total invested amount by the subsidiary in the Project was VND 60,149,250,000 in which VND 7,134,674,895 was contributed by the Corporation and VND 53,014,575,105 was contributed by other investors. However, the construction of the Project has been delayed by the Investor for a long period of time and the construction of HH3 building has been temporarily stopped since 2019 when it has been built up to the 14th floor, due to the Investor’s financial difficulties. In 2018, the Board of Management of the Corporation and the subsidiary had decided not to continue with the investments as per the Decsion No. 02/2018/QD-HDQT dated 22 June 2018 and filed a lawsuit against the Investor. In accordance with Decision No. 14/2019/QDST-KDTM dated 15 November 2019 by the Thanh Xuan District Court (“Decision No. 14”), Thang Long Company has to repay the subsidiary a total amount of VND 126,376,061,750 (comprising of VND 60,149,250,000 of principal and VND 66,226,811,750 of interest up to 31 October 2019) to the subsidiary either in cash or by handing over apartments of the Project to the subsidiary. On 31 August 2020, Thang Long Company and the subsidiary signed an agreement according to which Thang Long Company would hand over 65 apartments (7 completed apartments in HH2 building and 58 unbuilt apartments in HH3 building) with the value equal to those stated in the purchase contract of the off-the-plan apartment of the 65 apartments equivalent to VND 117,880,956,550. On 31 December 2020, Thang Long Company and the Subsidiary signed a Minute of balance reconciliation and confirmation to top up the interest for the period from August 2020 to 31 December 2020. The total amount of the principal and interest up to 31 December 2020 that Thang Long Company has to pay in cash or by handing over apartments from HH2 and HH3 buildings of the Project to the subsidairy, is at VND 132,633,052,958 (comprising of VND 60,149,250,000 of principal and VND 72,483,802,958 of interest).
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ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Accordingly, the subsidairy and Thang Long Company has signed 65 apartment purchase contracts dated 10 January 2020 for apartments in HH2 building and dated 31 August 2020 for apartments in HH3 building. These apartment purchase contracts do not establish the ownership of the subsidiary to the apartments until the subsidiary continue paying in full the apartment selling price and other related payments as specifed in the contracts. In specific, the subsidiary will need to pay an additional 30% of the value of the apartments, equivalent to 42,939,960,000 VND for the apartments of the HH3 building and 5% of the value of the apartments, equivalent to VND 581,701,750 for the apartments in the HH2 building. In accordance with the apartment purchase agreement between the subsidairy and Thang Long Company and document No. 85/2020/CV-TL responded by Thang Long Company dated 21 December 2020, the construction of HH3 building is expected to be resumed in March 2021 and to be completed in March 2022. However, up to the date of the financial statements, the construction of HH3 building has not been resumed. Up to 31 December 2020, 3 apartments in the HH2 building were handed over and sold. The remaining 62 apartments have not been handed over to the subsidairy hence the investments are reflected as receivables at VND 53,513,866,700 after deduction the sale of 3 apartments in HH2 building. The recoverable amount of the receivable principal is determined by the Board of Management by offsetting with the fair value of the apartments which will be handed over by the Investor to the subsidiary when the construction is completed and on the basis that the Corporation and the subsidiary continue to pay 30% of the value of the apartments, equivalent to VND 42,939,960,000 for apartments in HH3 buliding and 5% of the value of the apartments, equivalent to VND 581,701,750 for apartments in HH2 building to be eligble for apartment handover. According to the Valuation Certificate No. 200517/CT-VNVC dated 29 December 2020 of Vietnam Valuation and Consulting Joint Stock Company, the appraised value of these 62 apartments was at VND 145,913,479,333 (including VAT) without considering the potential handover delay factor. Based on this result, the Board of Management has made further assessment to take into account the possibility of a reduction of apartments’ selling price due to delay in the handover and to apply discounting factors to determine the fair value of those apartments as at 31 December 2020. Based on the Board of Management’s assessment, the recoverable amount of those apartments as at 31 December 2020 is at VND 56,365,507,491, which is higher than the curent book value of the investment principal of VND 53,513,866,700. Accordingly, no provision is required for the principal receivable amount The Board of Management has also assessed that the recoverability of VND 72,483,802,958 related to interest is uncertain hence reflected the receivable interest as contingent assets (Note 40 - Contingent assets) in the consolidated financial statements. The principal receivable amount is expected to be realised when the apartments are handed over to and sold by the Corporation and the subsidiary in accordance with Law on Housing.
(ii) Contrexim Complex project In accordance with Contract No. 0911210/HDKT dated 10 December 2009 between the subsidiary and Viet San Investment Joint Stock Company (“Viet San Company”) on the investment in the Contrexim Complex project, the subsidiary is entitled to product sharing from the project. During the period from 1 December 2010 to 10 December 2010, if the subsidiary does not have intention to receive the product sharing corresponding to the amount of the contributed investment, the subsidiary has the right to sell the apartments to Viet San Investment Joint Stock Company. As of 4 November 2010, the subsidiary issued Official Letter No. 38/2010/HTDT announcing the termination of the investment, transferring of product purchasing rights to Viet San Company. The subsidiary has initiated a lawsuit against The Vietnam Bank for Agricuture and Rural Development and Viet San Company for the receivable amount from Viet San Company. As at 31 December 2020, the subsidiary has not yet collected this investment including both principal and interest of VND 10,077,541,667. The Board of Management assessed this receivable balance is a doubtful debt and the subsidiary has made a provision for 100% value of this receivable balance.
(iii)
Hanoi Paragon Project This is the principal balance which VT Construction and Trade Joint Stock Company has to pay to the subsidiary after offsetting the payables by transferring apartments at Hanoi Paragon project – Dich Vong Hau Urban Area. The subsidiary has provided provision for this receivable balance based on the aging (Note 7 and Note 8).
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Notes to the consolidated financial statements (Continued) for the year ended 31 december 2020
7
Form B 09 - DNPNT/HN
OTHER RECEIVABLES (Continued)
(b) Long-term
Accrued interest income from investments Land lot in Tincom Plaza Project (*)
31/12/2020 VND
31/12/2019 VND
14,303,139,726
1,304,767,125
7,858,333,333
7,858,333,333
22,161,473,059
9,163,100,458
(*) This represents the cooperation and product sharing of the Tincom Plaza Project with Thang Long Company at No. 360 Giai Phong Street. The subsidiary would receive a land lot with with a five-floor house. As at 31 December 2020, the legal procedures to ensure the conditions for handover of this land lot have not been completed due to change of plan by the Investor. In accordance with the Valuation Certificate No. 200517/CT-VNVC dated 29 December 2020 issued by Vietnam Appraisal and Consulting Joint Stock Company, the appraised value of this property was VND 10,740,037,212. According to the assessment report of on- going real estate project of the Board of Management of the subsidiary dated 31 December 2020, the Board of Management has assessed that the amount that could be collected from the sale of the apartments that Thang Long Company agreed to hand over is higher than the carrying amount of the remaining receivable. Therefore, no provision is provided for this receivable in the consolidated financial statements as at 31 December 2020. 8 INVENTORIES Inventories mainly represent the value of 10 apartments handed over from VT Construction and Trade Joint Stock Company to offset its liabilities to the subsidiary, in which: - 9 apartments recorded in historical costs of VND 36,895,972,638 are owned by the subsidiary at Hanoi Paragon Project – Dich Vong Hau Urban Area, Cau Giay District, Hanoi. The Corporation and the subsidairy assessed the provision for decline in value of inventories based on the assessment report of Valuation Committee and the two valuation certificates:
• Valuation Certificate No. 070119/CT-TLVC-VNRI dated 7 January 2019 issued by Thang Long Investment and Valuation Joint Stock Company, the appraised value of the 9 apartments is VND 32,348,848,500; and
• Valuation Certificate No.200453/CT-VNVC dated 10 December 2020 issued Vietnam Appraisal and Consulting Joint Stock Company, the appraised value of the 9 apartments is VND 32,057,578,316. The Board of Management assessed that as at 31 December 2020, there was no significant differrence with the historical costs of the 9 apartments and the appraisal value, and therefore did not make additional provision for diminution in value of inventories for financial year ended 31 December 2020. - 1 apartment with value of VND 4,039,917,818 is owned by co-investors of Hanoi Paragon Project – Dich Vong Hau Urban Area, Cau Giay District, Hanoi City which the subsidairy has to pay to the co-investors. As at 31 December 2020, the Investor is finalising the legal procedures to ensure the handover conditions of this apartment. Therefore, in the consolidated financial statements, the Corporation still presents this apartment in the inventory balance and recognises a payable to the other co-investors as presented in Note 15(a).
94
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
The details of inventory value at historical cost are as follows: 31/12/2020
31/12/2019
Historical cost VND
Provision VND
Historical cost VND
Provision VND
Apartment No. B0303
4,065,155,091
(607,151,091)
4,065,155,091
(607,151,091)
Apartment No. B0601
4,046,033,727
(450,498,227)
4,046,033,727
(450,498,227)
Apartment No. B0603
4,065,155,091
(607,151,091)
4,065,155,091
(607,151,091)
Apartment No. B1101
4,261,046,455
(520,374,455)
4,261,046,455
(520,374,455)
Apartment No. B1103
4,281,202,364
(680,644,364)
4,281,202,364
(680,644,364)
Apartment No. B12A03
4,065,155,091
(607,151,091)
4,065,155,091
(607,151,091)
Apartment No. B2101
4,281,361,909
(527,482,909)
4,281,361,909
(527,482,909)
Apartment No. B2103
3,915,431,455
(302,039,455)
3,915,431,455
(302,039,455)
Apartment No. B2704
3,915,431,455
(244,631,455)
3,915,431,455
(244,631,455)
Apartment No. 12A04
4,039,917,818
-
4,039,917,818
-
Apartment No. B1804
-
-
4,075,584,182
-
Others Provision
9
PREPAID EXPENSES
(a)
Short-term
29,010,465
-
36,263,910
-
40,964,900,921
(4,547,124,138)
45,047,738,548
(4,547,124,138)
(4,547,124,138)
(4,547,124,138)
36,417,776,783
40,500,614,410
Deferred commission expenses (*)
31/12/2020 VND
31/12/2019 VND
580,190,581,169
406,888,443,007
-
6,476,221,951
580,190,581,169
413,364,664,958
Other short-term prepaid expenses
(*) Movements of deferred commission expense during the year were as follows: 31/12/2020 VND
31/12/2019 VND
406,888,443,007
244,016,133,558
Increase during the year
1,176,148,398,120
831,842,931,205
Allocation during the year
(1,002,846,259,958)
(668,970,621,756)
580,190,581,169
406,888,443,007
31/12/2020 VND
31/12/2019 VND
Long-term entrusted investment expenses
4,477,118,159
1,599,249,746
Others long-term prepaid expenses
1,092,522,429
1,244,899,417
5,569,640,588
2,844,149,163
Beginning of year
End of year (b) Long-term
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Notes to the consolidated financial statements (Continued) for the year ended 31 december 2020
10
FIXED ASSETS
a)
Tangible fixed assets Buildings and structures VND
Motor vehicle Office equipment VND VND
Form B 09 - DNPNT/HN
Others VND
Total VND
Historical cost As at 1/1/2020
15,170,997,037
2,980,277,071
6,928,749,747
715,784,299
25,795,808,154
New purchases
3,183,532,000
53,680,000
775,487,500
172,390,000
4,185,089,500
18,354,529,037
3,033,957,071
7,704,237,247
888,174,299
29,980,897,654
As at 31/12/2020 Accumulated depreciation As at 1/1/2020 Charge for the year As at 31/12/2020
(11,138,661,580) (2,980,277,071) (6,642,102,112) (590,293,958)
(10,065,000)
(216,242,822)
(11,728,955,538) (2,990,342,071) (6,858,344,934)
(350,324,244) (21,111,365,007) (32,644,791)
(849,246,571)
(382,969,035) (21,960,611,578)
Net book value As at 1/1/2020
4,032,335,457
-
286,647,635
365,460,055
4,684,443,147
As at 31/12/2020
6,625,573,499
43,615,000
845,892,313
505,205,264
8,020,286,076
Historical cost of fully depreciated tangible fixed assets but still in use as at 31 December 2020 was VND 10,359,605,603 (as at 31 December 2019: VND 10,322,605,603). b) Intangible fixed assets Reinsurance technical software VND Historical cost As at 1/1/2020
32,434,195,934
As at 31/12/2020
32,434,195,934
Accumulated amortisation As at 1/1/2020
(32,434,195,934)
As at 31/12/2020
(32,434,195,934)
Net book value As at 1/1/2020
-
As at 31/12/2020
-
Historical cost of fully amortised intangible fixed assets but still in use as at 31 December 2020 was VND 32,434,195,934 (as at 31 December 2019: VND 32,434,195,934).
96
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
11
INVESTMENT PROPERTIES Investment properties for leasing VND Historical cost As at 1/1/2020
34,055,061,893
As at 31/12/2020
34,055,061,893
Accumulated depreciation As at 1/1/2020
(24,646,279,168)
Charge for the year
(1,377,352,567)
As at 31/12/2020
(26,023,631,735)
Net book value As at 1/1/2020
9,408,782,725
As at 31/12/2020
8,031,430,158
Investment properties represent the value of the Building No. 141 Le Duan corresponding to the area for lease. In accordance with Vietnamese Accounting Standard No. 05 - Investment properties, fair value of investment properties as at 31 December 2020 should be presented. However, the Corporation has not been able to determine the fair value for disclosure purpose in the note to the consolidated financial statements. 12
CONSTRUCTION IN PROGRESS
142 Dinh Cong Project (*)
31/12/2020 VND
31/12/2019 VND
14,036,123,679
14,036,123,679
(*) The amount represents the investment for the construction of the residential, service and commercial building at No. 142 Dinh Cong Street between the Corporation, the subsidairy and Vietnam Railway Signal - Telecommunication Joint Stock Company in accordance with the Business Cooperation Contract No. 25/201/HDHTKD dated 25 July 2011 and the Investment Cooperation Agreement dated 28 October 2017. The project architecture plan has been approved by Hanoi People's Committee as proposed by the Department of Planning and Architecture in the Official Letter No.1369/ VP-DT of Hanoi People's Committee dated 23 February 2018. At the signing date of these consolidated financial statements, the Corporation and Vinare Invest are still in the process of implementing the necessary procedures to prepare for the project construction. 13
TRADE ACCOUNTS PAYABLE 31/12/2020 VND
31/12/2019 VND
Payables of insurance contracts
580,352,904,664
613,498,599,822
- Payable for inward reinsurance activities
238,830,722,156
282,969,056,308
- Payable for outward reinsurance activities
340,584,747,561
329,397,190,803
937,434,947
1,132,352,711
1,163,305,361
212,498,108,102
-
209,573,955,000
1,163,305,361
2,924,153,102
581,516,210,025
825,996,707,924
- Other payables for reinsurance activities Other trade payables
- Other payables related to swap contracts - Other payales
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Notes to the consolidated financial statements (Continued)
Form B 09 - DNPNT/HN
for the year ended 31 december 2020
14
TAX AND OTHER RECEIVABLES FROM/PAYABLES TO THE STATE Movements in tax and other receivables from/payables to the State during the year were as follows: Receipt/ Receivables/ payable during payment/offset during the year the year VND VND
As at 1/1/2020 VND
As at 31/12/2020 VND
a) Tax and other receivables from the State Value added tax
5,500,365,571
671,846,253
(968,446,429)
5,203,765,395
948,696,473
(1,055,939,991)
51,667,659
b) b) Tax and other payables to the State Value added tax
158,911,177
Personal income tax
247,879,077
7,510,946,959
(7,427,170,967)
331,655,069
Business income tax
17,306,240,598
66,121,705,916
(67,641,470,965)
15,786,475,549
183,465,891
915,826,031
(1,049,052,295)
50,239,627
17,896,496,743
75,497,175,379
(77,173,634,218)
16,220,037,904
Other taxes
15 OTHER PAYABLES 31/12/2020 VND
31/12/2019 VND
a) Short-term
154,386,825,136
159,878,229,787
Deferred commission income (*)
102,957,752,564
111,386,015,883
Withheld premiums ceded
15,215,855,236
10,087,324,463
Payable to co-investors of Tincom Plaza Project (Note 7)
22,641,503,475
22,641,503,475
5,915,459,941
10,383,394,941
646,765,000
646,765,000
Payable to co-investors of Hanoi Paragon Project (Note 8) Payable to co-investors of 142 Dinh Cong Project (Note 12) Others
7,009,488,920
4,733,226,025
b) Long-term
1,503,228,380
2,796,537,555
Long-term deposits
1,503,228,380
2,796,537,555
155,890,053,516
162,674,767,342
(*) Movements of deferred commission income during the year were as follows: 31/12/2020 VND
31/12/2019 VND
Beginning of year
111,386,015,883
107,386,456,892
Increase during the year
208,502,556,869
226,441,658,614
Allocation during the year
(216,930,820,188)
(222,442,099,623)
End of year
102,957,752,564
111,386,015,883
16 PROVISION FOR SHORT-TERM LIABILITIES
Provision for reinstatement premium payable
98
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
31/12/2020 VND
31/12/2019 VND
21,468,757,438
12,909,096,840
17 BONUS AND WELFARE FUND
18
31/12/2020 VND
31/12/2019 VND
Beginning of year
18,970,301,148
19,210,767,385
Increase in year (Note 20)
10,978,640,823
8,410,048,643
Utilisation in year
(7,258,771,843)
(8,650,514,880)
End of year
22,690,170,128
18,970,301,148
31/12/2020 VND
31/12/2019 VND
Unearned inward reinsurance premium reserves
1,196,704,406,560
1,077,521,983,191
Inward reinsurance claim reserves
1,636,743,500,588
1,590,506,312,001
1,514,358,242,545
1,479,443,897,290
- Reserves for losses incurred but not yet reported (“IBNR”)
122,385,258,043
111,062,414,711
Catastrophe reserves
172,065,103,211
157,173,203,700
3,005,513,010,359
2,825,201,498,892
TECHNICAL RESERVES
In which: - Reserves for lossed incurred and reported (“OSLR”)
(a)
Claim reserves and unearned premium reserves Inward reinsurance claim reserves VND
Outward reinsurance claim reserves VND
Net inward reinsurance claim reserves VND
1,636,743,500,588
(992,398,866,592)
644,344,633,996
- Reserves for losses incurred and reported (“OSLR”)
1,514,358,242,545
(944,858,882,510)
569,499,360,035
- Reserves for losses incurred but not yet reported (“IBNR”)
122,385,258,043
(47,539,984,082)
74,845,273,961
1,196,704,406,560
(470,264,225,140)
726,440,181,420
2,833,447,907,148
(1,462,663,091,732)
1,370,784,815,416
Inward reinsurance claim reserves VND
Outward reinsurance claim reserves VND
Net inward reinsurance claim reserves VND
1,590,506,312,001
(1,002,695,003,205)
587,811,308,796
46,237,188,587
(10,296,136,613)
56,533,325,200
End of the year
1,636,743,500,588
(992,398,866,592)
644,344,633,996
Unearned premium reserves
Inward reinsurance claim reserves VND
Outward reinsurance claim reserves VND
Net inward reinsurance claim reserves VND
1,077,521,983,191
(508,147,652,582)
569,374,330,609
119,182,423,369
(37,883,427,442)
157,065,850,811
1,196,704,406,560
(470,264,225,140)
726,440,181,420
Inward reinsurance claim reserves
In which:
Unearned reinsurance premium reserves
Details of movement of reserves are as follows: Claim reserves Beginning of the year Increase/(decrease) in in the year
Beginning of the year Increase/(decrease) in the year (Note 22 and 23) End of the year
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Notes to the consolidated financial statements (Continued)
Form B 09 - DNPNT/HN
for the year ended 31 december 2020
18
TECHNICAL RESERVES (Continued)
(a)
Claim reserves and unearned premium reserve (continued)
Inward reinsurance claim reserves VND
Outward reinsurance claim reserves VND
Net inward reinsurance claim reserves VND
1,077,521,983,191
(508,147,652,582)
569,374,330,609
119,182,423,369
(37,883,427,442)
157,065,850,811
1,196,704,406,560
(470,264,225,140)
726,440,181,420
Unearned premium reserves Beginning of the year Increase/(decrease) in the year (Note 22 and 23) End of the year (b)
Catastrophe reserves 2020 VND
2019 VND
147,884,005,692
182,011,294,206
14,891,899,511
11,872,711,486
-
(46,000,000,000)
9,289,198,008
8,876,683,166
-
412,514,842
172,065,103,211
157,173,203,700
31/12/2020 Ordinary shares
31/12/2019 Ordinary shares
Number of shares registered
131,075,937
131,075,937
Number of shares issued
131,075,937
131,075,937
Number of outstanding shares
131,075,937
131,075,937
I. Main activities Beginning of the year Increase in the year Utilisation in the year II. Pilot agricultural insurance activities Beginning of the year Increase in the year End of the year 19
OWNERS’ CAPITAL
(a)
Number of shares
(b)
Details of owners’ shareholding 31/12/2020 Owners’ contributed capital
State Capital Investment Corporation(“SCIC”)
%
Ordinary shares
%
1,310,759,370,000
100.00
1,310,759,370,000
100.00
529,060,350,000
40.36
529,060,350,000
40.36
Swiss Re Group
327,689,890,000
25.00
327,689,890,000
25.00
Baoviet Holdings
120,268,200,000
9.18
120,268,200,000
9.18
Baoviet Value Investment Fund
104,956,000,000
8.01
104,956,000,000
8.01
Bao Minh Insurance Joint Stock Corporation
84,275,100,000
6.43
84,275,100,000
6.43
Other shareholders
144,509,830,000
11.02
144,509,830,000
11.02
Share premium
566,368,537,309
566,368,537,309
1,877,127,907,309
1,877,127,907,309
Total
100
31/12/2019
Ordinary shares
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
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101
20
-
Appropriation to Bonus and welfare fund (Note 17)
Dividends distribution
-
Dividends distribution (**) 566,368,537,309
-
-
-
566,368,537,309
-
-
-
-
566,368,537,309
Share premium VND
211,573,836,051
-
-
-
211,573,836,051
-
-
5,496,214,773
-
206,077,621,278
Investment and development fund VND
(8,410,048,643)
(5,496,214,773)
288,085,060,920
735,886,003,612
Undistributed earnings VND
(10,978,640,823)
312,244,294,056
852,773,676,716
131,075,937,000
891,887,455,949
- (262,151,874,000)
-
-
131,075,937,000
- (157,291,124,400)
-
-
-
131,075,937,000
Compulsory reserve fund VND
33,617,810,274
-
-
(1,172,504,195)
34,790,314,469
-
-
-
(1,461,703,968)
36,252,018,437
Non-controlling interests VND
3,145,282,946,583
(262,151,874,000)
(10,978,640,823)
311,071,789,861
3,107,341,671,545
(157,291,124,400)
(8,410,048,643)
-
286,623,356,952
2,986,419,487,636
Total VND
(**) In accordance with General Meeting of Shareholders’ Resolution No. 10/2020/NQ-DHDCD dated 11 June 2020, the General Meeting of Shareholders has decided to declare dividend in cash to the shareholders for the year 2019 at the rate of 20%, which is equivalent to VND 262,151,874,000.
The Corporation has temporarily appropriated an amount of VND 10,978,640,823 from the profit after tax for the year ended 31 December 2020 to the welfare and bonus fund; in which in accordance with General Meeting of Shareholders’ Resolution No. 10/2020/NQ-DHDCD dated 11 June 2020, the General Meeting of Shareholders has decided to distribute bonus of VND 2,000,000,000 to the Corporation’s employees on the occasion of the 25 years anniversary of the Corporation. The final decision for profit distribution of 2020 will be concluded in the Annual General Meeting of Shareholders in 2021.
(*) In accordance with General Meeting of Shareholders’ Resolution No. 06/2013/NQ-DHDCD dated 25 April 2013, the General Meeting of Shareholders has approved the amendments to profit appropriation policies, which according to the welfare fund appropriation is equal to 1 month of actual salary and the bonus fund appropriation is equal to maximum of 1.5% of profit after tax but not exceeding 2 months of actual salary.
1,310,759,370,000
-
Appropriation to Bonus and welfare fund (*) (Note 17)
As at 31/12/2020
-
Net profit for the year
1,310,759,370,000
-
Allocation to Investment and development fund
As at 1/1/2020
-
1,310,759,370,000
Owners’ capital VND
Net profit for the year
As at 1/1/2019
MOVEMENTS IN OWNERS’ EQUITY
Notes to the consolidated financial statements (Continued)
Form B 09 - DNPNT/HN
for the year ended 31 december 2020
21 BASIC EARNINGS PER SHARE Basic earning per share is calculated by dividing the net profit attributable to shareholders after deducting the bonus and welfare funds by the weighted average number of ordinary shares outstanding during the year, excluding ordinary shares repurchased by the Corporation and held as treasury shares:
Net profit attributable to shareholders (VND) Deducting bonus and welfare fund (VND) Profit for calculating basic earning per share Weighted average number of ordinary shares including potential shares (shares) Basic earning per share (VND) 22
312,244,294,056 (8,978,640,823) 303,265,653,233
288,085,060,920 (10,410,048,643) 277,675,012,277
131,075,937
131,075,937
2,314
2,118
2020 VND
2019 VND
2,474,291,508,984 835,201,664,655 695,839,542,148 249,420,568,501 244,940,290,411 125,983,968,432 13,675,726,722 7,264,476,623 5,630,879,254 3,870,086,921 3,123,922,775 1,268,044,333 288,072,338,209 (26,586,348,153)
2,248,571,400,872 516,060,945,993 684,731,513,368 215,445,154,866 274,409,814,106 151,560,450,126 29,241,881,568 8,850,149,541 4,184,020,607 25,781,441,919 3,237,532,041 2,557,541,100 332,510,955,637 (27,323,106,630)
(119,182,423,369)
(203,184,764,080)
2,328,522,737,462
2,018,063,530,162
2020 VND
2019 VND
958,330,948,151 418,070,061,172 111,414,050,053 163,913,715,448 25,259,554,088 6,688,381,632 2,717,556,600 3,428,025,266 2,935,880,433 2,861,960,663 221,041,762,796 (7,531,266,508)
1,033,527,384,272 431,697,311,268 88,844,901,742 187,194,664,506 32,638,709,393 8,023,955,855 3,316,496,900 3,038,812,614 23,761,441,801 2,283,080,581 252,728,009,612 (3,248,770,036)
(37,883,427,442)
4,654,299,963
988,683,109,085
1,025,624,314,273
OUTWARD REINSURANCE PREMIUM
Total outward reinsurance premium Fire and property insurance Engineering insurance Hull and P&I Insurance Cargo insurance Fishing boat insurance K-Care insurance Aviation insurance Agriculture insurance Energy insurance Miscellaneous insurance Deductions in outward reinsurance premium (Decrease)/increase in unearned outward reinsurance premium reserves (Note 18(a))
102
31/12/2019
REINSURANCE PREMIUM INCOME
Inward reinsurance premium Personal accident insurance Fire and property insurance Engineering insurance Hull and P&I Insurance Cargo insurance Fishing boat insurance K-Care insurance Aviation insurance Agriculture insurance Energy insurance Life insurance Miscellaneous insurance Deductions in inward reinsurance premium Increase in unearned inward reinsurance premium reserves (Note 18(a)) 23
31/12/2020
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
24
OTHER INCOME FROM INSURANCE ACTIVITIES 2020 VND
2019 VND
4,926,416,898
1,021,421,214
16,701,594,874
20,635,168,827
- Brokerage income
8,555,910,444
8,685,782,064
- Profit commission
4,845,230,260
11,629,746,813
- Other income
3,300,454,170
319,639,950
21,628,011,772
21,656,590,041
2020 VND
2019 VND
Claim settlement expenses
950,313,250,918
1,075,927,565,712
Personal accident insurance
25,607,737,106
37,522,668,897
Fire and property insurance
264,861,892,401
364,796,202,168
Engineering insurance
124,279,312,926
108,337,965,895
Hull and P&I Insurance
160,472,179,953
139,962,661,928
Cargo insurance
45,135,491,764
45,550,328,148
Fishing boat insurance
33,444,097,253
45,941,068,447
K-Care insurance
2,172,625,000
1,551,550,000
Aviation insurance
2,788,359,754
14,260,444,522
Agriculture insurance
25,818,521,144
45,833,604,016
Energy insurance
17,545,697,688
11,260,406,914
174,165,470
2,121,973,200
Miscellaneous insurance
248,013,170,459
258,788,691,577
Claim receipts from ceded policies
579,287,329,344
669,723,131,637
59,871,801,757
(74,250,457,020)
105,536,227
(146,364,312,427)
430,792,187,104
478,318,289,482
Other receipts from inward reinsurance activities Other receipts from outward reinsurance activities
In which:
25
TOTAL INSURANCE CLAIM SETTLEMENT EXPENSES
Life insurance
Increase/(decrease) in inward reinsurance claim reserves (*) Increase/(decrease) in outward reinsurance claim reserves (*)
(*) In addition to reflecting the increase and decrease of the claim reserve for outward reinsurance (Code 192) and claim reserves for inward reinsurance (Code 329.2), these codes also reflect the claim reserves for inward/outward reinsurance for losses which have been reported, recognised and settle of the Sirus and KRIC contracts for the property and engineering insurance activities.
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103
Notes to the consolidated financial statements (Continued)
Form B 09 - DNPNT/HN
for the year ended 31 december 2020
26
COMMISSION EXPENSES 2020 VND
2019 VND
Personal accident insurance
623,596,590,586
297,493,724,563
Fire and property insurance
163,454,416,990
140,608,624,907
Engineering insurance
69,875,621,371
61,664,593,341
Hull and P&I Insurance
30,035,009,205
32,851,456,632
Cargo insurance
36,915,703,205
39,501,611,078
Fishing boat insurance
6,038,367,235
16,565,268,150
K-Care insurance
2,214,757,578
1,961,707,151
706,350,710
479,409,457
1,001,880,903
2,532,459,048
189,618,810
200,769,625
37,778,420
42,104,680
68,780,164,945
75,068,893,124
1,002,846,259,958
668,970,621,756
2020 VND
2019 VND
26,738,533,882
28,141,693,338
11,523,022,450
18,110,996,133
- Bonus for no claims
9,085,850,901
8,630,113,315
- Others
6,129,660,531
1,400,583,890
Other payments for outward reinsurance activities
9,891,987,101
(1,413,973,547)
36,630,520,983
26,727,719,791
2020 VND
2019 VND
Interest income from term deposits
200,734,997,111
186,191,337,466
Profit from sales of investments
104,499,665,799
50,188,572,049
Dividends and profits (*)
11,502,230,400
15,925,824,800
Realised foreign exchange gains
22,453,169,773
39,239,042,579
Interest income from bonds
19,703,664,383
18,680,093,152
6,598,277,037
10,681,550,805
94,843,253
192,274,745
365,586,847,756
321,098,695,596
Aviation insurance Agriculture insurance Energy insurance Life insurance Miscellaneous insurance
27
OTHER EXPENSES FROM INSURANCE ACTIVITIES
Other payments for inward reinsurance activities
In which: - Brokerage fees
28
FINANCIAL INCOME
Interest income from investments in entrustment funds Interest income on demand deposits
104
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
(*) Details of dividends that the Corporation has received during the year were as follows: 2020 VND
2019 VND
Agriculture Bank Insurance Joint Stock Company
6,400,000,000
3,840,000,000
Post and Telecommunication Joint Stock Insurance Corporation
3,556,224,000
2,844,979,200
18,400
7,474,857,600
Global Insurance Joint Stock Company
880,000,000
1,100,000,000
Sai Gon – Ha Long Hotel
665,988,000
665,988,000
11,502,230,400
15,925,824,800
2020 VND
2019 VND
21,235,488,248
39,793,733,154
8,119,068,784
5,597,936,586
(2,630,970,980)
(6,070,080,902)
2,545,907,973
5,995,970,688
12,536,914,292
11,469,674,959
41,806,408,317
56,787,234,485
2020 VND
2019 VND
Staff and expert expenses
58,125,393,292
55,341,977,529
Outside service expenses
10,255,497,303
10,680,907,760
Guest and advertisement expenses
5,020,652,552
4,693,286,476
Tax and fee expenses
2,906,569,603
1,469,046,835
Additional/(reversal) of provision for doubtful debts
2,343,764,414
(14,837,487,151)
Depreciation and amortisation expenses
849,246,571
765,009,517
Office supplies expenses
589,952,456
524,549,686
4,566,653,403
7,025,131,523
84,657,729,594
66,065,341,829
Petrolimex Joint Stock Insurance Corporation
29
FINANCIAL EXPENSES
Foreign exchange losses Expenses of investments in entrustment funds Reversal of provision for impairment of investments Foreign currency swap expenses Other financial expenses
30
GENERAL AND ADMINISTRATION EXPENSES
Others
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105
Notes to the consolidated financial statements (Continued)
Form B 09 - DNPNT/HN
for the year ended 31 december 2020
31
COST OF OPERATION BY FACTOR 2020 VND
2019 VND
1,485,160,867,556
1,139,889,342,515
Staff expenses
58,125,393,292
55,744,897,183
Outside service expenses
10,255,497,303
10,680,907,760
2,343,764,414
(14,837,487,151)
849,246,571
765,009,517
13,083,828,014
13,712,014,520
1,569,818,597,150
1,205,954,684,344
Insurance activities expenses
Additional/(reversal) of provision for doubtful debts Depreciation and amortisation expenses Other cash expenses
32
PILOT AGRICULTURAL INSURANCE ACTIVITIES On 1 March 2011, the Prime Minister issued Decision No. 315/QD-TTg on the pilot provision of agricultural insurance during the 2011 - 2013 period with objectives to help agricultural producers actively remedy and recover from financial losses caused by natural disasters or epidemics, contributing to assuring social welfare in rural areas and promoting agricultural production. According to the Decision, the Corporation has responsibilities to undertake agricultural reinsurance under the guidance of the Ministry of Finance. On 17 August 2011, the Ministry of Finance issued Circular No. 121/2011/TT-BTC providing guidance on certain clauses of Decision No. 315/QD-TTg dated 1 March 2011 issued by the Prime Minister. Accordingly, the principle of the pilot implementation is that insurance enterprises and the Corporation shall provide pilot agricultural insurance for non-profit purposes. Insurance enterprises have responsibilities to account for revenue and costs incurred from the pilot agricultural insurance activities separately from other activities and any existing agricultural insurance activities that insurance enterprises are implementing. The retained insurance premium for the year, after deducting valid expenses, is supplemented to the catastrophe reserves. On 20 June 2012, the Ministry of Finance issued Circular No. 101/2012/TT-BTC stipulating a number of financial matters for insurance enterprises and reinsurance enterprises who provide pilot agricultural insurance under Decision No. 315/QD-TTg dated 1 March 2011 issued by the Prime Minister. Accordingly, insurance enterprises and reinsurance enterprises have responsibilities to separately record the annual losses on their pilot agricultural insurance activities. Insurance enterprises and reinsurance enterprises which incur for losses from pilot agricultural insurance activities for the financial year will account for the losses in their income statement. In case of losses incurred due to losses on pilot agricultural insurance activities, such losses will be carried forward to the following year as regulated by law. During the year, no pilot agricultural insurance activities were carried out (2019: profit on pilot agricultural insurance activities was VND 412,514,842 and was transferred to Catastrophe reserves). From 2012, the Corporation started undertaking inward reinsurance for pilot agricultural insurance activities. Accumulated loss as at 31 December 2013 of the pilot agricultural insurance activities is VND 42,015,277,691. According to Decision No. 315/QD-TTg, pilot agricultural insurance activities ended on 31 December 2013. The Corporation has been carrying out procedures to finalise these activities with the Ministry of Finance. The final results of the Corporation’s pilot provision of agricultural insurance will be subject to the Ministry of Finance’s approval.
106
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
33
OFFSHORE FISHING BOAT INSURANCE ACTIVITIES On 7 July 2014, the Government issued Decree No. 67/2014/ND-CP on some fisheries development policies, including regulations on insurance policy for the offshore fishing fleet ("fishing boat insurance"). The Corporation undertakes this type of insurance, along with the local insurance companies, for supporting market and implementing the policies as per the Government’s objectives. On 20 August 2014, the Ministry of Finance issued Circular No. 116/2014/TT-BTC providing guidance on a number of financial matters for insurance enterprises undertaking the insurance activities as stipulated in aforementioned Decree No. 67/2014/ND-CP. According to Circular No. 116/2014/TT-BTC, the business results of fishing boat insurance activities shall be included in the results of operations of the insurance enterprises. The insurance enterprises must separately monitor revenue, expenses and results of operations of this type of insurance. Gain from fishing boat insurance activities (if any) shall be transferred to the catastrophe reserves at the year end. In 2020 and 2019, the Corporation did not have any gains from fishing boat insurance activities.
34
BUSINESS INCOME TAX The tax on the Corporation’s accounting profit before tax differs from theoretical amount that would arise using the applicable tax rate of 20% as follows: 2020 VND
2019 VND
Net accounting profit before tax
377,193,495,777
344,188,227,237
Tax calculated at a rate of 20%
75,438,699,155
68,837,645,447
863,368,928
651,435,442
(10,682,192,491)
(12,692,878,896)
501,830,324
768,668,292
66,121,705,916
57,564,870,285
66,121,705,916
57,564,870,285
-
-
66,121,705,916
57,564,870,285
Effect of: Income not subject to tax Expenses not deductible for tax purposes Losses of subsidiary BIT charge (*) Charged to the consolidated income statement: BIT– current BIT– deferred BIT expense (*)
(*) The BIT charge for the year is based on estimated taxable income and is subject to review and possible adjustments by the tax authorities.
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107
Notes to the consolidated financial statements (Continued) for the year ended 31 december 2020
35
Form B 09 - DNPNT/HN
FINANCIAL RATIOS OF THE CORPORATION AND ITS SUBSIDIARY Unit
2020
2019
- Long-term assets/Total assets
%
29.85
16.44
- Short-term assets/Total assets
%
70.15
83.56
- Total liabilities/Total resources
%
54.91
55.57
- Owners’ equity/Total resources
%
45.09
44.43
2.1 Liquidity ratio
lần
1.82
1.80
2.2 Current ratio
lần
1.28
1.51
2.3 Quick ratio
lần
0.55
0.75
- Net profit before tax/Revenue
%
19.26
21.88
- Net profit after tax/Revenue
%
15.88
18.22
- Net profit before tax/Total assets
%
5.41
4.92
- Net profit after tax/Total assets
%
4.46
4.10
3.3 Net profit after tax/Owners’ equity
%
9.89
9.22
1. Asset and equity structure 1.1 Asset structure
1.2 Equity structure
2. Liquidity
3. Profitability 3.1 Profit margins
3.2 Return on assets
36
FINANCIAL RISK MANAGEMENT Capital risk management The Corporation and its subsidiary manage its capital to ensure that the Corporation and its subsidiary will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the equity and debt balance. The capital structure of the Corporation and its subsidiary only consists of equity attributable to shareholders (comprising contributed capital, reserves and retained earnings). Significant accounting policies Details of the significant accounting policies and methods adopted (including the criteria for recognition, basis of measurement and recognition of income and expenses) for each class of financial assets, financial liabilities and equity instruments are disclosed in Note 2.
108
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Categories of financial instruments Carrying value 31/12/2020 VND
31/12/2019 VND
55,424,073,810
103,163,125,222
730,130,118,848
1,005,409,961,038
Short-term investments
2,053,240,931,318
2,795,615,165,741
Long-term investments
1,345,881,950,523
406,400,750,254
Total
4,184,677,074,499
4,310,589,002,255
581,516,210,025
825,996,707,924
1,503,228,380
2,796,537,555
583,019,438,405
828,793,245,479
Financial assets Cash and cash equivalents Trade accounts receivable and other receivables
Financial liabilities Trade accounts payable Other long-term payables Total
The Corporation and its subsidiary have not assessed fair value of its financial assets and financial liabilities as at the balance sheet date since there is no comprehensive guidance under Circular No. 210/2009/TT-BTC issued by the Ministry of Finance on 6 November 2009 (“Circular 210”) and other relevant prevailing regulations to determine fair value of these financial assets and financial liabilities. While Circular 210 refers to the application of International Financial Reporting Standards (“IFRS”) on presentation and disclosures of financial instruments, it does not adopt the equivalent guidance for the recognition and measurement of financial instruments, including application of fair value, in accordance with IFRS. Financial risk management objectives The Corporation and its subsidiary have set up a risk management system to identify and assess the risks exposed by the Corporation and its subsidiary and designed control policies and risk management procedures to manage those risks at an acceptable level. The risk management system is reviewed on a regular basis to reflect changes in market conditions and the Corporation and its subsidiary’s operations. The Corporation and its subsidiary’s activities may be exposed to risks include reinsurance risk, market risk, credit risk and liquidity risk. In general, the Corporation and its subsidiary's risk management policies are intended to minimise the potential adverse effects of these risks on the Corporation and its subsidiary's business performance. (a)
Reinsurance risk Rủi ro hoạt động khai thác nhận tái bảo hiểm là các rủi ro từ danh mục rủi ro mà Tổng Công ty nhận tái bảo hiểm. The risks from reinsurance activities are risks arising from the portfolio that the Corporation reinsures. The level of risk depends on the quality of the underwriting processes:
• Assessing the reinsurance risk; • Pricing, assessing reinsurance ability; • Terms and conditions applied; and • Monitoring the concentration of risk and disaster risk.
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Notes to the consolidated financial statements (Continued) for the year ended 31 december 2020
36
FINANCIAL RISK MANAGEMENT (Continued)
(a)
Reinsurance risk (Continued)
Form B 09 - DNPNT/HN
The objective of the insurance risk management is to improve the quality of the risk portfolio insured by implementing the above processes sufficiently and appropriately. The risk arising from insurance activities may include:
• Assessment on reinsurance risk is conducted inadequately, together with inappropriate terms and conditions; • Pricing is not reasonable with the risk insured; • Retrocession policies are inappropriate; • Claims are not properly handled; • Reserves are made inadequately; • Receivables from retrocession activities are unable to be collected. Objectives, policies and processes of the insurance risk management The ultimate goal of the insurance risk management is to control insurance events that may affect the Corporation’s financial position, equity and business performance. The Corporation’s risk management policies are set up through establishing risk tolerances and detailing insurance/ reinsurance guidelines such as guideline on treaty insurance/reinsurance, facultative insurance/reinsurance, and guideline on claim handling. The Corporation sets up a system of insurance risk management at different levels from the department level to the entity level in order to assure the effectiveness of risk management activities. The Risk Management Board plays an important role in the risk management process to ensure collaboration and connection among operational departments, the Board of Management and the Board of Directors of the Corporation. The insurance risk management is supervised by the top managers through insurance and reinsurance guideline and insurance risk monitoring standards. The bottom-up reporting procedure is also established and performed on a weekly, monthly, and quarterly basis to ensure the effectiveness of the monitoring activities. Insurance risk management procedures are carried out systematically in order to identify, measure, control and handle risks to ensure that risk measurement criteria are kept within the allowed limits. The Corporation applies various methods to detect risks including risk assessment, risk discussion in internal meetings, or experience from experts. Depending on the circumstances and characteristics of the risks which need to be measured, different quantitative and qualitative measurement methods can be applied. The qualitative method includes risk assessment by underwriting experts for individual transaction or risk portfolios. The quantitative measures include pricing and analysing the risk portfolio using historical statistical figures (premium, type of risk, loss). The reinsurance and retrocession schemes play an important role in maintaining the level of risk exposed by the Corporation within the risk tolerance. The Board of Management thus holds responsibility to set up the risk tolerance level appropriate with business performance of the Corporation at certain period as well as perform the annual insurance and reinsurance schemes as approved by the Board of Directors.
110
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Capital management activities The Corporation aims to maintain a strong capital base to support the development of its business and to comply with regulatory capital and the solvency requirements regulated in the relevant local regulations at all times. The table below presents the solvency capital and the minimum solvency margin of the Corporation: Company solvency capital
Minimum solvency margin
Solvency margin percentage
As at 31 December 2020
VND 1,882 billion
VND 374 billion
503%
As at 31 December 2019
VND 1,973 billion
VND 298 billion
662%
(b) Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate with the fluctuation of market price. Market risk includes 3 types of risk: currency risk, interest rate risk and price risk.
(i)
Currency risk The Corporation and its subsidiary’s activities expose primarily to the financial risks of changes in foreign currency exchange rates and prices. In the year, the Corporation and its subsidiary have entered into currencies swap transactions with banks to mitigate foreign exchange risk. To manage foreign currencies for reinsurance settlement, the Corporation and its subsidiary undertake certain transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The carrying amount of the Corporation and its subsidiary denominated monetary assets and monetary liabilities in foreign currencies at the end of financial year is as follows: Assets
Liabilities
31/12/2020 VND
31/12/2019 VND
31/12/2020 VND
31/12/2019 VND
302,013,535,702
551,827,509,788
280,399,898,125
286,841,095,714
3,227,980,573
3,281,595,648
973,305,361
890,972,815
179,211,555
174,432,303
-
-
Australian Dollar (AUD)
6,044,477
5,546,284
-
-
Singapore Dollar (SGD)
58,835,238
8,505,713
27,697,590
27,836,305
287,728,168
313,162,468
108,651,354
107,605,768
-
-
1,567,841
1,536,413
United States Dollar (USD) Euro (EUR) Great Britain Pound (GBP)
Japanese Yen (JPY) Ringgit Malaysia (MYR)
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111
Notes to the consolidated financial statements (Continued)
Form B 09 - DNPNT/HN
for the year ended 31 december 2020
36
FINANCIAL RISK MANAGEMENT (Continued)
(b)
Market risk (Continued)
(i)
Currency risk (Continued) The Corporation and its subsidiary are mainly exposed to United States Dollar and Euro. 5% is the sensitivity rate used by the Board of Management when analysing foreign currency risk and represents the Board of Management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding monetary items denominated in foreign currency and adjusts their translation at the year-end for a 5% change in exchange rates. For a 5% increase/decrease in the following foreign currencies against Vietnamese Dong, the profit before tax in the year would increase/decrease by the respective amounts as follows:
United States Dollar (USD) Euro (EUR)
(ii)
2020 VND
2019 VND
1,080,681,879
13,249,320,704
112,733,761
119,531,142
Price risk Shares held by the Corporation and its subsidiary are affected by market risks arising from the uncertainty about future prices of such shares. The Corporation and its subsidiary manage this risk exposure by setting up investment limits. The Corporation and its subsidiary’s Board of Management also assesses and approves decisions on share investments such as operating industry, investees. The Corporation and its subsidiary assess the share price risk as insignificant. The Corporation and its subsidiary are also exposed to equity price risks arising from investments in associates. The Corporation and its subsidiary’s Board of Management assesses and approves decisions on investments in associate such as operating industry, investees. Investments in the Corporation’s associates are held as long-term strategic investments rather than for trading purposes. The Corporation and its subsidiary do not have intention to trade these investments in the foreseeable future. The Corporation and its subsidiary review and assess these investments on an annual basis to provide concrete policies in order to ensure legal compliance and investment effectiveness.
(iii)
Interest rate risk The Corporation and its subsidiary bear interest rate risk on deposits at banks. The Corporation and its subsidiary 's term deposits in VND have many different interest rates and will bear interest rate risk when reinvesting.
(c) Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Corporation and its subsidiary. The Corporation and its subsidiary have a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Corporation and its subsidiary’s business operation is reinsurance; accordingly, the Corporation and its subsidiary’s credit risk mainly focuses on customers operating in insurance. As at the balance sheet date, there is credit risk arising on the trade accounts receivable. The Corporation and its subsidiary have made a sufficient provision for such receivables. (d) Liquidity risk The purpose of liquidity risk management is to ensure the availability of funds to meet present and future financial obligations. Liquidity is also managed by ensuring that the excess of maturing liabilities over maturing assets in any year is kept to manageable levels relative to the amount of funds that the Corporation and its subsidiary believe can generate within that year. The Corporation and its subsidiary’s policies are to regularly monitor current and expected liquidity requirements to ensure that the Corporation and its subsidiary maintain sufficient reserves of cash, and adequate committed funding from its shareholders to meet its liquidity requirements in the short and longer term. The following table details the Corporation and its subsidiary’s remaining contractual maturity for its non-derivative financial assets and financial liabilities with agreed repayment periods. The table has been drawn up based on the contractual cash flows of financial assets and contractual cash flows of financial liabilities based on the earliest date on which the Corporation and its subsidiary can be required to pay. The inclusion of information on non-derivative financial assets is necessary in order to understand the Corporation and its subsidiary’s liquidity risk management as the liquidity is managed on a net asset and liability basis.
112
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
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113
(581,516,210,025)
Trade accounts payable
103,163,125,222
3,481,795,756,776
Net liquidity gap
(*) Figures shown are before provision.
-
-
(828,793,245,479)
(2,796,537,555)
-
103,163,125,222
-
-
-
103,163,125,222
Total
Long-term deposits received
(825,996,707,924)
Trade accounts payable
406,400,750,254
Long-term investments (*) 4,310,589,002,255
2,795,615,165,741
Short-term investments (*)
Total
1,005,409,961,038
Trade accounts receivable and other shortterm receivables (*)
Cash and cash equivalents
103,163,125,222
3,601,657,636,094
Net liquidity gap
As at 31/12/2019
-
(583,019,438,405)
Total 55,424,073,810
-
(1,503,228,380)
Long-term deposits received
55,424,073,810
4,184,677,074,499
Total -
-
1,345,881,950,523
Long-term investments (*)
-
-
55,424,073,810
2,053,240,931,318
730,130,118,848
55,424,073,810
Unspecified term VND
Short-term investments (*)
Trade accounts receivable and other shortterm receivables (*)
Cash and cash equivalents
As at 31/12/2020
Total book value VND
2,975,028,418,855
(825,996,707,924)
-
(825,996,707,924)
3,801,025,126,779
-
2,795,615,165,741
1,005,409,961,038
-
2,201,854,840,141
(581,516,210,025)
-
(581,516,210,025)
2,783,371,050,166
-
2,053,240,931,318
730,130,118,848
-
Original term less than 1 year VND
403,604,212,699
(2,796,537,555)
(2,796,537,555)
-
406,400,750,254
406,400,750,254
-
-
-
1,344,378,722,143
(1,503,228,380)
(1,503,228,380)
-
1,345,881,950,523
1,345,881,950,523
-
-
-
Original term from 1 to 5 years VND
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Original term over 5 years VND
Notes to the consolidated financial statements (Continued)
Form B 09 - DNPNT/HN
for the year ended 31 december 2020
37
RELATED PARTY DISCLOSURES During the year, the Corporation had the mainly carried out transactions with the following related parties: Related parties
Relationship
State Capital Investment Corporation
Major shareholder
Swiss Re Group
Major shareholder
Samsung Vina Insurance Company Limited
Associate
(a) Related party transactions 2020 VND
2019 VND
249,543,008,892
243,239,126,942
71,801,808,322
69,175,721,621
100,665,348,396
142,223,341,779
65,537,978,000
39,322,786,800
Outward reinsurance premium
396,774,886
1,429,233,152
Outward reinsurance commission
108,749,920
282,972,215
Receipt from outward reinsurance claims
251,788,042
865,111,359
115,959,632,569
104,822,197,657
Intward reinsurance commission
25,604,629,352
22,771,897,850
Claim settlement of inward reinsurance
29,589,256,125
32,415,414,321
Dividends received
16,144,290,162
20,500,747,189
105,812,070,000
63,487,242,000
i) Swiss Re Group Outward reinsurance premium Outward reinsurance commission Receipt from outward reinsurance claims Dividends paid
ii) Samsung Vina Insurance Company Limited
Inward reinsurance premium
iii) State Capital Investment Corporation Dividends paid
114
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
iv) Compensation of key management 2020 VND
2019 VND
Board of Directors
Title
Mr. Nguyen Anh Tuan
Chairman (appointed on 11 June 2020)
938,526,591
-
Mr. Le Song Lai
Chairman, Head of Development Policy Subcommittee (resigned on 11 June 2020)
160,670,274
366,229,734
Mr. Nguyen Xuan Viet
Deputy Chairman (appointed on 10 September 2020)
239,417,856
158,862,418
Mr. Jared Orchard
Deputy Chairman (Member from 11 June 2020 and Deputy Chairman from 10 September 2020)
113,284,970
-
Mr. Pham Cong Tu
Member, Chief Executive Officer (resigned on 27 October 2020)
2,060,216,009
2,278,806,463
Mr. Mai Xuan Dung
Member, Chief Executive Officer (appointed on 17 November 2020)
1,820,529,921
1,660,532,240
Mr. Pham Phan Dung
Member, Head of Remuneration and Bonuses Subcommittee (appointed on 11 June 2020)
132,860,588
-
Mr. Dao Nam Hai
Member
236,325,178
267,091,510
Mr. Nguyen Dinh Anh
Member
209,325,178
213,091,510
Mr. Vu Anh Tuan
Member
209,325,178
142,061,007
Mr. Pham Sy Danh
Member, Head of Human Resources (resigned on 11 June 2020)
117,079,078
267,091,510
6,237,560,821
5,353,766,392
Board of Supervision
Title
Mr. Tran Trung Tinh
Chief Supervisor
151,381,413
154,833,883
Mr. Vu Ngoc Vuong
Member
125,837,648
128,976,258
Ms. Le Thi Thanh Hien
Member
139,819,609
143,306,953
Mr. Tushar Chatterjee
Member
62,159,016
-
Mr. Dao Manh Duong
Member
872,850,770
-
Mr. Tran Phan Viet Hai
Member (resigned on 11 June 2020)
55,908,756
128,976,258
1,407,957,212
556,093,352
Board of Management
Title
Mr. Mai Xuan Dung
Chief Executive Officer (appointed on 17 November 2020)
As presented above
As presented above
Mr. Pham Cong Tu
Chief Executive Officer (resigned on 27 October 2020)
As presented above
As presented above
Ms. Luu Thi Viet Hoa
Chief Accountant, Secretary of the Board of Directors
1,839,788,045
1,726,420,073
Mr. Nguyen Manh Linh
Deputy Chief Executive Officer
1,591,368,983
1,448,446,651
3,431,157,028
3,174,866,724
11,076,675,061
9,084,726,468
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Notes to the consolidated financial statements (Continued) for the year ended 31 december 2020
37
Form B 09 - DNPNT/HN
RELATED PARTY DISCLOSURES (Continued)
(b) Year end balances with related parties 31/12/2020 VND
31/12/2019 VND
Receivables from outward reinsurance
30,317,434,631
37,849,144,545
Payables from outward reinsurance
85,659,522,563
71,249,053,212
6,367,138,445
5,188,655,304
63,995,583
1,504,780,306
Swiss Re Group
Samsung Vina Insurance Company Limited Receivables from inward reinsurance Payables from inward reinsurance 38 SUMMARY OF CLAIMS Year of loss incurred
i.
2018 VND
2019 VND
2020 VND
Total VND
288,099,296,254
385,508,867,894
266,462,716,080
940,070,880,228
Paid in 2018
(41,951,581,376)
-
-
(41,951,581,376)
Paid in 2019
(128,124,455,298)
(82,503,031,532)
-
(210,627,486,830)
Paid in 2020
(44,946,937,967)
(188,034,493,364)
(41,993,786,854)
(274,975,218,185)
(215,022,974,641)
(270,537,524,896)
(41,993,786,854)
(527,554,286,391)
73,076,321,613
114,971,342,998
224,468,929,226
412,516,593,837
Accumulated claim reserve Accumulated Claim reserves accumulated to the current year 2020 (1)
ii.
Accumulated paid claim amount
Paid claims accumulated to the current year (2) Total outstanding iii. claim reserves (3) = (1) + (2) Outstanding claim reserves for previous years
156,982,766,197
Total outstanding claim reserves at the year end
569,499,360,034
39 BUSINESS SEGMENT REPORT The Corporation’s principal activities are reinsurance business and investments funded from surplus capital resources. Investments in other business activities are not material. Therefore, the Board of Management assesses and believes that not presenting segment reporting is in line with the Corporation’s current business operation.
116
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
40
CONTINGENT ASSETS As disclosed in Note 7(a) – Other short-term receivables, in accordance with Decision No. 14/2019/QDST-KDTM dated 15 November 2019 by the Thanh Xuan District Court, and Debt payment agreements signed between the subsidiary and Thang Long Company dated 31 August 2020 and the Minute of Debt reconciliation and confirmation on 31 December 2020, the total amount of the principal and interest up to 31 December 2020 that Thang Long Company has to either pay in cash or offset by apartments of the Tincom Plaza Project to the subsidiary, is at VND 132,633,052,958 (comprising of VND 60,149,250,000 of principal and VND 72,483,802,958 of interest). According to the Board of Management’s assessment, the possibility to recover VND 72,483,802,958 interest is assessed as uncertain. Hence the Board of Management does not record this interest amount to the consolidated financial statements but disclosed this interest amount as contingent assets (Note 7(a)).
41 EVENTS AFTER THE BALANCE SHEET DATE Subsequent to 31 December 2020, the widespread of Covid-19 is a fluid and challenging situation facing all industries. The Corporation has performed an assessment of the impact of the situation on the Corporation’s operations, including a recoverability assessment for the receivable balances and investments as at 31 December 2020 and concluded that the impact was insignificant in the foreseeable future. Up to the signing date of the consolidated financial statements, there have not been any significant losses incurred as a result of this event. The Corporation and its subsidiary will continue monitoring the situation, take appropriate and timely actions to minimise the impact. 42
COMPARATIVE FIGURES During the year, the Corporation has reclassified a number of line items in the consolidated financial statements to enhance the comparability with current year’s figures. Details were as follows: Consolidated balanced sheet as at 31 December 2019 (extracted): Year ended 31 December 2019 Code
As previously reported VND
Reclassification VND
As reclassified VND
100
SHORT-TERM ASSET
5,846,030,074,798
(1,304,767,125)
5,844,725,307,673
130
Short-term receivables
980,112,416,948
(1,304,767,125)
978,807,649,823
131
Short-term trade accounts receivable
916,184,821,195
(102,686,402,742)
813,498,418,453
307,464,323,662
(102,686,402,742)
204,777,920,920
90,529,906,968
101,381,635,617
191,911,542,585
1,148,351,750,011
1,304,767,125
1,149,656,517,136
131.2 Other trade accounts receivable (i) 136
Other short-term receivables (i) (ii)
200
LONG-TERM ASSETS
210
Long-term receivables
22,000,000,000
1,304,767,125
23,304,767,125
218
Other long-term receivables
22,000,000,000
1,304,767,125
23,304,767,125
218.2 Other long-term receivables (i)
-
1,304,767,125
1,304,767,125
241
Long-term work in progress (ii)
-
14,036,123,679
14,036,123,679
242
Construction in progress (ii)
17,142,387,324
(14,036,123,679)
3,106,263,645
The Corporation reclassified the balances in the balance sheet as at 31 December 2019 to be consistent in the comparability of the data as follows: (i)
Reclassified an accured interest income of VND 102,686,402,742 from short-term trade accounts receivable to other short-term receivables of VND 101,381,635,617 and other long-term receivables of VND 1,304,767,125;
(ii)
Reclassified the amount of VND 14,036,123,679 related to the investment for the construction of the residential, service and commercial building at No. 142 Dinh Cong Street from construction in progress to long-term work in progress.
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Notes to the consolidated financial statements (Continued)
Form B 09 - DNPNT/HN
for the year ended 31 december 2020
42
COMPARATIVE FIGURES (Continued) Comprehensive consolidated income statement for the year ended 31 December 2019 (extracted): Year ended 31 December 2019 Code 10
Income from investment properties
13
Other income
21
Cost of investment properties
24
Other expenses
As previously reported VND
Reclassification VND
As reclassified VND
-
13,954,420,816
13,954,420,816
15,470,417,217
(13,954,420,816)
1,515,996,401
-
(1,606,162,584)
(1,606,162,584)
(2,786,574,052)
1,606,162,584
(1,180,411,468)
Comprehensive consolidated income statement by activities for the year ended 31 December 2019 (extracted): Year ended 31 December 2019 Code
As previously reported VND
Reclassification VND
As reclassified VND
20
Income from investment properties
-
13,954,420,816
13,954,420,816
21
Cost of investment properties
-
(1,606,162,584)
(1,606,162,584)
22
Profit from investment properties
-
12,348,258,232
12,348,258,232
30
Operating profit
294,894,682,320
12,348,258,232
307,242,940,552
31
Other income
15,470,417,217
(13,954,420,816)
1,515,996,401
32
Other expenses
(2,786,574,052)
1,606,162,584
(1,180,411,468)
40
Net other income
12,683,843,165
(12,348,258,232)
335,584,933
The Corporation classifies revenue and cost relating to investment properties of financial year 2019 from other income and other expenses to be consistent in the comparability of the data. The consolidated financial statements were approved by the Board of Management on 22 March 2021.
Preparer
Chief Accountant Chief Executive Officer
_______________________ _______________________ _______________________ Nguyen Thanh Cong Luu Thi Viet Hoa Preparer Chief Accountant
118
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Mai Xuan Dung Chief Executive Officer 22 March 2021
SEPARATE FINANCIAL STATEMENTS FOR THE YEAR END 31 DECEMBER 2020
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Separate balance sheet
Form B 01a - DNPNT
As at Code
ASSETS
100 110 111 120 123
CURRENT ASSETS Cash and cash equivalents Cash Short-term investments Investments held-to-maturity Provision for impairment of short-term financial investments Short-term receivables Short-term trade accounts receivable - Insurance receivables - Other trade accounts receivable Short-term prepayments to suppliers Other short-term receivables Provision for doubtful debts – short-term Inventories Inventories Other current assets Short-term prepaid expenses - Deferred commission expenses - Other short-term prepaid expenses Reinsurance assets Unearned premium reserve for outward reinsurance Claim reserve for outward reinsurance LONG-TERM ASSETS Long-term receivables Other long-term receivables - Insurance deposits - Other long-term receivables Fixed assets Tangible fixed assets Historical cost Accumulated depreciation Intangible fixed assets Historical cost Accumulated amortisation Investment properties Historical cost Accumulated depreciation Long-term assets in progress Construction in progress Long-term investments Investments in subsidiaries Investments in associates Investments in other entities Provision for impairment of long-term financial investments Held-to-maturity investments Other long-term assets Long-term prepaid expenses TOTAL ASSETS
124 130 131 131.1 131.2 132 136 137 140 141 150 151 151.1 151.2 190 191 192 200 210 218 218.1 218.2 220 221 222 223 227 228 229 230 231 232 240 242 250 251 252 253 254 255 260 261 270
120
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Note
3 4(a)
5
7(a) 6
8(a)
16(a) 16(a)
2.9 7(b) 9(a)
9(b)
10
4(b) 4(b) 4(b) 4(b), 4(c) 4(c) 8(b)
4,784,925,999,430 52,900,251,472 52,900,251,472 2,036,740,931,318 2,036,740,931,318
31/12/2019 VND (Reclassified) 5,728,582,537,162 101,616,124,112 101,616,124,112 2,779,246,231,902 2,782,315,165,741
-
(3,068,933,839)
652,402,133,274 564,034,646,896 563,619,791,897 414,854,999 23,518,000 105,598,027,529 (17,254,059,151) 29,010,465 29,010,465 580,190,581,169 580,190,581,169 580,190,581,169 1,462,663,091,732 470,264,225,140 992,398,866,592 1,953,413,755,296 42,472,513,659 42,472,513,659 22,000,000,000 20,472,513,659 8,020,286,076 8,020,286,076 29,980,897,654 (21,960,611,578) 32,392,480,734 (32,392,480,734) 8,031,430,158 34,055,061,893 (26,023,631,735) 1,616,690,000 1,616,690,000 1,887,703,194,815 60,000,000,000 125,000,000,000 357,354,024,845
923,476,596,493 813,498,418,453 608,720,497,533 204,777,920,920 46,050,480 124,842,422,297 (14,910,294,737) 36,263,910 36,263,910 413,364,664,958 413,364,664,958 406,888,443,007 6,476,221,951 1,510,842,655,787 508,147,652,582 1,002,695,003,205 1,043,979,588,344 29,474,141,058 29,474,141,058 22,000,000,000 7,474,141,058 4,684,443,147 4,684,443,147 25,795,808,154 (21,111,365,007) 32,392,480,734 (32,392,480,734) 9,408,782,725 34,055,061,893 (24,646,279,168) 3,106,263,645 3,106,263,645 994,461,808,606 60,000,000,000 125,000,000,000 403,155,876,046
(532,780,553)
(94,817,694)
1,345,881,950,523 5,569,640,588 5,569,640,588 6,738,339,754,726
406,400,750,254 2,844,149,163 2,844,149,163 6,772,562,125,506
31/12/2020 VND
As at Code
RESOURCES
300
Note
31/12/2020 VND
31/12/2019 VND
LIABILITIES
3,799,320,191,443
3,851,503,899,798
310
Short-term liabilities
3,797,816,963,063
3,848,707,362,243
311
Short-term trade accounts payable
581,516,210,025
825,996,707,924
580,352,904,664
613,498,599,822
1,163,305,361
212,498,108,102
240,934,974
619,661,089
16,187,287,904
17,887,827,194
25,352,582,932
21,508,923,286
302,524,570
-
13(a)
21,588,232,169
14,227,829,987
13(a)
102,957,752,564
111,386,015,883
11
311.1 - Insurance payables 311.2 - Other trade accounts payable 312
Short-term advances from customers
313
Tax and other payables to the State
314
Payables to employees
315
Short-term accrued expenses
319
Other short-term payables
12
319.1 - Deferred commission income 321
Provision for short-term liabilities
14
21,468,757,438
12,909,096,840
322
Bonus and welfare fund
15
22,689,670,128
18,969,801,148
329
Technical reserves
16
3,005,513,010,359
2,825,201,498,892
329.1 - Unearned premium reserves for inward reinsurance
1,196,704,406,560
1,077,521,983,191
329.2 - Claim reserves for inward reinsurance
1,636,743,500,588
1,590,506,312,001
172,065,103,211
157,173,203,700
1,503,228,380
2,796,537,555
1,503,228,380
2,796,537,555
329.3 - Catastrophe reserves 330
Long-term liabilities
337
Other long-term payables
400
OWNERS’ EQUITY
2,939,019,563,283
2,921,058,225,708
410
Capital and reserves
2,939,019,563,283
2,921,058,225,708
411
Owners’ capital
1,310,759,370,000
1,310,759,370,000
1,310,759,370,000
1,310,759,370,000
17, 18
566,368,537,309
566,368,537,309
13(b)
17
411a - Ordinary shares with voting rights 412
Share premium
418
Investment and development fund
18
211,311,595,298
211,311,595,298
419
Compulsory reserve
18
131,075,937,000
131,075,937,000
421
Undistributed earnings
18
719,504,123,676
701,542,786,101
421a - Undistributed post-tax profits of previous years
437,390,912,101
440,887,305,670
421b - Post-tax profit of current year
282,113,211,575
260,655,480,431
6,738,339,754,726
6,772,562,125,506
440
TOTAL RESOURCES
_______________________ _______________________ _______________________ Nguyen Thanh Cong Luu Thi Viet Hoa Preparer Chief Accountant Message
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Separate balance sheet (Continued)
Form B 01a - DNPNT
As at Code
OFF BALANCE SHEET ITEMS
Unit
31/12/2020
31/12/2019
1.
Foreign currencies United States Dollar
USD
1,834,964,63
3,690,944,67
Australian Dollar
AUD
345,15
345,15
Japanese Yen
JPY
43,775,00
43,775,00
Singapore Dollar
SGD
3,419,87
498,16
Great Britain Pound
GBP
5,770,51
5,770,51
Euro
EUR
115,531,26
127,138,70
_______________________ _______________________ _______________________ Nguyen Thanh Cong Luu Thi Viet Hoa Preparer Chief Accountant
122
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Mai Xuan Dung Chief Executive Officer 22 March 2021
Separate income statement
Form B 02a - DNPNT
PART I - COMPREHENSIVE SEPARATE INCOME STATEMENT Year ended Code
2020 VND
2019 VND (Reclassified)
1,578,398,460,337
1,236,537,905,553
8,467,926,462
13,954,420,816
380,878,976,246
340,805,119,079
641,715,981
1,881,704,038
(1,485,160,867,556)
(1,139,889,342,515)
(1,542,259,810)
(1,606,162,584)
Note
10
Net income from insurance business
11
Investment income from investment properties
12
Financial income
13
Other income
20
Total insurance expenses
21
Cost of investment properties
22
Financial expenses
26
(38,606,694,613)
(52,311,276,958)
23
General and administrative expenses
27
(84,657,729,594)
(66,065,341,829)
24
Other expenses
(1,205,969,139)
(1,180,411,468)
50
Net accounting profit before tax
357,213,558,314
332,126,614,132
51
Business income tax (“BIT”) - current
(66,121,705,916)
(57,564,870,285)
52
BIT- deferred
-
-
60
Net profit after tax
291,091,852,398
274,561,743,847
25
31
_______________________ _______________________ _______________________ Nguyen Thanh Cong Luu Thi Viet Hoa Preparer Chief Accountant
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123
Separate income statement (Continued)
Form B 02a - DNPNT
PART II - COMPREHENSIVE SEPARATE INCOME STATEMENT BY ACTIVITIES Year ended Code
124
Note
2019 VND (Reclassified)
2,328,522,737,462
2,018,063,530,162
2,447,705,160,831
2,221,248,294,242
119,182,423,369
203,184,764,080
(988,683,109,085)
(1,025,624,314,273)
(950,799,681,643)
(1,030,278,614,236)
(37,883,427,442)
4,654,299,963
1,339,839,628,377
992,439,215,889
1
Insurance premium income
1.2
- Inward reinsurance premium
1.3
- Increase in unearned premium reserves for inward reinsurance
2
Outward reinsurance premium
2.1
- Outward reinsurance premium
2.2
- (Decrease)/Increase in unearned premium reserves for outward reinsurance
3
Net insurance premium income
4
Commission income from outward reinsurance and other insurance income
238,558,831,960
244,098,689,664
4.1
- Commission income from outward reinsurance
216,930,820,188
222,442,099,623
4.2
- Other insurance income
21,628,011,772
21,656,590,041
10
Net income from insurance business
1,578,398,460,337
1,236,537,905,553
11
Claim expenses
22
(950,313,250,918)
(1,075,927,565,712)
11.1
- Gross claim expenses
22
(950,313,250,918)
(1,075,927,565,712)
12
Recoverables from outward reinsurance
22
579,287,329,344
669,723,131,637
13
Increase/(decrease) in inward claim reserves
22
59,871,801,757
(74,250,457,020)
14
Increase/(decrease) in outward claim reserves
22
105,536,227
(146,364,312,427)
15
Net claim expenses
22
(430,792,187,104)
(478,318,289,482)
16
Increase/(decrease) in catastrophe reserves
14,891,899,511
(34,127,288,514)
17
Other insurance expenses
(1,039,476,780,941)
(695,698,341,547)
17.1
- Commission expenses
23
(1,002,846,259,958)
(668,970,621,756)
17.2
- Other insurance expenses
24
(36,630,520,983)
(26,727,719,791)
18
Total insurance expenses
(1,485,160,867,556)
(1,139,889,342,515)
19
Gross insurance profit
93,237,592,781
96,648,563,038
20
Income from investment properties
8,467,926,462
13,954,420,816
21
Cost of investment properties
(1,542,259,810)
(1,606,162,584)
22
Profit from investment properties
6,925,666,652
12,348,258,232
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
19
2020 VND
20
21
Year ended Code
Note
2020 VND
2019 VND (Reclassified)
23
Financial income
25
380,878,976,246
340,805,119,079
24
Financial expenses
26
(38,606,694,613)
(52,311,276,958)
25
Profit from financial activities
342,272,281,633
288,493,842,121
26
General and administrative expenses
(84,657,729,594)
(66,065,341,829)
30
Operating profit
357,777,811,472
331,425,321,562
31
Other income
641,715,981
1,881,704,038
32
Other expenses
(1,205,969,139)
(1,180,411,468)
40
Net other (expense)/income
(564,253,158)
701,292,570
50
Net accounting profit before tax
357,213,558,314
332,126,614,132
51
Business income tax (“BIT”) - current
(66,121,705,916)
(57,564,870,285)
52
BIT- deferred
-
-
60
Net profit after tax
291,091,852,398
274,561,743,847
27
31
_______________________ _______________________ _______________________ Nguyen Thanh Cong Luu Thi Viet Hoa Preparer Chief Accountant
Message
Overview of VINARE
Business environment
Business results 2020 and business plan 2021
Mai Xuan Dung Chief Executive Officer 22 March 2021
Corporate governance
Sustainable development report
Financial statements
125
Separate cash flow statement
Form B 03a - DNPNT
(Direct method)
Year ended Code
Note
2020 VND
2019 VND
574,997,091,053
576,934,658,888
(437,534,364,332)
(344,231,365,167)
CASH FLOWS FROM OPERATING ACTIVITIES 01
Proceeds from inward and outward reinsurance activities
02
Cash paid for inward and outward reinsurance activities
03
Cash paid to employees
(44,125,159,885)
(41,307,107,247)
05
BIT paid
(67,641,470,965)
(54,624,848,662)
06
Cash received from other operating activities
1,838,971,478
3,628,549,541
07
Cash paid for other operating activities
(26,561,559,599)
(32,473,759,037)
20
Net cash inflows from operating activities
973,507,750
107,926,128,316
(2,641,835,855)
(2,490,942,645)
(2,130,460,954,990)
(1,433,810,460,000)
1,898,804,517,959
1,172,285,520,133
45,801,851,201
59,210,487,951
CASH FLOWS FROM INVESTING ACTIVITIES 21
Purchases of fixed assets and other long-term assets
23
Purchases of debt instruments of other entities
24
Proceeds from sales of debt instruments of other entities
26
Proceeds from divestment in other entities
27
Dividends and interest received
401,054,439,496
293,785,539,620
30
Net cash inflows from investing activities
212,558,017,811
88,980,145,059
CASH FLOWS FROM FINANCING ACTIVITIES 36
Dividends paid, profits distributed to owners
(262,150,813,160)
(157,090,344,240)
40
Net cash outflows from financing activities
(262,150,813,160)
(157,090,344,240)
50
Net decrease in cash and cash equivalents
(48,619,287,599)
39,815,929,135
60
Cash and cash equivalents at beginning of year
101,616,124,112
61,645,461,451
61
Effect of foreign exchange differences
(96,585,041)
154,733,526
70
Cash and cash equivalents at end of year
52,900,251,472
101,616,124,112
3 3
_______________________ _______________________ _______________________ Nguyen Thanh Cong Luu Thi Viet Hoa Preparer Chief Accountant
126
ANNUAL REPORT 2020 V I E T N A M N AT I O N A L R E I N S U R A N C E C O R P O R AT I O N
Mai Xuan Dung Chief Executive Officer 22 March 2021
020
In order to protect the environment, VINARE 2020 Annual Report is printed with a limited number of copies. Therefore, once no longer in use, please kindly hand them over to persons who are interested in. In addition, VINARE 2020 Annual Report is also announced in electronic version, interested readers please kindly access to: www.vinare.com.vn
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VIETNAM NATIONAL REINSURANCE CORPORATION HEAD OFFICE
141 Le Duan, Hoan Kiem District, Hanoi (84 024) 3942 2354/65-69 (84 024) 3942 2351 HOCHIMINH BRANCH
11 Nguyen Cong Tru, District 1, Ho Chi Minh City (84 028) 3821 1615 (84 028) 3821 1616 www.vinare.com.vn
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