VIETNAM INSURANCE INDUSTRY May 20, 2014

INDUSTRY COVERAGE

Vietnam gross premium written Over 20 years of liberalization, Vietnam’s insurance market has Total non-life premiums, VND trillion recorded extraordinary growth with a CAGR of 13.7% per 60 Total life premiums, VND trillion annum for the period from 2005 to 2013. There are 29 non-life Total premiums, VND trillion 48 50 insurers, 16 life insurers, and 2 reinsurers in the Vietnam 41 38 market. The gap in terms of market share between the top 2 or 40 31 3, and the rest, however, is enormous. 30 25 23 24 21 22 The life insurance segment has seen a massive flow of foreign 18 17 20 15 15 14 11 players over the past few years thanks to the increase in 7 8 23 10 6 18 average households’ incomes and growing public awareness 14 16 9 8 10 10 12 about insurance products. This trend is expected to continue for 0 years to come. 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: AVI, VPBS 2013 non-life market shares Non-life insurance activities are showing signs of stagnation although it still managed to record a y-o-y growth of 7% in 2013. 2013 Bao Viet This decrease may be attributed to fierce competition among 23.2% Others non-life insurers and the industry-specific practice of battles 32.4% being waged for commissions.

With respect to the reinsurance segment, there are only two reinsurers: PVI Re and Vinare. In the past, the Law on Insurance PVI Business initially demanded that an insurance enterprise PTI 20.9% 6.0% seeking to reinsure offshore cede at least 20% of the risk to PJICO Bao Minh Vinare. Later, according to agreements with the WTO, Vietnam 8.1% 9.4% abolished this requirement in 2008, which in turn increased Source: AVI, VPBS competition in the reinsurance market. 2013 life market shares Currently, there are seven listed insurance companies on both Prudential Others stock exchanges. The insurance sector is trading at a P/E of 23.3% 22.7% 11.57x and P/B of 0.99x. The three largest market capitalization insurance companies are Bao Viet Holdings (Ticker: BVH – HSX), PetroVietnam Insurance (Ticker: PVI – HNX), and Vietnam Dai-ichi National Reinsurance Company (Ticker: VNR – HNX) Life Bao Viet 9.2% Life 20.7% Manulife 10.8% PVI Sunlife 13.3%

Source: AVI, VPBS

www.VPBS.com.vn Page | 1

Table of Contents OVERVIEW ABOUT INSURANCE BUSINESS ...... 3 WHAT IS INSURANCE ...... 3 STRUCTURE OF AN INSURANCE COMPANY ...... 3 INSURANCE BUSINESS CYCLE ...... 4 REGIONAL INSURANCE INDUSTRY ...... 5 WORLD INSURANCE MARKET ...... 5 TOP INSURERS IN THE WORLD ...... 8 VIETNAM INSURANCE INDUSTRY ...... 9 INTRODUCTION ...... 9 REGULATORS ...... 10 OVERVIEW OF INSURANCE PRODUCTS ...... 11 INVESTMENT CHANNELS FOR (RE)/INSURERS ...... 12 CAPITAL AND SOLVENCY REQUIREMENTS ...... 14 VIETNAM INSURANCE INDUSTRY CHARATERISTICS ...... 15 GENERAL MARKET ...... 15 LIFE INSURANCE SEGMENT ...... 17 NON-LIFE INSURANCE SEGMENT ...... 21 REINSURANCE MARKET ...... 25 KEY PLAYERS IN THE INDUSTRY ...... 27 INSURANCE INDUSTRY OUTLOOK ...... 28 COMPANIES ON THE EXCHANGES...... 30 CONCLUSION ...... 34

www.VPBS.com.vn Page | 2

INSURANCE BUSINESS OVERVIEW

WHAT IS INSURANCE Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent or an uncertain loss. In a nutshell, the primary goal of insurance is spreading risk. Insurance at a glance Insured Insurer

Premium

Policy

Claims or benefits Damage/Loss

Source: PwC Insurance

STRUCTURE OF AN INSURANCE COMPANY

Structure of an insurance company

Source: PwC Insurance The structure of an insurance company includes the following main functions:

 Actuarial. This function has the important role of analyzing data and working with other company personnel to set the prices that the insurance company charges its client.  Reinsurance. Almost all insurance companies have a reinsurance program. The ultimate goal of the program is to reduce the exposure to loss by transferring part of the risk of losses to a reinsurer or a group of reinsurers.  Underwriting. This function is responsible for establishing, implementing and managing the company underwriting program. This function also includes www.VPBS.com.vn Page | 3

researching the market; developing coverage, evaluating underwriting program, and developing underwriting guidelines.  Claims. This function inputs loss notice for claim handlers, processes various support tasks for claim handling, and services phone calls from policy holders and agents.  Investment management. The investment department manages the invested assets for the company. This includes selecting individual bond and stock investment instruments, and monitoring the performance of the entire portfolio in relation to investment policies and models. Key transactions in insurance business

* Note: R/I = Reinsurance Source: PwC Insurance

INSURANCE BUSINESS CYCLE

Just as all other industries that experience cycles of expansion and contraction, the insurance industry is cyclical in nature. Insurance industry cycles normally last from two to ten years and are comprised of a hard market and a soft market. Typical insurance cycle

Soft market Hard market Source: VPBS collects A typical cycle within the insurance industry begins when insurers tighten their underwriting standards and raises their premiums after a period of severe underwriting losses. In other words, a new cycle begins at the point named “Catastrophe” in the above image. Before this point of time, the features of a soft www.VPBS.com.vn Page | 4

market in insurance industry include: (1) lower insurance premiums, (2) broader coverage in the policies, (3) loosened underwriting standards, and (4) increasing competition among insurers. All of these features together would hit the insurance industry hard by causing the insurers to record losses and reduce their profits that are heavily dependent on investment income. When the insurers implement a stricter standard in underwriting policy and higher premium rates, the profit and the accumulation of capital would began to rise. Again, the increase in underwriting capacity increases competition, which, in turn, drives premium rates down and relaxes underwriting standards, thereby causing underwriting losses and setting the stage for the cycle to begin again. Regarding the reasons that cause the insurance business cycle, there are three schools of thought:

 Disequilibrium between supply and demand: competition in prices to gain market share, and insurance capacity constraints due to previous claims’ losses.  External shocks: changes in interest rates, and catastrophic losses.  General business influences: economic performance of the national economy (e.g., real GDP growth rate, CPI, etc.) REGIONAL INSURANCE INDUSTRY

WORLD INSURANCE MARKET Just as other financial services were hit by the subprime crisis in 2008, so too the insurance sector received its share of the punches. Both life and non-life premium growth rates suffered negative growth rates between 2008 and 2009. The life insurance sector decreased lower than the non-life segment due to the decrease in demand of unit-linked products, one of the major products of the life insurance sector. In addition, volatility risk during the crisis increased the value of guarantees for policyholders, which was reflected in the increase in the insurers’ reserves. The guarantees thus became costly to hedge at this time.

World life and non-life premiums

Non-life premiums, USD, % y-o-y 2010 2011 2012 2013 Life premiums, USD, % y-o-y World non-life premium, 14% 1,885 2,063 2,081 2,210 USD billion 12% World life premium, USD 2,304 2,487 2,485 2,538 10% billion 8% World premium, % World 6.5% 6.4% 6.3% 6.3% GDP 6% 4% 2% 0% -2% -4% -6% 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: BMI, VPBS collected After the financial crisis in 2008, the world insurance market showed signs of recovery. The expected increase in economic growth rates in major industrialized nations gradually provided noticeable stimulus to insurance demand. This holds especially true for the life insurance business, which on a global scale has www.VPBS.com.vn Page | 5

contracted in inflation-adjusted terms over the last two years. Growth in non-life insurance business had already been stronger in 2012 due to positive market cycle effects. Regional differences remain

Penetration rate by region

Europe Emerging Europe 2013 insurance penetration Asia Pacific Latin America

Middle East Africa Europe 6.8% Emerging Asia Emerging 9.00% 2.5% Europe 8.00% Asia Pacific 6.0% 7.00% Latin America 6.1% 6.00% Middle East 1.6% 5.00% Africa 3.9% Emerging Asia 4.5% 4.00% 3.00% 2.00% 1.00% 0.00% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: BMI, VPBS collects The highest levels of growth in direct insurance business continue to come from emerging markets, especially emerging Asia. There is still plenty of catch-up potential, although in some countries growth rates have now reached their peak or are falling slightly. Total premium growth rate, y-o-y Europe Asia Pacific Latin America 30% Middle East Africa Emerging Asia 25%

20%

15%

10%

5%

0%

-5%

-10% 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: BMI, VPBS collected In non-life business, real premium growth in Eastern Europe and in Latin America would be around 6% in period from 2013 and 2014. In many parts of Asia, such as China and India, real growth rates could be as high as 10% or more. In life insurance, we believe that in the period from 2013 to 2014 real premium growth in emerging markets would be even higher than in the past. In many Asian and Latin American countries, for example, it would be considerably more than 10%, and even over 15% in some cases. In Latin America, the growth of 18% seen in 2012 is now forecast to return to the more normal level of 11% in 2013. Above-average increases in insurance premiums are also forecast for Africa and the Middle East, although these markets continue to represent only a very low proportion of global premium income (around 2.5%). www.VPBS.com.vn Page | 6

The situation in Europe is very different; only moderate growth in life insurance is expected in the short term as a result of the sovereign debt crisis. It is very likely that premiums, adjusted for inflation, will continue to fall in several markets, such as in the peripheral euro zone countries that occurred in 2013. Therefore, we expect most European countries to see a slow return to growth again in 2014, in line with economic recovery. In Latin America the expected improvement in the economy should help non-life business, as will the rate increases which have been observed. However, in life insurance we only expect to see modest growth because of the high level of saturation and changes in the regulatory environment. Regarding the insurance trend in the future, significant opportunities exist across the The arrival of many big, foreign insurers has fueled rapid range of rapid growth markets. China, for example, appears to be the most attractive market growth. market for insurers due to its immense scale. Fast growth in income and home and auto ownership along with an aging population and support from government to the insurance sector presents great prospects for insurance growth. Therefore, we believe that the global rankings of the largest primary insurance markets will change over time. While China was only in 15th place in 2000, in terms of total premium income, by 2010 it had already reached 6th place. In 2020 it is likely to rise to number three. Brazil and India will also be in the top ten in 2020. However, we do not anticipate the two dominant positions of the US market and Japan to have changed by the end of the decade. Top 20 countries with highest Gross Premium Written in 2013

Gross Premium Written, USD billion

United States 486 Japan 390 United Kingdom 185 China 153 France 152 Germany 119 Italy 94 South Korea 88 Taiwan 80 Canada 66 India 56 Australia 43 South Africa 39 Ireland 35 Bermuda 34 Brazil 34 Spain 33 Sweden 32 Switzerland 31 Hong Kong 29

0 100 200 300 400 500 600 Source: BMI, VPBS collects

www.VPBS.com.vn Page | 7

TOP INSURERS IN THE WORLD

2012 Country of Company Name 2012 Net Premiums Rank Domicile Written, USD million 1 AXA S.A. France 106,427 2 UnitedHealth Group Inc. United States 99,728 3 Allianz SE. Germany 88,230 4 Assicurazioni Generali S.p.A. Italy 83,399 National Mut Ins Fed Agricultural 5 Japan 74,142 Coop. 6 Japan Post Insurance Co., Ltd. Japan 68,836 7 Munich Reinsurance Company. Germany 66,320 8 Prudential Financial Inc. United States 65,354 China Life Insurance (Group) 9 China 58,720 Company. 10 State Farm Group. United States 57,618 11 Nippon Life Insurance Company. Japan 56,979 Kaiser Foundation Group of Health 12 United States 56,781 Plans. 13 WellPoint Inc. United States 56,567 United 14 Prudential plc. 47,540 Kingdom 15 Zurich Insurance Group Ltd. Switzerland 47,495 Meiji Yasuda Life Insurance 16 Japan 39,080 Company. 17 Dai-ichi Life Insurance Co Ltd. Japan 38,729 18 Life Insurance Corporation of India. India 38,381 19 MetLife Inc. United States 37,975 20 American International Group, Inc. United States 37,717 People’s Ins Co (Group) of China 21 China 37,105 Ltd. 22 Humana Inc. United States 37,009 23 Berkshire Hathaway Inc. United States 35,727 Ping An Ins (Group) Co of China 24 China 35,087 Ltd. MS&AD Insurance Group Holdings, 25 Japan 34,069 Inc. Source: A.M Best

www.VPBS.com.vn Page | 8

VIETNAM INSURANCE INDUSTRY INTRODUCTION Although only being liberalized in 1993, the Vietnam insurance market has witnessed tremendous growth in recent years and continues to be a promising market. In the 1990s, the Vietnam insurance market was dominated exclusively by state-owned enterprises. In the 2000s, there was the first foreign insurer operated in Vietnam and the privatization of many big stated-owned insurance companies was completed. Since 2007 when Vietnam became a member of WTO, Vietnam insurance market was open up for foreign players. Key historical milestones

Source: Axco report in 2009 REGULATORY FRAMEWORK

Insurance activities, including the establishment and operation of foreign-invested insurers, are highly regulated in Vietnam. Vietnam’s insurance sector and the establishment and operations of insurance companies are governed by the following main legal documents: www.VPBS.com.vn Page | 9

1. Law on Insurance Business No. 24/2000/QH10 dated December 9 2000 (as amended by Law No. 61/2010/QH12 dated November 24 2010) (Law on Insurance Business); 2. Decree No. 45/2007/ND-CP by the Government dated March 27 2007 providing guidelines for the implementation of a number of articles of the Law on Insurance Business (Decree 45); 3. Decree No. 46/2007/ND-CP by the Government dated March 27 2007 on the financial regime for insurers and insurance brokers (Decree 46); 4. Decree No. 41/2009/ND-CP by the Government dated May 5 2009 on penalties for administrative breaches in the insurance business sector (Decree 41); 5. Decree No. 123/2011/ND-CP by the Government dated December 28 2011 providing regulations for the implementation of the Law on Insurance Business and amending Decree 45 (Decree 123); 6. Decision No. 193/QD-TTg by the Prime Minister dated February 15 2012 on the strategy for development of Vietnam’s insurance market in the period 2011- 2020 (Decision 193); 7. Decision No. 96/2007/QD-BTC by the Ministry of Finance dated November 23 2007 issuing regulations on underwriting universal life insurance (Decision 96); 8. Circular No. 124/2012/TT-BTC by the Ministry of Finance dated July 30 2012 providing guidelines for the implementation of Decree 45 and Decree 123 (Circular 124); 9. Circular No. 125/2012/TT-BTC by the Ministry of Finance dated July 30 2012 on the financial regime applicable to insurers, reinsurers, insurance brokers and branches of foreign non-life insurers (Circular 125); and 10. Law on Insurance Business of the National Assembly dated July 23 2013. This law combines Law 24 of the National Assembly dated December 9 2000, and Law 61 of the National Assembly dated November 24 2010, which amended Law on Insurance Business 2000.

REGULATORS As specified in Article 121 of the Law on Insurance Business, the Ministry of Finance (MoF) is responsible for monitoring insurance activities. On December 2 2009, Decision 288/QD – TTg was issued to identify the functions, powers, and organizational structure of the Insurance Supervisory Authority (ISA). ISA directly supervises the insurance business activities and reports to the MoF. In addition to ISA, the Association of Vietnam Insurers (AVI), founded on December 24, 1999, is charged with protecting the rights of participating insurers and insurance buyers. Supervisory Agency

Source: Insurance Research & Training Center (IRT) www.VPBS.com.vn Page | 10

OVERVIEW OF INSURANCE PRODUCTS

The Law of Insurance Business determines insurance products in Vietnam and classifies them into three categories: (1) life insurance products, (2) non-life insurance products, and (3) health insurance products.

1. Life Insurance Products

There are seven types of life Insurers can offer the following seven types of life insurance products: insurance products, the clauses and premium rates of which  Whole-life insurance; need approval from MoF  Pure endowment insurance;  Term life insurance;  Endowment insurance;  Annuity insurance;  Investment-linked insurance and;  Pension insurance. The life insurers who want to provide the above products have to seek approval from MoF over the clauses and premium scales of the products. Life insurers cannot sell non-life insurance products, and vice versa. Worth noting is that investment-linked insurance is a new field in the Vietnam insurance industry that is approved by the MoF since 2007. Different from traditional life products in which client’s premiums are invested in safe channels such as treasury bonds to ensure a certain level of guaranteed payment to policyholders, premiums from investment- linked insurance are allowed to be invested in more profitable and riskier channels such as securities via an investment fund. In this such case, policyholders would receive payment that is linked to the performance of the investment fund.

2. Non-Life Insurance Products

There are ten types of life Non-life insurance products include: insurance products, the clauses and premium rates of which  Property and damage insurance; don’t require approval from  Insurance for goods in transit by road, sea, waterway, rail and air; MoF  Aviation insurance;  Motor vehicle insurance;  Fire and explosion insurance;  Marine hull insurance and ship-owners’ civil liability insurance;  Liability insurance;  Credit and Financial risks insurance;  Business loss insurance and;  Agriculture insurance. Unlike life insurance products, the clauses and premium scales of non-life insurance products do not need to be approved by the MoF before being sold. However, the MoF might request an insurer to stop selling certain non-life insurance products that have negative impacts on the financial safety of the insurer and may affect the rights of policyholders. If that’s the case, the rules, terms and premium scales of the insurance products must be amended, and the amendments must be approved by the MoF before the insurer may restart selling them. Vietnam law specifies certain mandatory non-life insurance products. They are (1) Civil liability insurance for motor vehicles, (2) Civil liability insurance for aviation carriers to passengers, (3) Professional liability insurance for providing legal www.VPBS.com.vn Page | 11

services, (4) Professional liability insurance for insurance brokers, and (5) Fire and explosion insurance

3. Health Insurance Health insurance was introduced as a separate category of products on July 1 2011, and consisted of (1) personal accident insurance, (2) medical expenses insurance and (3) health-care insurance. Similar to life insurance products, the clauses and premium rates that apply to the health insurance products must be approved by the MoF. Health insurance business is categorized as non-life insurance business for supervision purpose.

4. Reinsurance

Maximum percentage of each In Vietnam, an insurer is only permitted to retain a maximum liability on each risk risk and loss that could be or on each loss at no more than 5% of its equity. The maximum level of retention of retained in a company is 5% for liability applicable to a reinsurer is 10% of its equity. An insurer or reinsurer must insurance companies and 10% cede the portion of liability exceeding the applicable thresholds to other insurers or for reinsurers. reinsurers. In other words, insurers may only transfer part of the liability which they have insured to one or more reinsurers, including to other insurers or overseas reinsurers. This is to avoid potential abuse by reinsurers to earn reinsurance commission while the original insurers are actually incapable of underwriting the direct insurance. Furthermore, foreign reinsurers are allowed to provide unrestricted cross-border reinsurance services. But foreign reinsurers have to satisfy some requirements such as investment grade credit rating. Otherwise, foreign insurers need to seek written confirmation from their home-country regulator to ensure the insurers’ solvency. INVESTMENT CHANNELS FOR (RE)/INSURERS An insurer may make investments to increase profit from two main sources (1) owner’s equity, and (2) idle capital (similar to premium reserves minus funds for regular payouts). Regarding the former source of investment capital, insurers are permitted to make offshore investments from its equity that exceeds the minimum required legal capital for relevant insurance activities or the minimum solvency margin, whichever is greater. The solvency margin of an insurer is equal to the difference between asset value and debts payable at the time of the calculation date. When calculating the solvency margin of an insurer, only liquid assets may be used, and the whole or part of some assets shall be deducted in accordance with guidelines set by the MoF. According to Decree no.46/2007/ND-CP, the domestic investment channels that insurance companies are allowed to invest in include:

Limitation Type of transaction Non-life insurers/ Re-insurers Life insurers 1. Government bonds/Government guaranteed bonds of corporations, Unlimited Unlimited deposits in other credit institutions 2. Shares, unsecured bonds and Maximum of 35% of idle Maximum of 50% of idle capital contribution to other capital from insurance capital from insurance enterprises reserves reserves Maximum of 20% of idle Maximum of 40% of idle 3. Real estate business and lending capital from insurance capital from insurance reserves reserves Source: VPBS collects

www.VPBS.com.vn Page | 12

FOREIGN INVESTMENT AND PARTICIPATION IN VIETNAM’S INSURANCE MARKET

A foreign investor may participate in Vietnam's insurance market through one or several options, including the following: (1) cross-border supply, (2) establishing a branch or local presence in Vietnam, and (3) acquiring equity interest in an existing insurance company in Vietnam.

FOREIGN PARTICIPATION IN VIETNAM INSURANCE MARKET Establishing local Acquisition of equity in Branch of non-life Cross-border supply insurance company, or existing company in foreign insurer representative office Vietnam Since 2012, a local company may be licensed to engage in the following business Under Vietnam’s WTO activities: agreements, foreign insurers (i) insurance and are permitted to establish in reinsurance business, Vietnam as a branch of an Foreigner or foreign companies (ii) prevention and mitigation oversea non-life insurance A foreigner could establish working in Vietnam may obtain of risk and loss, business from 2012 onwards. local presence by acquiring Description non-life insurance from (iii) loss inspection, For the life insurance equity in local insurance qualified offshore insurers (iv) acting as loss inspection segment, there is no explicit companies and claim settlement prohibition on the agents, establishment of a life (v) third-party claim agents, insurance branch by a and foreign insurer. (vi) fund management and capital investment.

- An individual shareholder Key Offshore insurer: All of the requirements for Similar to those applicable to can only hold up to 10 requirements offshore insurers plus the establishing a local company - Have head office that must be percent of the insurance requirement for minimum in Vietnam plus the in a country with which company's charter capital; legal capital to provide following: Vietnam has entered into a - An entity shareholder relevant insurance services in treaty for the cross-border - There is an agreement (including related parties) Vietnam. For details of this supply of insurance products between the MoF and can only hold up to 20 requirement, please see in (e.g., a WTO member) regulator of the home percent of the insurance below section “Capital and - Is licensed to offer insurance country of the foreign company's charter capital; Solvency Requirement.” products and operated for at non-life insurer over the - A strategic institutional least 10 years. With respect to representative supervision of the foreign shareholder - Is profitable in three years and office, there is currently no activities of the subjected acquiring shares in an has not violated relevant specific requirement other branch. equitized state-owned insurance regulations. than local legislation. - The minimum legal insurance company may - Has investment grade credit capital for foreign non-life hold up to 25 percent of the rating (e.g., BBB+ by S&P, B++ insurer branch is VND200 company's charter capital if by A.M Best, Baa1 by billion (approx. USD10 they could obtain the Moodys). million) approval from MoF - Provides cross-border insurance services in Vietnam through a broker/agent permitted to work in Vietnam. - Has assets of USD2 billion or more. Offshore brokers must have assets of USD100 million or more. - Must deposit VND100 billion (approximately USD5 million) or more at a bank in Vietnam

Source: VPBS collects www.VPBS.com.vn Page | 13

CAPITAL AND SOLVENCY REQUIREMENTS

Activities Legal Capital/Owners’ Capital Legal documents Non-life insurance (excluding Decree aviation and satellite insurance) VND300 billion (approx. USD15 million) No.46/2007/ND-CP and/or health insurance Additional capital required for VND50 billion (approx. USD2.5 million) + for Circular No. aviation insurance and satellite each type of insurance 125/2012/TT-BTC insurance Life insurance (including health insurance, but excluding investment Decree VND600 billion (approx. USD30 million) linked insurance and pension No.46/2007/ND-CP insurance) Additional capital required for unit- Circular VND200 billion + (approx. USD10 million) linked insurance No.135/2012/TT-BTC Additional capital required for Circular No. VND300 billion + (approx. USD15 million) pension insurance 115/2013/TT-BTC Reinsurance (non-life and/or health Circular No. VND400 billion (approx. USD20 million) insurance) 123/2011/ND-CP Reinsurance (life and/or health Circular No. VND700 billion (approx. USD35 million) insurance) 123/2011/ND-CP Circular No. Reinsurance (all types of insurance) VND1,100 billion (approx. USD55 million) 123/2011/ND-CP Circular No. Foreign non-life branches VND200 billion (approx. USD10 million) 123/2011/ND-CP Decree Insurance broker (normal) VND4 billion (approx. USD200,000) No.46/2007/ND-CP Insurance broker (direct insurance or Decree VND8 billion (approx. USD400,000) reinsurance) No.46/2007/ND-CP Additional capital required for VND10 billion + (approx. USD500,000) for insurance companies with more than Decree each additional branch or representative 20 branches and representative No.46/2007/ND-CP office offices Source: Hogan Lovells Vietnam Insurance Jurisdiction Update – March 2013, VPBS collects

www.VPBS.com.vn Page | 14

VIETNAM INSURANCE INDUSTRY CHARACTERISTICS GENERAL MARKET

GROWING FAST FROM A LOW BASE Both the life and non-life insurance segments of Vietnam have witnessed tremendous growth since 1999. The life insurance segment managed to record a triple digit returns in 1999, 2000, and 2001. The annualized growth rate for the sector between 1999 and 2004 was around 81% while the non-life sector grew by 25% per annum over the same period. From 2005 on, total premiums of the industry have grown steadily by an average CAGR of more than 13% per annum. Growth was mainly driven by the non-life segment due to the evolution of commerce and industry in Vietnam. Indeed, this can be further illustrated by looking at the weight (in terms of total industry premiums) of the non-life sector that catapulted from 39% in 2005 to 51% in 2013 (see graphs below). For the life insurance segment, although showing growth in absolute terms, its expansion is severely constrained by the typically low level of average household income. In 2013, based on our analysis, the full-term estimated premium fee of a typical life insurance contract is USD1617, two times the annual consumer spending per capita of a middle class household. Vietnam Gross premiums written

Total non-life premiums, VND trillion 2005 Total life premiums, VND trillion 60 Non-life Total premiums, VND trillion insurance 39.0% 50 48 Life 41 insurance 40 38 61.0%

31 30 25 24 23 21 22 20 18 17 2013 15 15 14 11 Life 8 23 10 7 insurance Non-life 6 16 18 14 49.0% insurance 10 10 12 9 8 51.0% 0 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: Associations of Vietnam Insurance (AVI), BMI INSURANCE PENETRATION AND DENSITY LEVEL ARE LOW Although the demand for insurance is showing strong growth, insurance gross premiums as a percentage of GDP remained static at around 1.5% between 2005 and 2013. This ratio level is quite low compared to other regional countries (e.g., Thailand: 14% and Malaysia: 16%) but also to the real needs of Vietnam’s population. 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total premiums, VND 15,000,000 15,450,000 17,850,000 21,185,000 25,478,635 30,843,698 37,944,733 41,148,840 47,709,178 million +/- y-o-y 0% 3% 16% 19% 20% 21% 23% 8% 16% Total premiums, VND 180,373 183,763 209,982 246,475 293,191 351,101 427,344 483,104 490,694 per capita Total premiums, % of 1.80% 1.60% 1.50% 1.40% 1.50% 1.60% 1.50% 1.42% 1.20% GDP Source: BMI, AVI

www.VPBS.com.vn Page | 15

2012 Insurance penetration

2012 premiums in % of GDP

World, 6.5

Asia, 5.73

Emerging Asia, 2.96 ASEAN, 3.19 Indonesia, 1.77 Vietnam, 1.42 Emerging markets, 2.65 Philippines, 1.4

0 1 2 3 4 5 6 7 8 9

Source: Swiss Re sigma World insurance in 2012 The same phenomenon goes with Vietnam’s premiums per capita ratio, also known as the “density” ratio. This ratio has increased nearly fifty times from its low base of VND10,000 (around USD0.5) per capita in 1993 to VND490,694 (approx. USD24) per capita in 2013. Even so, Vietnam’s ratio is miniscule when compared with that of other ASEAN nations that average around USD68.8 per capita. Vietnam Insurance Density ratio

450,000 427,344 Premium per capita, VND 400,000 351,101 350,000 293,191 300,000 250,000

200,000 164,000 150,000 88,000 100,000 27,000 50,000 10,000 17,000 0 1993 1996 1999 2002 2005 2009 2012 2013 Source: AVI, VPBS collected LACK OF COMPETENT WORKFORCES The skill sets of the workforce in Vietnam’s insurance industry are not commensurate with its job requirements. Currently, the major issues related to human capital in Vietnam’s insurance industry include:

 The majority of personnel in the insurance industry are new graduates who severely lack practical knowledge and experience. According to The Insurance Research and Training Center (IRTC), the average age of the insurance industry workforce is thirty, the age at which job-hopping is still prevalent. Therefore, insurance companies in Vietnam are reluctant to invest too much in their new hires.  Increasing numbers of insurance companies in recent years along with the inadequacy of quality insurance training has caused a serious shortage of skilled personnel. This fact also leads to unfair competition among insurance companies in attracting experienced employees. Domestic insurance companies

www.VPBS.com.vn Page | 16

have encountered the “brain-drain” problem due to non-lucrative wages and limited promotion opportunities for their staff.  Insurance agents are a vital channel to sell insurance products to customers but the quality of human resources in this channel remains low in terms of both technical and soft skills. In addition, many people consider insurance agent work as a temporary job to increase additional income while looking for a real job. When other opportunities arise, insurance agents often leave the company, leaving their employer with the burden and expense of training new hires. The retention ratio of Vietnam insurance agents in one year is just around 20%.

Unit: thousands people 2006 2007 2008 2009 2010 2011 New insurance agents in the 36,690 43,446 61,935 88,198 108,902 202,956 period Number of insurance agents 63,209 72,091 72,097 127,905 162,423 134,106 (end-of-year) Source: AVI LIMITED PUBLIC AWARENESS With the estimated population of over 90 million people in 2013 and low insurance density level, Vietnam appears to be a potential market for many insurers. One of the biggest obstacles that might impede the development of the insurance industry is the public’s awareness. Normally, an insurance product contains two features: risks, that protect the buyer from risks and savings that generate additional household income. However, potential consumers often look only at the savings angle and find that the rate of return offered by insurance products is low. Another challenge faced by the insurance industry in Vietnam is cultural. It is not uncommon in Vietnam to consider the purchase of insurance a bad omen. This perception has been reinforced for generations and is likely to continue for many years to come. Reasons for not entering insurance program in Vietnam

Unafforable 20.8%

Other reasons (e.g., don't believe) Not know much 47.9% about insurance products 19.5%

There is other more efficient saving channels 11.9% Source: New York Life, MoF

LIFE INSURANCE SEGMENT

MASSIVE INFLUX OF FOREIGN PLAYERS Foreign insurers are being drawn to Vietnam’s insurance market as the country’s population expands, reaching an estimated 90 million people in 2013, and more importantly, many people are emerging from poverty along with the rising tide of the economy. In addition, the insurance penetration and density levels remain low www.VPBS.com.vn Page | 17

compared to other countries. This makes Vietnam’s insurance segment a largely untapped industry.

Life insurer in Vietnam Vietnamese Partner Foreign Partner 2013 life market shares

Prudential N.A Prudential UK 22.7%

Bao Viet Life Bao Viet Sumitomo Life, Japan 20.7%

Sun Life Financial PVI Sunlife PetroVietnam Insurance 13.3% Canada

Manulife N.A Manulife, Canada 10.8%

Dai-ichi Life N.A Dai-ichi Life, Japan 9.2%

AIA N.A AIA Group, Hong Kong 8.3%

ACE Life N.A ACE Group, Switzerland 6.0%

Prevoir N.A Prevoir, France 4.4%

Hanwha Life N.A Hanwa Group, Korea 2.0%

Generali N.A Generali, Italy 0.8%

BNP Paribas Cardiff, VCLI Vietcombank, SeaBank 0.7% France Cathay Financial Group, Cathay Life N.A 0.4% Taiwan

VietinAviva Vietinbank Aviva Corporation, UK 0.3%

Great Eastern, Great Eastern Life N.A 0.3% Singapore

Fubon Life N.A Fubon Life, Hong Kong 0.1%

Phu Hung Assurance, Phu Ting Family, Hong Phú Hung Life 0.0% My Hung corporation Kong * Note: N.A = 100% foreign-owned company Source: AVI, VPBS collected International insurers can provide knowledge and experience in many areas such as corporate governance, technology, training, products and distribution. All foreign investment in insurance companies must be approved by the Ministry of Finance. To date, the larger Vietnam companies have been the favorites of foreign insurers, and other small insurers are also seeking overseas partners.

FIERCE COMPETITION IN A YOUNG MARKET Vietnam life insurance industry is still at the early stage of development. As a dynamic emerging market in South East Asia, Vietnam has ideal demographics, a growing middle class, and potential future economic growth, making it a very attractive market to many foreigners. The influx of new foreign players in the industry has also led to the erosion of domestic companies’ market share. In 1965, the Vietnamese government established the local insurer, Bao Viet, as the Vietnam Insurance Company. Initially, Bao Viet was created with the purpose of underwriting non-life insurance, but it became the first life insurer in the country in 1996. In 2013, there were 16 life insurers in the market, and many of them are wholly owned foreign insurers or joint ventures.

1993 1996 1999 2002 2005 2009 2012 2013 Number of life insurance - 1 3 4 8 11 14 16 companies Total gross life premiums, n.a n.a n.a n.a 9,100 11,835 18,391 23,254 VND billion Source: BMI, AVI, VPBS collected Due to the entrance of new competitors, Bao Viet’s market share has dwindled from 29% in 2010 to 21% in 2013, making it second to Prudential UK, who led the market with 22.74% market share in 2013. Prudential entered Vietnam in 1999 with a solid foundation built on an extensive distribution channel, diversified products, and www.VPBS.com.vn Page | 18

human resources. When setting foothold in Vietnam, Prudential developed its listening culture to help employees to better understand and serve clients. With respect to distribution channel, Prudential has always accounted for nearly 50% of the total number of Vietnam’s insurance agents. Other multinational companies include Manulife, ACE, and AIA, each having between 7% to 11% of the market. The market has also attracted a number of leading insurers from Asia who are eyeing the opportunity to enter at an early stage. Dai-ichi from Japan was the first to enter in 2007 through the acquisition of the life insurance arm of a local insurer Bao Minh. Key life insurance players and 9M2013 revenue of Prudential, Manulife, and Bao Viet

Source: VPBS collected The top five positions in recent years include: Prudential, Bao Viet, Manulife, Dai-ichi, and AIA. However, the gap in terms of market share among these five has narrowed. The competitive landscape has not yet been settled and life insurers from across the globe will continue flocking to Vietnam in search of growth. In 2013, PVI Sun Life, a limited liability life insurance company formed by the combination of PetroVietnam Insurance (PVI) and Sun Life Financial Canada, started operations. With just over six months of operation, PVI Sun Life managed to capture total revenue of VND1600 billion and now stands in third position with 13 percent of the market. Life market shares AIA Bao Viet Life Dai-ichi Life Manulife Prudential PVI Sunlife 38% 40% 35% 35% 28% 28% 30% 23% 25% 21% 20% 13% 11% 12% 11% 15% 7% 8% 8% 10% 7% 8% 9% 5% 0% 2011 2012 2013 Source: AVI, VPBS collected INCREASINGLY DIVERSIFIED PRODUCTS OFFERED TO CLIENTS The double digit growth rate in Vietnam’s insurance industry in general and life insurance in particular has been the motivation for insurance companies to invest in improving the quality of service and launch more products in order to gain additional market share. www.VPBS.com.vn Page | 19

Currently, there are eight types of life-insurance policies in Vietnam with endowment and rider products accounting for 80% of the total number of life insurance contracts in 2013.

Life insurance structure by contract 2009 2010 2011 2012 2013 1. Whole Life 0.83% 0.82% 0.71% 0.61% 0.53% 2. Term Insurance 4.38% 5.92% 6.65% 8.11% 8.64% 3. Pure Endowment 0.004% 0.027% 0.023% 0.019% 0.014% 4. Endowment 40.83% 36.99% 33.72% 29.96% 27.80% 5. Annuity 0.14% 0.10% 0.10% 0.09% 0.09% 6. Investment-linked Insurance 2.67% 4.76% 6.06% 7.67% 9.09% 7. Riders 51.15% 51.39% 52.73% 53.55% 53.83% 8. Pension Insurance 0.00% 0.00% 0.00% 0.00% 0.0007% Source: AVI, VPBS collected

Investment-linked insurance In 2007 after the MoF’s approval for life insurers to provide investment-linked products remain largely insurance, also known as universal life, the preference for buying this product has untapped. continued to increase over time. As its name implies, investment-linked products are a way for policyholders to invest indirectly into invested assets through an investment fund of the insurer, which later would have high probability of generating greater return than normal life insurance products’. One major difference between investment-linked products and endowment products is that the former would not guarantee the buyer any annuity. The annuity in investment-linked products would depend solely on the performance of the investment fund. The potential for this type of product remains largely untapped and will continue growing along with the development of investment channels in Vietnam. As can be seen in the above table, the weight of investment-linked insurance policies in total number of valid policies has gradually bumped up since 2009. In 2013, pension insurance was introduced to the public. Pension insurance is a voluntary form of savings to fund retirement. It benefits people by providing financial independence and security during old age, helps the government by channeling individual savings to national development, and assists employers by providing an efficient means of rewarding their employees. However, not all insurance companies are able to provide this type of product. According to Circular no.115/2013/TT-BTC, to be allowed to provide pension insurance products, insurance firms must have chartered capital of more than VND1 trillion (USD48 million), a liquidity ratio higher than VND300 billion (USD14.4 million), and are obligated to establish a voluntary pension fund with value not lower than VND200 billion (USD9.6 million). Based on these requirements, there are only six eligible companies: Prudential Vietnam, Bao Viet, Manulife, Daiichi Vietnam, AIA, and PVI Sun Life. In 1Q2014, the life insurance market witnessed a wave of new products that are predicated on the specific cultural nuances of Vietnamese culture: investing for the future of children and financial planning needs for retirement. For example, Generali Vietnam, one of the leading insurers in Italy, introduced a product named “Juvenile Education Basic Plan” to help parents rest assured with the financial protection solutions which are specifically planned in line with their children’s educational progress. The earlier that a customer signs up for the program, the less costly the program’s fees.

www.VPBS.com.vn Page | 20

NON-LIFE INSURANCE SEGMENT

GROWTH MOMENTUM SLIPS AS THE ECONOMY SLOWS DOWN The non-life insurance market in Vietnam witnessed an average premiums growth rate of 23% between 2005 and 2011. This extraordinary growth reflected the country’s booming economy over the same period. However, the growth of the non-life segment was hit by the government’s efforts to control inflation and tighten public spending and investment in subsequent periods. In order to control inflation, the Government has increased interest rates and tightened credit lines, which, in turn, lower investment activities and the demand for property insurance. Life and non-life GPW growth rate (y-o-y)

2011 2012 2013 Total non-life insurance (VND billion) Total non-life +/- y-o-y, non-life segment GPW (VND 20,628 22,758 24,455 40,000 35% billion) +/- y-o-y, life segment 35,000 30% +/- y-o-y, non-life 21% 10% 7% segment 30,000 25% +/- y-o-y, life 20% 16% 15% 26% 25,000 segment 15% 20,000 10% 15,000 5% 10,000 0% 5,000 -5% 0 -10% 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: AVI, BMI In our analysis, we decided to compare the growth rate of the non-life segment in time (t) with the change in CPI and GDP (y-o-y) in time (t-1) because it normally takes one year for the non-life insurance industry to react to the structural economic changes. What could be drawn from the past is that the growth rate (y-o-y) of the non-life segment exhibited a negative linear relationship with growth rate of CPI and a positive correlation with growth rate of GDP from 2005 to 2010. Non-life, CPI and GDP growth rate

Source: AVI, BMI, VPBS www.VPBS.com.vn Page | 21

Competition in non-life From 2011 onwards, the correlation among the non-life growth rate, CPI, and GDP segments lead many insurers growth rate seems to have weakened since the reasons for the decline in growth of into dilemma position. the non-life insurance segment have become more diversified. Due to the slowing down of economic growth, many non-life insurers competed with each other by reducing fees even lower than their break-even point, causing losses in their operating results. The second reason is the increasing number of false insurance claims over the past few years. This also translated into higher premium fees later as insurance companies want to screen and select persons who are in genuine need of an insurance policy. However, high premium fees are obstacles for many households in Vietnam as their incomes are still below average. The tension of opposing forces, decreasing fees to gain market share while increasing fees to limit false insurance claims, needs to be skillfully resolved in the future if non-life insurers in Vietnam want to accelerate the growth of their segment. Non-life insurance claims

GPW (VND Claims (VND Loss 120,050 Claims (VND billion) Year billion) billion) ratio 2011 206,276 87,307 42% 100,050 2012 227,580 88,736 39% 80,050 2013 244,550 107,112 44% 60,050

40,050

20,050

50 2008 2009 2010 2011 2012 2013 Source: AVI, VPBS collected COMMISSION BATTLE DRAGS MANY INSURERS DOWN? In Vietnam, the MoF sets the ceiling for insurance commissions to limit competition among insurers via the commission “weapon” and ensure the solvency of insurance companies. For insurance brokers, MoF has set a cap for commission rate of 15% of total gross premium written. For insurance agents, the commission rate varies depending on insurance products. However, this requirement seems to not be working as intended. In reality, most insurance agents and brokers try to get the maximum rate of commission for selling insurance products. In fact, they have even demanded higher commission fees from insurance companies given the fierce growing competition in the non-life segment. Currently, there are 29 non-life insurers in the industry with the top five insurers’ market share accounting for two-thirds of all premiums. Consequently, competition is intense for the remaining 19 companies that vie for just one-third of the remaining market share. Non-life market shares Bao Viet PVI Bao Minh PJICO PTI Others 32% 2013 31% 35% Bao Viet 30% 23.2% 30% Others 24% 24% 32.4% 23% 25% 21% 20% 21% 20%

11% 15% 9% 10% 9% 9% 8% 10% PVI 5% PTI 7% 6% 20.9% 5% 6.0% 0% PJICO Bao Minh 2011 2012 2013 8.1% 9.4% Source: AVI, VPBS collected

www.VPBS.com.vn Page | 22

Number of non-life insurance companies from 1996 35 29 29 29 29 30 27 28

25 22

20 16 14 15 13 10 10 6 5

0 1996 1999 2002 2003 2005 2007 2008 2009 2010 2011 2012 2013 Source: IRTC, VPBS collects

The different rates of commission for insurance agents and brokers have shown limitations. For products that brokers get less commission than agents, the brokers tend to claim the same rate of commissions as those paid to agents. This irrational demand might partly be attributed to the fact that some insurance brokers usually pay commission to customers by lowering the premium fees for them. If customers introduce their friends to buy insurance products, then they also receive some commission from the brokers. This has the effect of increasing the cost of sales for insurance activities to very high levels and subsequently brings a loss in revenue to insurance companies.

The competition for commissions in Vietnam might be the reason why many foreign non-life insurers fail to catch up with the domestic players in terms of market shares. In general, foreign players adhere to applicable regulations more strictly than their local competitors. Coincidently, in 2013, total market share of 100% foreign owned non-life insurers accounted for only 6.8% of the total non-life market.

70 PERCENT OF TOTAL MARKET SHARE CLAIMED BY THREE TYPES OF PRODUCTS With respect to type of products, the main source of non-life insurance revenue is coming from motor and vehicle insurance, accounting for 28 percent of the market in 2013, followed by property and casualty insurance (21.8%) and P&H (Personal accident & Health) insurance (20.8%). Non-life shares by type of products

Other products Personal accident, Health insurance 120% Property & Casualty Insurance Motor Vehicle Insurance 100% 29% 80% 37% 33% 32% 32% 33%

60% 14% 15% 21% 15% 16% 18% 40% 19% 21% 22% 22% 21% 22% 20% 29% 32% 32% 30% 28% 28% 0% 2008 2009 2010 2011 2012 2013 Source: AVI, VPBS www.VPBS.com.vn Page | 23

Unit: VND billion 2009 2010 2011 2012 2013 Motor Vehicle Insurance 4,375 5,378 6,230 6,329 6,850 +/- y-o-y 37% 23% 16% 2% 8% Property & Casualty Insurance 2,862 3,698 4,496 4,810 5,340 +/- y-o-y 41% 29% 22% 7% 11% Personal accident, Health 1,960 2,502 3,281 4,012 5,092 insurance +/- y-o-y 23% 28% 31% 22% 27% Other products 4,447 5,474 6,620 7,607 7,173 Source: AVI, VPBS collected  Property and Casualty (P&C) insurance products include a variety of sub- products such as theft insurance, standard fire and special perils insurance and compulsory fire insurance as regulated by MoF (all of the above are broadly categorized as “fire insurance”). Fire insurance often accounts for a majority of total P&C policies in Vietnam mostly due to the mandatory fire insurance requirements of the MoF. According to Circular No. 220/2010 TT-BTC, the compulsory fire and explosion insurance premium is set at around 0.06 percent to 0.70 percent of insured value, and the premium rate depends on the characteristics of each insured object and the relevant risks. The circular is applied to the industry with high fire and explosion risk such as exported wood processing, chemicals, textiles and garments. However, in practical terms, many companies buy the fire insurance not necessarily due to fire risk but rather to be in compliance with governmental authorities.. For individuals, private home insurance products are eyed with skepticism by the typical homeowner. In general, people do not care about buying fire and explosion insurance unless they are obliged to do so. For example, when people pledge their homes against bank loans, the bank often requires them to buy insurance for their home mortgage. With the increasing number of fire accidents in Vietnam, the fire insurance segment still has a lot of untapped potential. So, above all, changing the public’s awareness and perception about insurance products is, in fact, the industry’s first order of business. Fire, explosion and other risks insurance market shares in 2013

Others Bảo Minh 30.5% 22.4%

Bảo Việt 14.6% BIC 5.3% PJICO Fubon 5.9% UIC MSIG 7.6% 6.2% 7.6% Source: AVI, VPBS  Motor and vehicle insurance is another compulsory insurance product in Vietnam. Currently, there are more than 2 million cars and 37 million motorbikes in Vietnam, but only 29% of the motorbikes have been insured according to the Ministry of Transportation and AVI. As a result, the motorcycle insurance segment remains largely untapped given the fact that taking motor insurance is compulsory in Vietnam. However, to fully exploit this market is not an easy task. There are several reasons explaining this fact such as: o Limited public awareness;

www.VPBS.com.vn Page | 24

o The premium fees for motor and vehicle insurance are low (around USD3 per motorcycle and USD30 for automobiles), consequently insurance agents are less motivated to sell these products; o Complicated claim procedure. Motor and vehicles insurance market shares in 2013 Others 9.1% Bảo Minh 10.9% Bảo Việt 33.3%

PVI 12.2%

PJICO PTI 18.9% 15.6%

Source: AVI, VPBS collected  Personal accident and Health (P&H) insurance. Although still limited, Vietnam’s public awareness over insurance products has shown many positive signs of improvement, especially in P&H insurance. Gross premium written from this segment has increased on average 26% per annum from 2008 to 2013. As the households’ income increases, the demand for health and personal accident insurance has started kicking up. Many non-life insurers recorded high growth in this business. P&H Gross premium written, VND billion 2013 P&H market shares 6,000 Others 5,092 17.6% 5,000 4,012 PJICO B o Vi t 4,000 ả ệ 3,281 4.0% 38.2% AAA 3,000 2,502 5.3% 1,960 2,000 1,597 PTI 5.6% ABIC 1,000 6.1% PVI Bảo Minh 14.4% 0 8.7% 2008 2009 2010 2011 2012 2013 Source: AVI, VPBS collected

REINSURANCE MARKET DEPENDENT ON FOREIGN REINSURERS Prior to 2011, the reinsurance market in Vietnam only had one reinsurer, Vietnam National Reinsurance Corporation (Vinare). In 2011, PVI Re, a member company of PVI, entered the market with charter capital of VND460 billion (approx. USD22 million). In the past, the Law on Insurance Business initially demanded that an insurance enterprise seeking to reinsure offshore cede at least 20% of the risk to Vinare. Later, according to agreements made with the WTO, Vietnam abolished this requirement in 2008, making the reinsurance market in Vietnam more competitive. However, the local market is still very dependent on foreign reinsurance supports. Major insurance companies in Viet Nam like Bao Viet and Bao Minh have their own re-insurance operations, but shares up to 70 per cent with foreign reinsurers to hedge their risks.

www.VPBS.com.vn Page | 25

Domestic reinsurance Overseas reinsurance Year Retention in domestic ceded (VND million) ceded (VND million) 2009 1,810,627 3,291,643 35% 2010 2,186,163 4,127,961 35% 2011 2,373,807 5,435,968 30% 2012 3,223,550 5,933,013 35% 2013 3,970,756 5,718,237 41% Source: AVI, VPBS collected The low domestic reinsurance amount that is ceded exists due to the perceived lower financial reliability of domestic reinsurers, insufficient capacity in the domestic reinsurance segment and domestic reinsurance companies’ lack of experience with certain insurance products.

PROFITS FROM RE-INSURANCE ACTIVITIES IS INCREASING Theoretically, periods of several years with high premium levels in the insurance business are followed by periods with low reinsurance rates. Also, in the years with moderate to high equity growth, low claims and high investment income, the supply of reinsurance increases and prices fall. So too the opposite applies, low returns on investment and catastrophic losses cause prices to rise. Comparison among deposit rates, non-life growth and profit from reinsurance Average deposit rates (right axis) 30% % non-life growth, y-o-y 30.00% Vinare's reinsurance profit (%age of total profit) 25% 25.00%

20% 20.00%

15% 15.00%

10% 10.00%

5% 5.00%

0% 0.00% 2010 2011 2012 2013 Source: VPBS collects As mentioned elsewhere in the report, Vietnam appears to currently be in the soft- market of insurance cycles. Furthermore, as investment-linked products still comprise only a minor portion of all available insurance products, the relationship between equity market return and profit in the reinsurance business exhibits a low correlation. As such, we have chosen to use the average deposit rate as the proxy for investment return. Looking at Vinare’s financial statements in the past, one could see that profit from reinsurance remained low compared to that from financial investments and other activities such investment in affiliates. However, the weight of the reinsurance business is becoming more and more important along with the increasing retention rate of domestic reinsurance that is ceded.

Vinare’s profit by service 2010 2011 2012 2013 Profit from Re-insurance segment 7.7% 8.4% 11.8% 23.8% Profit from Financial activities 80.9% 70.6% 66.8% 55.3% Profit from Other activities 3.7% 3.0% 1.5% 2.3% Income from affiliates 7.7% 18.0% 19.9% 18.6% Source: Company data, VPBS

www.VPBS.com.vn Page | 26

KEY PLAYERS IN THE INDUSTRY By the end of 2013, there were 29 players in the non-life insurance segment, 16 players in life insurance segment, and 12 insurance brokers in Vietnam. In the period 2005 to 2012, insurance business revenue increased by an average annualized rate of 13% to 15% a year, totaling approximately USD2 billion by the end of 2012.

No Non-life insurers 2013 market shares Life insurers 2013 market shares 1 Bao Viet 23.2% Prudential 22.7% 2 PVI 20.9% Bao Viet Life 20.7% 3 Bao Minh 9.4% PVI Sunlife 13.3% 4 PJICO 8.1% Manulife 10.8% 5 PTI 6.0% Dai-ichi Life 9.2% 6 Samsung Vina 3.7% AIA 8.3% 7 BIC 3.2% ACE Life 6.0% 8 MIC 2.8% Prevoir 4.4% 9 ABIC 2.2% Hanwha Life 2.0% 10 AAA 2.2% Generali 0.8% 11 GIC 2.0% VCLI 0.7% 12 Liberty 1.8% Cathay Life 0.4% 13 VNI 1.8% VietinAviva 0.3% 14 Bao Long 1.8% Great Eastern Life 0.3% 15 AIG 1.5% Fubon Life 0.1% 16 MSIG 1.4% Phu Hung Life 0.0% 17 Bao Viet Tokio Marine 1.2% Others 6.8%

Source: AVI, VPBS 2013 Gross premium written and gross profit Top five non-life insurers Top five life insurers Gross premium written, VND bn Gross premium written, VND bn Gross profit, VND bn Gross profit, VND bn 7,000 6,648 12,000 11,011 6,082 6,000 10,000 8,482 5,000 8,000 4,000 6,000 3,000 1,951 1,752 4,000 3,242 2,000 1,535 2,237 2,000 1,145 1,104 1,000 400 482 700 105 85 72 390 200 49 0 0 Bao Viet PVI (non- Bao Minh PJICO PTI Prudential Bao Viet Manulife Dai-ichi PVI Sun Non-life life) Life life Life

Source: Company data, VPBS Bao Viet (Ticker: BVH – HSX) currently holds the number one position in the non-life insurance segment and ranks second in the life insurance segment. Bao Viet Holdings, through its subsidiaries, engages in insurance, fund management, banking, securities, investment, and real estate businesses. In 2013, total consolidated revenue of the group reached VND17,096 billion, an increase of 6.8% y-o-y, and total consolidated profit achieved VND1,234 billion. Insurance business was the most profitable function in BVH, accounting for 60% of total consolidated profit after tax. Prudential Vietnam, an arm of Prudential UK, is the leading life insurer in Vietnam’s market. Established in 1999, Prudential Vietnam provides insurance services to millions of Vietnamese people via the nationwide network of over 200 customer service centers, branch offices and general agencies as well as business partner www.VPBS.com.vn Page | 27

offices. With a variety of popular products such as “Phu – Toan Gia Hanh Phuc”, “Phu – An Loc” along with diversified distribution channels, Prudential Vietnam exceeded its financial targets in 2013 with total revenue of VND11,011 billion, up 10% y-o-y, and net income of VND841 billion (2013: loss of VND108 billion). PetroVietnam Insurance Corporation (Ticker: PVI – HNX) was established in 1996 as a captive insurance company for the Vietnam Oil & Gas Corporation currently known as the Vietnam National Oil & Gas Group (PetroVietnam). PVI currently holds nearly all of the energy insurance market share; about 30% of marine insurance market share and around 40% of the property and engineering insurance market. In 2013, the company recorded VND8,074 billion in total revenue, up 26% y-o-y, and VND355 billion in net income, equivalent to 91% of 2012’s. In 2013, the efficiency in the operation of the non-life insurance segment was among the reasons for 2013 PVI’s business success. In particular, total revenue in non-life insurance was VND6,082 billion, an increase of 11.5% y-o-y, and profit before tax from this division was VND482 billion, up 6% y-o-y. With respect to the life insurance segment, PVI Sun Life was able to achieve total revenue of VND1,024 billion in just over six months of operation. INSURANCE INDUSTRY OUTLOOK In this section, we will delve further into the trend of Vietnam’s insurance companies’ operations in 2014.

INCREASE CHARTER CAPITAL TO ENHANCE CAPACITY In 2014, the picture of Vietnam’s insurance industry is clearer as most companies in the market have found their own development paths. The differentiation among insurers would lie in the quality of services and products provided to clients rather than competition to gain market share. Many insurers have focused on in-depth development strategies and risk management. As the stock market recovers, many insurance companies have planned to increase their charter capital to enhance their capacity and strengthen their financial positions. For example, BIDV Insurance Corporation (Ticker: BIC – HSX) announced an increase in charter capital from VND693 billion to VND1,089 billion via payment of 2013 stock dividends at 10 percent and the issuance of maximum 30 percent of new charter capital to strategic holders in 2014. Military Insurance Joint Stock Company (MIC), Post and Telecommunication Joint Stock Insurance Corporation (Ticker: PTI – HNX), and Petrolimex Insurance Corporation (Ticker: PGI – HSX) are all on the same page with BIC regarding the plan to increase charter capital in the future. Besides the target to increase financial capacity and match with insurance sales volume, insurers increase charter capital to meet the conditions necessary to achieve a good international credit rating. Many Vietnam insurers strive to secure a rating by A.M Best Company, a global credit rating agency with a unique focus on the insurance industry. Being rated by a world-class institution like A.M Best would promote the image of Vietnam insurers in the eyes of many foreign companies seeking insurance products in Vietnam. Currently, A.M Best only assigned ratings to two insurers in Vietnam (PVI and Vinare) (both are assigned with B++ rating)

STRUGGLING TO FIND INVESTMENT CHANNELS Investment income is an important source for insurers to meet liquidity requirements in the short- and long-term. The most important priority for any insurer’s investment is safety. In Vietnam, in 2010 and 2011, the interest rates for deposits at banks were www.VPBS.com.vn Page | 28

high, standing around 11% to 13% per annum, making the interest income from deposits a tempting investment channel for Vietnam’s insurers. However, the deposit rates are on a downward trend and are expected to stay at low levels for years to come in order to boost lending. Currently, the deposit rates fluctuate in a range from 7% to 8% per annum. In addition, although the stock market has shown some positive signs of recovery at the beginning of 2014 with the VN-index increasing by 15% to 20%, it is still saddled with many lurking risks such as volatility,and information risk, among others. Therefore, insurers are unable to place too much money in this channel. Many insurers are now looking for opportunities outside of Vietnam by establishing a joint venture, or an affiliate, with other foreign insurers. For example, BIC invested in Lao Viet Insurance (LVI), a reputational insurer in Laos with domestic market shares standing in second position, to profit in two ways: (1) expand the distribution network of BIC, and (2) generate additional profit from LVI’s operation. Just like BIC, PTI also plans to invest in the Myanmar insurance sector as the competition level in this market remains low compared to Vietnam. All in all, we believe that interest income from deposits at banks would still be the major channel for insurer’s investment in 2014. Insurers would try to mitigate the impact of declining deposit rates by locking money into long term deposit.

www.VPBS.com.vn Page | 29

COMPANIES ON THE EXCHANGES

Currently, there are six listed insurance companies, out of which four companies are non-life insurers only, two companies provide both life and non-life insurance products and one is a reinsurance company on the HSX and the HNX. The market capitalization of the insurance sector (as of May 20 2014) was VND35,278 billion, accounting for 3.75% of the total market capitalization.

Unit: VND million Net premium written Net investment income Net income ROE Company name Ticker Exchange 2012 2013 2012 2013 2012 2013 2012 2013 BIDV Insurance BIC HSX 529,791 680,241 118,693 129,050 84,178 94,654 11.1% 12.0% Corporation Bao Minh Insurance BMI HSX 1,787,460 1,951,929 91,780 46,830 86,533 89,484 4.0% 4.1% Corporation Bao Viet Holdings BVH HSX 8,414,121 8,366,329 3,117,097 3,160,964 1,348,269 1,137,531 11.1% 9.4% PJICO Insurance PGI HSX 1,665,408 1,752,266 124,019 121,836 99,209 65,884 11.7% 8.0% Corporation Post and Telecommunication JSC PTI HNX 1,141,399 1,322,372 97,369 65,360 64,496 54,853 9.7% 8.3% Insurance Corporation PetroVietnam Insurance PVI HNX 2,422,115 2,763,252 562,143 441,078 389,049 330,486 6.4% 5.4% Vietnam National VNR HNX 808,810 773,270 214,374 215,692 255,776 298,333 11.0% 12.3% Reinsurance Corporation * Note: Net investment income includes income from associated companies Source: Audited financial statement, VPBS

 Net premium written (NPW). Net premium written in listed companies exhibited a downward trend in line with the growth trend of non-life segment. NPW growth rate, y-o-y BIC BMI PVI VNR 160% BVH PGI 33% PTI Average of the group 140% Non-life industry 28% 120%

100% 23%

80% 18% 60% 13% 40%

20% 8% 0% 3% -20%

-40% -2% 2008 2009 2010 2011 2012 2013 *Note: PGI started operating in 2008 so we incorporate the PGI’s growth rate in NPW from 2009. The same goes for PTI that operated in 2010. Source: Thompson Reuters accessed May 7 2014, VPBS The combined ratio, which is used to assess the efficiency of insurance business activities and is calculated by taking incurred direct expenses, plus loss claims divided by total NPW, varies among the companies with BIC having the lowest combined ratio in 2013 (the lower the ratio, the more the profitability of the insurance segment of the company). The general trend of combined ratios shows that the profit from insurance segments has been increasing since 2009.

www.VPBS.com.vn Page | 30

Combined ratios of listed companies BIC BMI 125% PVI VNR BVH PGI LOSS PTI Break-even line 100%

75%

50%

25%

0% 2008 2009 2010 2011 2012 2013 * Note: Our combined ratio doesn’t include G&A expenses Source: Thompson Reuters accessed May 7 2014, VPBS calculates Nonetheless, the operating profit margin in insurance activities remains low, even below zero, indicating that the efficiency of the insurance business activities is still in doubt. Many insurers incur significant expenses to expand their distribution network and recruit skilled personnel in order to gain additional market share. Therefore, the G&A expenses of many insurers accounts for a large portion of the total operating expenses. In 2013, PVI was the most efficient in insurance business operation with net profit margin of 3.5%. Operating profit margin in insurance activities BIC BMI PVI BVH PGI PTI 10% Average of the group 0.0% 5% -1.0% 0% -2.0% -5% -10% -3.0% -15% -4.0% -20% -5.0% -25% -30% -6.0% 2008 2009 2010 2011 2012 2013

Source: Thompson Reuters, VPBS calculates  Net investment income. With the risky nature of the insurance business, insurers cannot control unexpected events that might cause severe losses to their business. Therefore, investment income plays an integral part for insurers to meet liquidity objectives in both the short- and long-term. In seven listed companies, the investment structure favors interest income from deposits at banks, accounting for average of 70% of total investment income. However, many insurers also suffered losses in stock investment, eliminating nearly all of the net interest income.

www.VPBS.com.vn Page | 31

2013 Net interest income, Net investment income, Percentage Ticker VND million VND million BIC 91,421 129,050 71% BMI 129,350 46,830 276% PVI 473,798 441,078 107% VNR 188,521 215,962 87% BVH 1,311,450 3,160,964 41% PGI 106,450 121,836 87% PTI 69,201 65,360 106% Source: Company data, VPBS In 2013, BMI suffered the most declines in net investment income mainly due to provisions and other expenses in stock and bond trading activities, the total amount equal to VND106.459 billion. On the other side, in BVH, the weight of net interest income in total net investment income was quite low compared to the other companies thanks to the unique strength in bond investment activities, which brought a profit of VND1408 billion to BVH in 2013. The details of investment allocation in each company are as below. 2013 investment allocation

VNR

PVI Deposits at banks

PTI Stock

PGI Bonds

BVH Others BMI (Investment in associates, etc) BIC

0% 20% 40% 60% 80% 100%

Source: Company data, VPBS Compared with the performance of the VN-index from the beginning of 2014, most insurance companies have performed below the average of the VN-index except for VNR and BMI. Generally, the trading turnover of the insurance sector is not high mainly due to the concentrated shareholders’ structure of the listed insurers. For example, nearly 90% of PVI’s floating shares belong to three strategic holders: Petro Vietnam Oil & Gas, HDI-Gerling Industrie Versicherung AG, and Funderburk Lighthouse Limited. VNR also shares this common trait with PVI. Nearly 75% of the VNR’s floating shares belong to: SCIC (40.36%), Swiss Reinsurance Company (25%), and Bao Viet Holdings (9.18%). The sudden extraordinary increase in trading turnover of BMI’s stock in 2014 was attributed to the resolution of the government to restructure state-owned enterprises. According to Resolution No.26/NQ – CP, state- owned enterprises (SOEs) have been requested to withdraw from their non-core investments before 2015. At the end of 2013, BMI’s shareholder structures consisted of many SOEs such as Vietnam Airlines holding 4.25 million of BMI’s shares and Vietnam Southern Food Corporation having 1.66 million of the shares. These two SOEs all divested their positions in BMI in 2014. www.VPBS.com.vn Page | 32

Insurance tickers and VN-index in 2014 (till May 7 2014) (Base = January 1 2014) ^VNINDEX BIC BMI BVH PGI PTI PVI VNR 70% 60% 50% 40% 30% 20% 10% 0% -10% -20% 2-Jan 2-Feb 2-Mar 2-Apr 2-May Average trading turnover in 2014 (till May 7 2014) and 2013

600 528 2014 average trading turnover (till May 7 2014) 2013 average trading turnover 500 440 404 Thousands 400

300

200

90 100 75 48 39 23 36 11 11 11 6 6 0 BVH BMI BIC PVI PGI VNR PTI

Source: VPBS Trading multiples Price change (%) Market Dividend 6-month Company name Ticker P/E P/B YTD 3-month change capitalization, VND yield (%) change billion BIDV Insurance Corp. BIC 7.3 0.9 9.8 -17.97% -19.85% 0% 728 Vietnam National VNR 8.7 1.1 6.4 13.6% -1.15% 15.11% 2,611 Reinsurance Corp. PVI Holdings PVI 12.3 0.7 7.7 -0.55% -7.69% 14.65% 4,057 Post and Telecommunication PTI 10.0 0.8 10.0 2.86% -8.47% 6.93% 544 JSC. PJICO Insurance PGI 13.1 0.7 8.8 -5.43% -17.92% 3.57% 603 Corp. Bao Viet Holdings BVH 24.5 2.1 4.2 -0.26% -18.22% -4.56% 25,654 Bao Minh Insurance BMI 11.6 0.5 8.4 19.17% 3.62% 21.19% 1,080 Corp. Sector average 12.48 0.97 5.69 (Mean) Sector median 11.59 0.83 7.08

Source: Bloomberg accessed May 20, 2014, VPBS

www.VPBS.com.vn Page | 33

CONCLUSION With low penetration and density levels, Vietnam’s insurance industry still has many opportunities for growth. According to Decision no. 193/QD-TTg, dated February 15, 2012, and issued by the Prime Minister regarding the development strategy for the insurance market in the period from 2011 to 2020, total premiums are targeted to account for 2% to 3% of Vietnam’s GDP by 2015 and 3% to 4% of the GDP by 2020. In order to do so, the Government has devised some solutions as below:

(1) Complete the system of legal instruments that regulate the insurance business; (2) Raise the safety of the operating system, operational efficiency, and competitiveness of insurers; (3) Encourage and assist enterprises to develop and diversify insurance products; (4) Diversify distribution channels; (5) Strengthen the effectiveness of the State’s administration of the insurance business, and (6) Promote international co-operation and international integration in the insurance industry. In addition, as mentioned elsewhere in the report, there is currently a trend of investing in the insurance industry of rapidly growing markets such as Vietnam, China, and Indonesia from developed foreign insurers. Vietnam is among the most attractive insurance markets in the list with low penetration and density levels along with the Government’s commitment to support the insurance market in the future. Also, the demographic of Vietnam will shift toward aging group (50+ years old) in the future. Therefore, we believe that the demand for life insurance will gradually increase. Vietnam’s population by age group, 1990 – 2020 1990 1995 2000 2005 2010 2013E 2015F 2020F 0-4 years 13.5% 12.3% 8.8% 8.1% 8.1% 7.8% 7.5% 6.8% 5-9 years 12.5% 12.1% 11.4% 8.3% 7.6% 7.7% 7.7% 7.2% 10-14 years 11.4% 11.2% 11.3% 10.7% 7.8% 7.2% 7.2% 7.4% 15-19 years 10.7% 10.3% 10.5% 10.7% 10.1% 8.4% 7.4% 6.9% 20-24 years 9.6% 9.5% 9.5% 9.8% 10.0% 10.0% 9.6% 7.0% 25-29 years 8.7% 8.5% 8.7% 8.8% 9.1% 9.3% 9.4% 9.1% 30-34 years 7.5% 7.8% 7.9% 8.1% 8.2% 8.4% 8.6% 8.9% 35-39 years 5.6% 6.7% 7.2% 7.4% 7.6% 7.7% 7.7% 8.2% 40-44 years 3.6% 5.0% 6.2% 6.7% 6.9% 7.1% 7.2% 7.3% 45-49 years 2.9% 3.2% 4.6% 5.8% 6.3% 6.4% 6.5% 6.8% Total 0 - 49 years 86.1% 86.5% 86.1% 84.4% 81.7% 79.9% 78.7% 75.6% Total 50 + years 14.0% 13.5% 13.9% 15.6% 18.3% 20.1% 21.3% 24.4% 50-54 years 2.9% 2.6% 2.9% 4.4% 5.5% 5.8% 5.9% 6.1% 55-59 years 3.0% 2.5% 2.3% 2.6% 4.0% 4.7% 5.0% 5.5% 60-64 years 2.4% 2.5% 2.2% 2.0% 2.3% 3.1% 3.6% 4.6% 65-69 years 2.1% 2.0% 2.2% 1.9% 1.8% 1.8% 2.0% 3.2% 70-74 years 1.5% 1.6% 1.6% 1.8% 1.6% 1.5% 1.5% 1.8% 75-79 years 1.1% 1.1% 1.2% 1.3% 1.4% 1.3% 1.3% 1.2% 80+ years 0.9% 1.0% 1.4% 1.7% 1.7% 2.0% 2.0% 2.1% Source: BMI, VPBS collected Regarding the non-life segment, the major portion in the structure of non-life product, motor and vehicle insurance, would also increase in the future in line with the increase in population and the recovery of Vietnam’s economy. With all of these facts, there is no doubt that Vietnam’s insurance market remains largely unexploited, and in the long-term, the insurance industry looks very profitable. For listed insurance companies, low liquidity might be an obstacle for investors interested solely in stocks, however, we believe that many companies are still undervalued given the good prospects of Vietnam’s insurance market outlook. www.VPBS.com.vn Page | 34

Disclaimer This research report is prepared and issued by VPBank Securities Co. Ltd. (“VPBS”). This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This document is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe restrictions. Each research analyst involved in the preparation of a research report is required to certify that the views and recommendations expressed therein accurately reflect his/her personal views about any and all of the securities or issuers that are the subject matter of this research report, and no part of his/her compensation was, is and will be directly or indirectly related to specific recommendations or views expressed by the research analyst in the research report. The research analyst involved in the preparation of a research report does not have authority whatsoever (actual, implied or apparent) to act on behalf of any issuer mentioned in such research report. Any research report is provided, for information purposes only, to institutional investor and retail clients of VPBS. A research report is not an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. Barry David Weisblatt Head of Research The information contained in a research report is prepared from publicly available information, internally [email protected] developed data and other sources believed to be reliable, but has not been independently verified by VPBS and VPBS makes no representations or warranties with respect to the accuracy, correctness or Nguyen Thi Thuy Linh completeness of such information and they should not be relied upon as such. All estimates, opinions and Director – Macro and Financials recommendations expressed herein constitute judgment as of the date of a research report and are subject [email protected] to change without notice. VPBS does not accept any obligation to update, modify or amend a research report or to otherwise notify a recipient of a research report in the event that any estimates, opinions and Pham Thanh Hai recommendations contained herein change or subsequently becomes inaccurate or if a research report is Research Analyst subsequently withdrawn. [email protected] Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this research report. The price of the Hanoi Head Office securities mentioned in a research report and the income they produce may fluctuate and/or be adversely 362 Hue Street, affected by market factors or exchange rates, and investors may realize losses on investments in such Hai Ba Trung District, Hanoi securities, including the loss of investment principal. Furthermore, the securities discussed in a research T - +84 (0) 4 3974 3655 report may not be liquid investments, may have a high level of volatility or may subject to additional and F - +84 (0) 4 3974 3656 special risks associated with securities and investments in emerging markets and/or foreign countries that may give rise to substantial risk and are not suitable for all investors. VPBS accepts no liability whatsoever Ho Chi Minh City Branch for any loss arising from any use or reliance on a research report or the information contained herein. 76 Le Lai Street, The securities in a research report may not be suitable for all types of investors and such reports do not take District 1, Ho Chi Minh City into account particular investment needs, objectives and financial circumstances of a particular investor. An T - +84 (0) 8 3823 8608 investor should not rely solely on investment recommendations contained in this research report, if any, as F - +84 (0) 8 3823 8609 a substitution for the exercise of their own independent judgment in making an investment decision and, prior to acting on any of contained in this research report, investors are advised to contact his/her Danang Branch investment adviser to discuss their particular circumstances. 112 Phan Chau Trinh Street, VPBS and its affiliated, officers, directors and employees world-wide may, from time to time, have long or Hai Chau District, Danang short position in, and buy or sell the securities thereof, of company (ies) mentioned herein or be engaged in T - +84 (0) 511 356 5419 any other transaction involving such securities and earn brokerage or other compensation or act as a market F - +84 (0) 511 356 5418 maker in the financial instruments of the company (ies) discussed herein or act advisor or lender/borrower

to such company (ies) or have other potential conflict of interest with respect to any recommendation and

related information and opinions. Any reproduction or distribution in whole or in part of a research report without permission of VPBS is prohibited. If this research report has been distributed by electronic transmission, such as e-mail, then such transmission cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late, in complete, or contain viruses. Should a research report provide web addresses of, or contain hyperlinks to, third party web sites, VPBS has not reviewed the contents of such links and takes no responsibility whatsoever for the contents of such web site. Web addresses and/or hyperlinks are provided solely for the recipient’s convenience and information, and the content of third party web sites is not in any way incorporated into this research report. Recipients who choose to access such web addresses or use such hyperlinks do so at their own risk.

www.VPBS.com.vn Page | 35