Techcombank partners with Vingroup on new life insurance venture

Techcombank is to set up a new subsidiary in the insurance field via capital contributions and share purchases, according to an announcement from the bank on March 23.

TCLife will have a charter capital of VND1.3 trillion ($50.7 million). Techcombank plans to contribute VND1.04 trillion to hold 80 per cent of the new company. The remaining 20 per cent stake will be held by Vingroup and other partners.

After its first five years of operation, TCLife is expected to generate a net revenue of VND1.19 trillion ($46.4 million) with a profit margin equivalent to 23.4 per cent.

Techcombank believes that the insurance company will help them increase their net assets, thereby improving their position in the financial market. TCLife's total assets are estimated to reach VND728 billion ($28.4 million) in the first year and VND16.1 trillion ($628 million) in the fifth year.

Vietnam is still in its golden population period, with more than half of the population of working age. The contribution of life insurance to Vietnam's GDP is still modest at 1.2 per cent.

In addition, research by market research firm Cimigo covering 2017–2022 shows that the proportion of families with a monthly income of $500 - $999 increased by 67 per cent, while families with a monthly income of over $1,000 grew by 378 per cent. With increased financial capability, along with heightened awareness of financial instruments, life insurance products should remain popular for the foreseeable future.

The fluctuations in the life insurance market have opened up opportunities for companies with a digital orientation in consulting and after-sales services.

Techcombank and Manulife agreed to discontinue their exclusive distribution partnership last October, which began in 2013. Through this distribution partnership, the two companies collaborated to successfully provide life and health insurance solutions to their customers.

Thanh Van

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