Vinare Annual Report 2020 - Báo cáo thường niên 2020

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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.

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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

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.

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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

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

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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


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

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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


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

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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


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.

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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 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.

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

29



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%.

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

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)

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

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.

Message

Overview of VINARE

Business environment

5. Comparison between (3) & (4)

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

37


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

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

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.

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

43


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.

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

45


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.

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

47



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

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

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


Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

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.

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

55


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

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

57


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

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

61


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

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

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

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

65


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

The notes on pages 72 to 118 are an integral part of these consolidated financial statements. Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

67


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

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

69


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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71


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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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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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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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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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.

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

83


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


Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

85

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


Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

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

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

89


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)

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

91


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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99


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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109


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

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

115


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.

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements

117


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

Message

Overview of VINARE

Business environment

Business results 2020 and business plan 2021

Corporate governance

Sustainable development report

Financial statements Financial statements

119


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

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

121


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

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

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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