2017 Annual report -...

2017Annual report

Vietinbank Insurance: Toward being the leading insurer in retail market“

TABLE OF CONTENT

CHAPTER 01

Performance Indicators

Chairwoman’s Statement

2017 Highlights

Corporate Governance Structure

08

12

14

18

22

27

28

29

34

35

37

38

40

42

44

48

50

51

52

56

59

61

CHAPTER 03

General information

Report of Management

Independent auditors’ report

Balance sheet

Income statement

Cash flow statement

Notes to the financial statements

CHAPTER 02

2017 Macro Economics and Insurance Market, Business

Performance

2018 Business Plan and Development Orientation

Human Resource Governance

Direct Insurance

Reinsurance

Claim Management

Risk Management

Network Development

Customer Services

Communication and Branding

Community Support

54

2017 Annual report VietinBank Insurance

• Performance Indicators• Chairwoman’s Statement• 2017 Highlights• Corporate Governance Structure

OVERVIEW

01


PERFORMANCE INDICATORS

UnitBillion VND

Unit: %ROA

ROE Unit: %

2012

2013

2014

2015

2016

2017 5.42

5.58

6.37

7.26

5.64

8.19

2012

2013

2014

2015

2016

2017 11.13

10.12

9.1

8.72

6.47

8.47

0

200,000

2012 2013 2014 2015 2016 2017

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

02012 2013 2014 2015 2016 2017

600,000

300,000

375,000

150,000

225,000

75,000

450,000

525,000

0

200,000

2012 2013 2014 2015 2016 2017

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

02012 2013 2014 2015 2016 2017

200,000

100,000

125,000

150,000

175,000

50,000

75,000

25,000

0

200,000

2012 2013 2014 2015 2016 2017

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

REVENUE

PRESERVATION FEE

EQUITY

PROFIT BEFORE TAX

TOTAL ASSETS

98

CHAPTER 1OVERVIEW2017 Annual report VietinBank InsuranceKEY PERFORMANCE INDICATORS

Vietinbank Insurance Joint Stock Corporation“

1110

CHAPTER 1OVERVIEW2017 Annual report VietinBank Insurance

In November 2017, VietinBank Insurance marked a significant shift by transforming the Company into a Joint Stock Corporation, thereby creating a sound platform to attract strategic investors for 2018. This brings new opportunities and challenges to our journey and moving closer to our key goal of leading Vietnam’s non-life insurance market.

By strategically positioning as a technological pioneer, we are leading in the move towards the application 4.0 technology in the insurance industry. In 2017, VietinBank Insurance is proud to have launched the My VBI App - the first on-line application for the purchase of insurance, loss survey and claim settlement in Vietnam. This optimizes the delivery process across –the- board for customer services.

“TOGETHER WE DEVELOP AHEADTO LEADING POSITION”

With renewed commitment, we are confident of reaching our revenue target of 1,500 billion VND in 2018.

With a dynamic approach we seek new breakthroughs in range of sectors emphasising technology and customer services. For 2018, the focus is on 6 key tasks:

• Increase market share by further strengthening our customer focused approach and the development of sale channels: cross sale, extension of individual and organisation agents and online-sale.

• Quality improvement of claim and customer services: through the nationwide extension of associated garages and hospitals for easy access to clients and claim survey. VBI shall minimise claim procedures and necessary documents in order to simplify the claim survey and direct billing process. As a result, VBI will become the first insurer to process claim document and settlement

Ladies and Gentlemen

In 2017, the insurance industry continued with good growth, underpinned by stable social and economic conditions - thanks to the government’s policies supporting administrative reform, inflation control and boosting the macroeconomic environment generally.For more than 9 years now, the big ship VBI has encountered many challenges. Nevertheless, thanks to its persistence, resilience, solidarity and pursuit of a common purpose, VBI has reached important milestones and significant successes; ensuring strong and stable development augmented with added value to the company, community and society. VietinBank Insurance has risen to the top 10 most prestigious insurers in the market, been awarded the prize for Best Quality Customer Services in Vietnam by Global Banking & Finance Magazine and is recognized as the company with the fastest growth in Vietnam for the period 2013-2017.

Sincerely!

CHAIRWOMANNguyen Hong Van

within 3-5 days• Boosting public communication and VBI branding.

VBI will standardise brand identification systems at all levels and develop branding ambassador group, training sale staff to become professional financing consultants.

• Design and standardise risk management system. VBI, in cooperation with KPMG, continues to evaluate and design risk management frameworks for each and every working process of Head quater and branches.

• Attract and develop high quality human resource. VBI continues to stabilise and maintain high quality human resources, enhance training and at the same time, build up recruitment procedures and attractive welfare and benefit policies so as to employ capable, faithful employees with a long term commitment to the company.

On behalf of the Board of Directors of Vietinbank Insurance Joint –Stock Corporation, I would like to express our sincere gratitude to our valued customers, partners, government management agencies and all staff of Vietinbank Insurance, who have trusted, accompanied and supported us throughout the years. We remain committed to building and further developing Vietinbank Insurance in a growing and sustainable manner with a view to contributing positively to the overall development of the insurance industry and Vietnam’s economy.

1312

VietinBank Insurance

12

CHAPTER 1OVERVIEW2017 Annual report CHAIRWOMAN’S STATEMENT

HIGHLIGHTS

Top 10 most Prestigious Insurance Companies in Vietnam 2017

On 18/7/2017 at the Annual General Meeting of Vietnam CEO Summit in Hanoi, VietinBank Insurance was honoured as part of the Top 10 most prestigious Vietnamese insurance companies for 2017. This follows independent research conducted by Vietnam Report Joint Stock Company (Vietnam Report) in conjunction with Vietnam Net Online Newspaper. The award is based on three main criteria: financial capacity, media credibility and users’ satisfaction with insurance products and services offered by corporations.

Issued the First Online Loss Survey and Settlement Application in Vietnam - My VBI

With the positioning as ‘pioneer in technology” and leading in the era 4.0 in the field of insurance, Vietinbank insurance issued the First Online Loss Survey and Settlement Application in Vietnam – My VBI to improve customer services.

This application utilize the process of customer services, which enables customers to be supported in the fastest way

Transformed into VietinBank Insurance Joint Stock Corporation

After nearly 10 years of establishment and development, VietinBank insurance has become a prestigious and highly regarded brand in the non-life insurance market in Vietnam. Step-by-step, it has affirmed its position by supplying preferential products and services to customers based on the most modern information technology platforms. On 02/11/2017, the Ministry of Finance issued the amended license No. 21 / GPDC23 / KDBH allowing Vietinbank Insurance - which used to be a one-member Ltd. Insurance Company – for the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) - transforming and renaming as the Vietin Bank Insurance Joint Stock Corporation (VietinBank Insurance).

VBI Successfully reached Targeted Goals of the 2017 Business Plan and has become a Member of the 1000 billion Dong club!

VBI has repeated its success in receiving the Award for Outstanding Achievement at the VietinBank Conference for 2017 Business Performance as well as for the Implementation of 2018 activities. In particular, 2017 marked a tremendous achievement in the development of VietinBank insurance when it surpassed revenue of more than 1000 billion Dong for the first time.

VBI was honoured with the “Vietnam Excellence Brand 2017” Award

The “Vietnam Excellence Brand” is a prestigious annual-award co-organized by the Vietnam Economic Times and VIETRADE (Ministry of Industry and Trade) to honour the enterprises with outstanding achievements in business, service provision, full completion of tax obligations, protection of workers’ benefits, and active participation in social and community support activities. This event specifically acknowledges enterprises’ contributions in the sustainable development of the nation’s economy and improving the competitive edge of Vietnamese brands in the international market.

Top 500 Fastest Growing Enterprises in Vietnam

At the ceremony of announcing and honouring the 500 fastest growing enterprises in Vietnam 2017, VietinBank Insurance was named No.1 in the insurance industry and ranked 79th in FAST500 ranking of “rising stars” in the Vietnamese economy.

Launching Customer-Service Contact Centre 19001566

To understand customers’ desires and needs and deal with their questions and concerns more speedily, VietinBank Insurance has launched customer service contact centre 1900 1566 since 5th September 2017.The Contact Centre has been equipped with the most up-to-date technologies, using ACD / IVR system, Customer Interaction Centre (CIC) solutions, etc. In addition, fully qualified and trained operators are able to meet the standards of modern KPI, ensure effective cares and best services to meet customer needs.

“ 2017 Best Insurance Company for Vietnamese Customer Services”

In November 2017 In the UK, VietinBank Insurance Corporation was honoured “the Best Insurance Company for Vietnamese Customer Service 2017” by Global Banking& Finance Review (GBAF). This is a recognition of outstanding performance in the insurance industry; based upon revenue, market share, customer services, competitive capacity and advanced technology.

Award the Certification of Customer Satisfaction Index CSI2017

In August 2017, VietinBank Insurance was awarded CSI 2017 certification by the Economic Research Institute: Excellent Enterprise for Customer Satisfaction in Non-life Insurance. CSI 2017 Standard (Customer Satisfaction Index) is a measure of customer satisfaction across sectors, enterprises in many countries, including Vietnam. This is based on reports from the Council of Economy Research Institute, under international quality supervision by the International Organization for Assessment and Certification

Establishment of Three New Branches

During 2017, VBI has established 3 new branches : VBI Lao Cai, VBI Quang Ninh, VBI Binh Duong, bringing the total number of branches to 19 which are located at key areas nationwide.

2017 Annual report

16

HIGHLIGHTS

CORPORATE GOVERNANCE STRUCTURE

BOARD OF DIRECTORS

Ms. Nguyen Hong Van

ORGANISATIONAL DIAGRAM

SUPERVISORY BOARD

Mr. Le Tuan Dung graduated with a Bachelor’s degree in Economics, specializing in Insurance and has a Master’s degree in Business Administration from the Vietnam National Economics University. He has more than 23 years of experience in the insurance industry and has taken important positions from direct insurance to operational management, reinsurance in various insurance companies such as the Military Insurance Corporation, Post and Telecommunications Insurance Joint Stock Corporation and Petro Vietnam Insurance Joint Stock Corporation. He holds the position of Member of the Board of Directors and Chief Executive Officer of Vietinbank Insurance

Mr. Le Tuan Dung General Director

Chairwoman

Member

Ms Le Thi Huyen Trang

Ms. Le Thi Huyen Trang graduated from FinancialAcademy with a Bachelor’s dgree in Accounting and Master’s degree in Banking Finance. She has more than 6 years of experience in auditing. In November 2017, she was appointed as member of VIB Insurance’s

Supervisory Board.

Ms. Nguyen Ngoc Quynh

Ms. Nguyen Ngoc Quynh graduated from National Economics Unversity with a Bachelor’s degree in Banking Finance and Master’s degree in Finance, Monetary Transaction and Credit. She has more than 13 years of working in banking finance. In November 2017, she she was appointed as member of VIB Insurance’s Supervisory Board.

Ms. Nguyen Thai Dung

Ms. Nguyen Thai Dung graduated with Bachelor’s degree in auditing from National Economics Unversity and has Master’s degree in Econimic from Foreign Trade University. She has more than 10 years of working in accounting and auditing. In November 2017, she she was appointed as member of VIB Insurance’s Supervisory Board.

Ms. Luu Thi Linh NhamGĐ. Ban TCKT

Ms. Luu Thi Linh Nham graduated from Foreign Trade University with a Bachelor’s degree in Foreign Economic Relations. She has more than 12 years of experience in auditing. In August 2017, she was appointed the position of Director of VietinBank Insurance’s Financial and Accounting Department. Before joining VietinBank Insurance, she has hold management positions in large organisations: Earn and Young Auditing Firm, Bank of Investment and Development of Vietnam, Vietnam Joint Stock Commercial Bank for Industry and Trade.

Ms. Tran Thi Huong Thuy graduated with a Bachelor’s degree in Law at the Law University and has a Master’s degree in Business Administration at Latrobe University. She has more than 22 years of experience in banking and insurance holding assorted senior management positions. She is currently a Member of the Board of Directors and Deputy-Chief Executive Officer of Vietinbank Insurance

Ms. Tran Thi Huong ThuyDeputy General Director

Mr Nguyen Hong Phong graduated with a Bachelor’s degree in Economics at Trade University and has a Master’s degree in Business Administration at the Vietnam National Economics University. Before being appointed as VIB’s Deputy Chief Executive in July 2013, he has experienced the positions of marketing and operational manager at insurance companies of Vietinbank, Agriculture and Petrol Vietnam.

Mr. Nguyen Hong PhongDeputy General Director

CHAPTER 1OVERVIEW CORPORATE GOVERNANCE STRUCTURE

2017 marks a big progress in VBI activities which enables VBI to position itself in Top 10 most prestigious Insurance companies in Vietnam 2017.

Mr. Le Tuan Dung

Ms. Tran Thi Huong Thuy

Member

VietinBank Insurance2017 Annual report

• 2017 Macro Economics and Insurance Market, Business Performance• 2018 Business Plan and Development Orientation• Human Resource Governance• Direct Insurance • Reinsurance• Claim Management • Risk Management• Network Development • Customer Services• Communication and Branding • Community Support

2017 BUSINESS PERFORMANCE AND 2018 STRATEGIC ORIENTATION

02


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CHAPTER 22017 BUSINESS PERFORMANCE AND 2018 STRATEGIC ORIENTATION VietinBank Insurance



2017 BUSINESS PERFORMANCE

2017 total premium revenue is VND1,010 bn, up by 29.4% over the same period of 2016 and 84.1% over 2015. Of this, total premium insurance is almost VND892 bn, up by 28.8% and reinsurance premium is VND118.6 bn, up by 33.8% over the same period of 2016.

• At the end of 2017, VBI had 19-member companies and 5 transaction offices under the Head Office. This includes VBI Binh Duong, which was licensed in November 2017 and has been operating since 2018. Thus, in the past year, the company has expanded its three-member companies: Lao Cai, Quang Ninh, Binh Duong and 5 transaction offices: Long An, Tien Giang, Vinh Long, Tuyen Quang and Son La. The size and capacity of the business units shows consistently strong growth. In the period of 2015-2017, the premium revenue of branches increased by 50% or more.

Reinsurance premium revenue

Direct insurance revenue

0

400,000

200,000

600,000

800,000

1,000,000

2015 2016 2017

486,169

692,332

891,966

42,2%

84.1%

29,4%118,645

88,655

62,856

Total premium Revenue

Billion1.01029,4%

2017

2016

DT>20 Tỷ DT>45 Tỷ DT>70 Tỷ DT>100 Tỷ

0

2

4

6

8 8

4 4

2 2

0

6

15

10

12

14

16

Distribution channel

• Cross-selling through bank remains the major channel accounting for 70% of 2017 direct insurance premiums. Of this, underwriting through Vietinbank accounts for 97.5%.

Structural shifting and business growth of key operations

6.5%

17.2%

16.3%

1.8%6.2%

19.3%

32.8%

2015

2016

2017

34.7%

12.3%

6.3%

2.9% 5.3%

17.8%

20.7%

17.9% 32.5%

24.3%

6.8%

2.9%6.8%

8.5%

Property insurance Shipping operations

Others

Engineering insurance

Personal insurance

Cargo insurance

Motor vehicle insurance

2017 Annual report

2524



• In terms of the revenue proportion of direct insurance operations in 2017, the motor vehicle insurance achieved VND290bn, accounting for 32.5%; personal insurance VND215.9bn, accounting for 24.3%; property insurance VND 159.2bn, accounting for 17.9%; engineering insurance VND 76.2bn, accounting for 8.5%; cargo insurance VND 60.4bn, accounting for 6.8%; shipping operations VND 28.5bn, accounting for 3.2% and other lines (miscellaneous, liability and agricultural insurance) VND 59.4bn, accounting for 6.8%

35.00%

45.00%

40.00%

50.00%

55.00%

60.00%

65.00%

Total Reinsurance Direct insurance

42,30%

43,60%

55,30%

61,40%

40,60%

39,90%

2016 2017

Claim settlement

In 2017, VBI’s loss ratio on retained liability was 43.6%. Of this, the ratio for direct insurance increased from 39.9% to 40.6% and for reinsurance increased from 55.3% to 61.4%.

Property & reserve

Reserve

Property

1,222

1,470

1697

0

1,000

1,500

2,000

500

2015 2016 2017

395

614

841

2017 Annual report

2726



Labor & productivity by premium

Profit before tax & ROE

Productivity (bn)

ROE

Average staff

Profit before tax

2.20

2.44

33%

2.38

250

320

200

400

500

600

300

2.10

2.30

2.40

2.50

2.20

2015 2016 2017

425

28%

10.65%

12.03%

13.52%

68.4

75.1

60

80

90

70

8%

12%

14%

10%

2015 2016 2017

84.5

PLANNING, STRATEGIC ORIENTATION AND SOLUTIONS FOR 2018

2018 MARKET TREND

GrowthIn 2018, Non-life insurance market is predicted to maintain good growth rate with the average from 10% to 13%, especially motor vehicle insurance, personal insurance, health care insurance, bancassurance, liability insurance are predicted to grow from 25-30%.

ProductsThe selection of insurance products are still under the demand of the market. With the participation of many international re-insurancers, 2018 will be the year of boosting of insurance products and premium.

Technology2018 will be a year of technology. This will boost up a trend of technology competition among insurance companies.

M&AMerging or seeking foreign strategic partners to increase financial strength, management capacity, and competitive advantage in service are likely to be a prevailing trend in the market.

Distribution channelInsurance companies will continue to strengthen distribution channel, especially bancassurance. Besides, Online channel, telesales, direct agents will be continued to develop further.

Support from governmentThe government will have more supports to new insurance products in the fields of agriculture, engineering insurance, public property, miscellaneous, ...

2018 MAJOR BUSINESS PLAN

Total revenue

Profit before tax Increase equity

Loss ratio

Billion

Billion

Under1450

100 25%

44%

PLANNING, STRATEGIC ORIENTATION AND SOLUTIONS FOR 20182017 Annual report

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CHAPTER 22017 BUSINESS PERFORMANCE AND 2018 STRATEGIC ORIENTATION VietinBank InsuranceHUMAN RESOURCE GOVERNANCE

HUMAN RESOURCE GOVERNANCE

NETWORK DEVELOPMENT

In 2017, VBI has transformed its business model into a joint stock corporation. Human resource plays an important role in the success of VBI and therefore VBI has been continuing to improve human resource policies and associated salary, bonus and training policies.

In 2017, VBI continued to expand its business activities by ensuring quality and efficiency in service delivery and extending its geographical footprint. VBI has established three new member companies Quang Ninh, Lao Cai and Binh Duong and 7 transaction offices under the head office including Tien Giang, Vinh Long, Long An, Binh Dinh, Tuyen Quang, Son la, Hung yen. Its business network has been extended, consisting of 26 member companies , more than100 business units and 70 regional sale offices to boost sales and improve customer service quality.

In 2018, VBI’s retail activities will be promoted through an extended network and expects to establish eight more new member companies, 20 business units and regional transaction offices.

Training Policy

Aiming to build and develop staff with sound business ethic, professional in working style and customer service and knowledgeable, In 2017, VBI sent just under 100 staff to participate in external training courses and over 2000 person-units of training were internally provided.8 staff have completed the prestigous ANZIIF international standard insurance training programme. In addition, more than 30 staff have participated in study visits in Russia and Japan.

Reward Policy

In order to motivate VBI employees to increase working efficiency, productivity and quality, VBI has issued a periodical reward plan for individuals and groups which effectively contribute to business activities. In addition, VBI also considers contingency bonuses for individuals and groups with innovations on technical improvement, business organisation, obtaining new customers and markets and cost savings and as a result enhancing business efficiency.

Strategic Orientation for Human Resources in 2018

Continue to improve training schedules for every position. Put in place diverse and flexible policies and programmes to motivate employees i.e. incentive schemes, salary and reward policies.

Remuneration policy

The stipulations on salary payment and additional allowances apply uniformly throughout the VBI system. For business units, wages are paid according to turnover and minimum income guaranteed. For supporting units, renumeration is based on job position, performance and efficiency. This payment method creates a highly motivational environment for qualified employees and ensures fairness between positions within the VBI system. 2017 Employees’ average salary increased by nearly 10% compared to 2016.

DIRECT INSURANCE

DIRECT INSURANCE

In 2017, VBI’s direct insurance revenue reached VND 893 bn, up by 29.1% over 2016 and nearly three times the average growth of the whole market of 11%. Revenue from motor vehicle insurance continues to be the largest portion of VBI’s portfolio with VND 290bn , accounting for 32.47% of total revenue. The is followed by the personal line with VND 217 bn, accounting for 24.31% of total revenue. Property

insurance reached VND159bn VND, accounting for 17.85% of total revenue. Engineering insurance revenue was VND76.99bn, making up 8.62% of total revenue. Cargo Insurance revenue was VND88.94 bn, accounting for 9.96% of total revenue. The remaining insurance lines accounted for 6.79% of the sum.

2017 Annual report

30

CHAPTER 22017 BUSINESS PERFORMANCE AND 2018 STRATEGIC ORIENTATION

31

VietinBank InsuranceDIRECT INSURANCE

This is VBI’s flagship product towards individual customers and has had a boom in revenue by reaching VND 217,091 bn, up by 51.6% compared to 2016, accounting for 24,3% total direct insurance revenue and being the second highest premium revenue at VBI (behind motor vehicle insurance with VND290 bn). VBI’s claim payments in 2017 were VND78.67 bn, a loss ratio was 36.2%.

In 2017, Swiss Re, the world’s leading reinsurer, published a report on “Demand and Expectations for Better Healthcare Services are Rising in Emerging Markets.” The report also points out that “premiums for reimbursement-type products are expected to double by 2020…As income levels in emerging markets rise, people spend more on healthcare services as a means to improve their quality of life. This is driving demand and expectations for better health services in the emerging markets”.

Recognizing that personal insurance products have high potential for fast growth in revenue, VBI has simultaneously focused on providing personal insurance products such as insurance packages for borrowers as personal insurance, VietinCare and for savers as personal safety insurance. Those products have brought to VBI about 10,000 new individual customers. In particular, VBI is one of the market-leading insurers in the retail segment for individual health care products with a distribution network through various agent channels.

In 2018, VBI will continue to provide retail healthcare products for individual customers of VietinBank and affiliated banks such as Ocean Bank & GP Bank. This is a market segment with high potential and is envisaged to be a significant source of future customers.

In addition, VBI will give strong attention to promoting insurance products for borrowers, international travel insurance, health insurance, cancer and dangerous disease insurance amongst others by way of integrating with bank products offering more choices and meeting the diverse needs of customers.

PERSONAL INSURANCE

This is the line with biggest revenue propotion of all businesses (accounting for 32.47%). In 2017, revenue was VND290.02 bn, an increase of 20.09% over 2016 (more than 2 times of average growth rate of whole market of 13%). Motor physical damage insurance revenue reached VND257.58bn, accounting for 89% of total motor vehicle revenue. Other related motor vehicle insurance reached VND32.44 bn, accounting for 11% of total revenue. VBI’s total claim payment for motor vehicle insurance was VND172.88 bn VND, accounting for 59.60% of total revenue (lower than the market’s loss ratio of 68%).

Circular 50 has been in effect since 1st July 2017. According to the Insurance Supervisory and Authority - Ministry of Finance, Circular 50 has removed difficulties for insurance enterprises; put in place government management and supervision functions; and supported the development of insurance enterprises, thereby enabling the insurance market to continue its strong development.In 2018, motor vehicle insurance remains VBI’s key

MOTOR VEHICLE INSURANCE

business. Besides integrating Motor vehicle insurance with car loan products from VietinBank and other affiliated banks across the country, VBI also actively collaborates with showrooms and garages to provide convenient motor vehicle insurance products that meet customers’ demand, as well as promoting online sales, based on its strength in information technology. In particular, VBI has preferential and attentive care policies to customers with low damage rate so that mechanisms and solutions to enhance the renewal process to maintain a high renewal rate.

Revenue

Billion29020,9%

PROPERTY INSURANCE

In 2017, property insurance continues to be a business line accounting for a high proportion of VBI’s insurance revenue structure, just behind motor vehicle and personal insurance with revenue of nearly VND160 bn, a 29.1% increase compared to 2016 (8.5 times higher than the average market growth rate of 3.4%) and accounting for 17.85% of VBI’s total revenue by lines of business.

In 2017, VBI’s business units collaborated closely with VietinBank’s branches in providing insurance for mortgaged properties at the bank, especially disbursement for plants, manufactures, and warehouses etc.

The direct loss ratio for property insurance in 2017 was 41.34%. Although this was higher compared to 2016, this is still lower than 43% of the whole market and is due to the severe natural disasters negatively affecting business during the year. This result was built on VBI’s continuous effort in risk control at the outset, especially with high risk exposures in the areas most vulnerable to natural disasters. Some of the major losses settled by VBI consisting companies of Cao Phong, Asia Tea, TASA ceramics.....

VBI’s orientation for 2018 is to focus on underwriting property insurance for VietinBank’s small and medium-sized clients and affiliated banks. With respect of risk control , VBI will rebuild the whole engineering property software system at every stage of underwriting, risk assessment, quotation, policy issuance to ensure consistency, centralized management and productivity.

Revenue

Billion16029,1%

Revenue

Billion21751,6%

2017 Annual report

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CHAPTER 22017 BUSINESS PERFORMANCE AND 2018 STRATEGIC ORIENTATION VietinBank InsuranceDIRECT INSURANCE

Engineering insurance includes construction/erection all risks insurance, contractor’s machinery and equipment insurance, electronic equipment insurance, machinery breakdown insurance, boiler insurance, completed civil risks insurance, and deterioration of stock in cold storage insurance.

In 2017, VBI’s engineering insurance generated VND76.99 bn

ENGINEERING INSURANCE

Miscellaneous and liability insurance revenue for the whole company is over VND 59.3 bn, representing 6.6% of total premiums, up over 60% compared to 2016. This is a business line with strong potential as the market segment has yet to be fully exploited. The loss ratio of Miscellaneous and Liability Insurance in Vietnamese market is often very low as liability lawsuit cases are not popular and rarely pursued.

MISCELLANEOUS AND LIABILITY INSURANCE

Marine Insurance revenue increased

39,2% in comparison to 2016

In 2017, cargo premiums reached VND60,486 bn, accounting for 6.8% of total revenue, a 39.2% increase over 2016. VBI considers cargo insurance as the key product in promoting premium revenue.

In 2018, VBI will continue to promote the following products: containerized import-export cargo, inland transit, airfreight cargo. VBI will boost its cargo insurance by marketing new customers through Vietinbank, implementing good underwriting policies . In terms of target customers, VBI will focus on customers that open L / C or who have entrusted payment through VietinBank and other affiliated banks.

Marine Hull Insurance revenue increased

43,2% in comparison to 2016

In 2017, hull insurance created revenue of VND28.458 bn, accounting for 3.2% of total revenue, with a growth rate of 43.2% compared to 2016. At the same time, VBI approached a number of new ship owners to underwrite International P & I at various Associations and the fleet insured with VBI has incurred no losses up to now. VBI has provided hull insurance to many vessels with capacity of 220,000 tons on international voyages . Owners of those vessels are confident in VBI in dealing with incidents during marine ventures.

In 2018 VBI will continue to implement underwriting policies as for 2017, taking advantage of VietinBank and other cooperative banks, expanding to new international P & I fleet. In addition, we shall continue to focus on the current VBI fleet with good claim histories, passenger and tourist ships and oil tankers.

MARINE INSURANCE

VBI’s Marine Insurance including Cargo and Hull Insurance.

Revenue reaches over

Billion59,360% IN COMPARISON TO 2016

accounting for 8.62% of total revenue by business lines, a decrease of 10.79%, with a loss ratio of 77.17% equivalent to VND 59.41 bn. This adverse result was due to the reduction of the construction of infrastructure, large factories ... as well as the intense competition between insurers on the engineering insurance.

Taking advantage of being a joint stock corporation with VietinBank as major shareholder, in 2017, VBI continued to closely coordinate with VietinBank’s branches to provide comprehensive package insurance to projects financed by VietinBank. During the year, VBI has signed large construction/erection all risks policies such as Build-Operate-Transfer (BOT) Bac Giang - Lang Son, Complex construction project at 3 Luong Yen, CityLand Residential Project, Tourism and Premier Villas Project (Premier Village Halong Bay)...

In 2018, VBI continues to focus on underwriting construction/erection projects funded by VietinBank and affiliated banks, limiting the exploitation of high risk projects such as hydropower plants in the West North and Central provinces, machinery and equipment operating in areas with complex terrain.

Revenue Account for

Total revenue

Billion76,99 8,62%

In 2018, VBI will continue to accelerate underwriting this line including money insurance for the banking system, general liability, professional liability as well as special insurance such as prize insurance, agricultural insurance, insurance for cardholders.

01 02

2017 Annual report

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REINSURANCE

REINSURANCE

In 2017, reinsurance revenue reached VND118 bn, an increase of 32.5% compared to 2016. This has been the highest growth rate of reinsurance business in recent years, of which property and personal insurance has demonstrated strong growth .

In 2017, reinsurance revenue reached

Reinsurance target

118

150In 2018, reinsurance is still one of our main lines , contributing to the overall development of the corporation with a target of VND150 bn, up by 27%. In addition to continuing and enhancing close cooperation with local insurers to exchange insurance services, VBI will expand its reinsurance operation to international markets through reinsurers, service exchange with foreign insurers of the same size to diversify the insurance types, strengthen the cession capacity as well as inward reinsurance revenue.

Billion

Billion

CLAIMS MANAGEMENT

Launching the customer care contact centre 19001566

in September 2017, VBI launched the 24/7 customer care contact centre with three main functions: receiving motor vehicle loss notification, answering the questions on medical claims and receiving hospital direct billing requests.

Launching my VBI Application

In November 2017, by integrating activities into the 4.0 technology revolution, VBI launched the My VBI application that operates on both iOS and Android operating systems. Through the application, VBI’s customers can:• Take photos and make claim notification of car accidents.• Make request of health insurance claim.• Update the status of medical claim.• Search for associated garages and direct billing hospitals.The launch of the My VBI application enables VBI insured clients to take the initiative in filing claims, and tracking claims processing, and receive quick responses from the VBI compensation team.

Successfully deploy centrally managed claim settlement model in Hanoi region

For the purpose of central claims management, from mid-2016 VBI began implementing a centrally managed claim settlement model in the Hanoi region. Despite some early challenges, 2017 represented a year of improvements in workflow towards specialization. VBI successfully reduced the time for claim processing and settlement, improving the efficiency and accuracy of the claim files.

In November 2017, by integrating activities into the 4.0 technology revolution, VBI launched the

My VBI

CLAIMS MANAGEMENT

Motor vehicle claims

In 2017, motor vehicle insurance is the leading line with revenue accounting for 32.5% of total revenue. In order to improve the claim settlement quality, VBI has provided software for every step from inspection to compensation. In addition, VBI has also coordinated with its partnering consultant to develop a risk management framework for motor vehicle operation, thereby minimizing fraudulent claims and errors in claim processing.

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CHAPTER 22017 BUSINESS PERFORMANCE AND 2018 STRATEGIC ORIENTATION VietinBank InsuranceCLAIMS MANAGEMENT

2018 PLAN

Personal insurance claims

After the motor vehicle, personal insurance is VBI’s 2017 second largest revenue business, accounting for 24.3% of total revenue. However, it also creates a huge claim volume of over 42,000 recorded events. In order to handle the burden of work quickly, VBI has made significant improvements to claim process such as:

• Providing software to the entire claim process from claim receipt to settlement, with automated data input.

• Claim settlements are approved online, minimizing the use of the claim papers.

• Set up time processing metrics for each step of the claim process through the software system to speed up all steps in accordance with the established process.

• - Having more direct billing hospitals in the current system: In 2017, VBI has expanded the direct billing system with a total of 183 hospitals

• Continue to improve the loss investigation process for motor vehicles. Introduce monetary compensation for motor vehicles.

• Continue to improve the claim settlement process for personal insurance, with the target of being the first company in the market committing to handle health insurance claim within 3 to 5 working days.

nationwide signing a cooperation contract with VBI (compared to 20 hospitals in 2016), such as big and reputable hospitals such as Saigon Ear Nose & Throat Hospital, Hoan My Sai Gon Hospital, Tu Du Hospital (in HCM area), French-Vietnamese Hospital, Vinmec International Hospital (in the Hanoi area). The expansion of direct billing hospitals enables customers to have more options when using health insurance.

For 2018, further improvements are envisaged to enhance the claims settlement process, quality and customer satisfaction. VBI has therefore set-out the following objectives:

• Optimize direct billing process so that customers actively declare and obtain direct billing via the application on their phone/tablet.

• Provide software to property, engineering and marine claims processes. Regularly check the outstanding claim dossiers, follow up with independent loss adjusters to speed up loss assessment and settlement in a timely manner.

• Re-evaluate the property, engineering and marine loss adjusters to work with reputable and good quality companies.

• Strengthen the training of loss surveyors and claim officers in the whole system.

• Continue to expand the network of direct billing hospitals and associated garages nationwide.

• Implement the centrally managed claim settlement in Ho Chi Minh City.

RISK MANAGEMENT SYSTEM

RISK MANAGEMENT SYSTEM

In 2017, KPMG International worked with VBI to develop and implement the Enterprise Risk Management Framework. With KPMG’s support, the pilot implementation of the framework has been applied to motor vehicle claims.

Two parties have performed the following tasks: Develop Enterprise Risk Management Framework (ERMF); Develop 2017 major risk profile; Training and transferring knowledge on risk management; Convert to language of information technology; Support pilot implementation of the detailed risk management system.

The project has created a “thermal map” for VBI key activities to help the Board of Directors with a holistic view on ERM and set up the direction for better management of the company.

In 2018, risk management will be further strengthened by applying information technology for the central management of all records and documents throughout the Company and continue to cooperate with reputable partners for the design of a risk management framework at VIB.

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CHAPTER 22017 BUSINESS PERFORMANCE AND 2018 STRATEGIC ORIENTATION VietinBank InsuranceINFORMATION TECHNOLOGY

In 2018, for the purposes of becoming a leader in information technology, modernisation of business management and customer service, VBI will continue to strongly upgrade and deploy IT applications so as to increase effectiveness and working productivity, build up online systems to enhance interactions to clients and partners.

Optimise processes

In 2018, modernisation of all processes for the sale and underwriting of motor vehicles will be carried out. Underwriting process for property, engineering, cargo insurance will be emphasised in 2018

Upgrade systems

• Transform Bancassurance to a portal for tighter and more flexible management and apply improved underwriting processes.

• Upgrade My VBI application with more features and convenience such as registering doctor’s visits for VIP clients, advising transportation routes….

Deploy function of automation invoicing

Deploy the feature of automatic invoicing and accounting for retail policies to minimize time-taken for cross checking, statistic reference and labouring

Computerise customer services

• In 2018, VBI will enhance customer services by implementing systems (CRM, HRM, customer service Website…).

• In addition, VBI has a research plan to apply image recognition technology to support management operation and customer services.

Strengthen system security VBI plans to hire Pentest to evaluate system security levels by stress testing.

ORIENTATION FOR 2018 TECHNOLOGICAL DEVELOPMENT

INFORMATION TECHNOLOGY

With the strategy of ‘pioneering information technology’ positioning, VBI always brings experiences to clients with the new and most advanced insurance e services. VBI has created an IT revolution to various activities in business operation, customer services, document management. This was one of VBI’s highlights during 2017.

Modernisation of administrative procedures

• Building a documentation archive module for the whole system to make it easy for information search and associated trainings...

• Deploying new digital signature solution to make digital signature quicker

• Deploy digital signature of documents and papers instead of manual signature.

Deploy relevant software application for garages and hospitals

• VBI has deployed 2 features on the system, interlinked with automobile and personal claim settlement.

• In 2017, VBI has upgraded and transformed the software for automobile and personal claims, direct billing system.

Deploy new model of online insurance

• Besides developing My VBi application in order that customers can buy insurance easily, VBI also build centralize managerial systems for retail service.

Launching the My VBI application

• My VBI is an online inspect and claim settlement application with all convenient features. It provides clients with efficient and speedy support from insurance purchase to claim survey and settlement. It helps VBI to create competitive advantages and bring new experiences to our clients.

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VBI - LISTEN FROM THE HEART

Submit claim of car insurance and photographing of motor vehicle damage

CUSTOMER SERVICES

CUSTOMER SERVICES

“

The contact centre ensures the reception of all customer’s calls, minimization of missed calls. It helps the claim department and inspection centres shorten the claim processing time by eliminating a step of manually receiving information from customers. In addition, the professional style and voice inspiration make customers feel comfortable and trust in VietinBank Insurance.

The application of My VBI has been of the highlights and perhaps the crowning achievement of 2017. For the first time in the market, an application allows customers to report online and take pictures of damaged motor vehicles; declare health insurance; update the claim

Customer service play a very important role in building the brand and image of the business to the public in general and to customers, in particular. Good customer service activities increase renewal rates, help to retain customers for a long period of time, and help business grow in a sustainable and long-term manner.

App My VBI

Submit claim of Health care insurance

Search Claim settlementSearch online insurance certificate

process; obtain electronic insurance certificate or invoice – that had previously been manually reissued. In addition, VietinBank Insurance has been developing a new “VBI for sale” application in order to optimize the selection and purchase of VBI insurance products, allow online payment and shorten the time for purchasing insurance products.

2017was another year for strong VBI customer service delivery and 2018 is envisaged to be no different. VBI will continue to develop customer service policies.

Objectives for 2018

VBI will implement care activities for corporate customers: implementation care activities on the occasion of the company establishment, Holidays, organization events gratitude customer ...

• Design contact centre’s comprehensive features for receiving customer information.

• Develop a standard database system to implement the classifications and customer service programmes.

• Further strengthen trust and satisfaction for existing clients.

• Standardization of messages and information sent to clients.

VietinBank Insurance is the customer base, the customer care is the focus for the development of sustainable.“For each group, the customer service department has outlined specific strategies to take care of them throughout the insurance provision and renewal period. This may include : birthday gifts (according to customer’s classification), rewards for clients renewing policies....Furthermore, the customer service department will coordinate with relevant departments to develop a mechanism to receive and handle the specific needs of each group; expand cooperation with health facilities, health care centres, tourism, automobile, shopping ...; standardize information communicated to customers and further develop health consulting services –family doctors through contact centre; apply the technology solution “CRM software” to standardize customer’s database system; ...amongst other things…

3.000.000

The number of VBI’s expected customers in 2018 is estimated at

The customer service activities for 2018 will continue to bring the best policies and services to customers, provide updates and workable solutions as well as make progress with their concerns such that that they will feel satisfied and have complete confidence in VBI’s service provision.

“SCRUPULOUS, CONSCIENTIOUS, UNDERSTAND”

VBI - LISTEN FROM THE HEART2017 Annual report

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CHAPTER 22017 BUSINESS PERFORMANCE AND 2018 STRATEGIC ORIENTATION VietinBank InsuranceCOMMUNICATION AND BRANDING

COMMUNICATION AND BRANDING

In addition, the vision, core values and slogans are clearly and deeply communicated within the corporation, and are expressed with a pervasive sense of humanity, which carries our mission of risk sharing with customers in order to “preserve the value of life”.

VietinBank Insurance facilitates and motivates employees to contribute and share ideas of brand imaging and development. At the same time, the brand values and tools are being integrated and developed in across the product spectrum. This will create linkage to employee behaviour and internal actions in-keeping with the company brand.

In 2017, Vietinbank Insurance not only achieve big growth in revenue but also mark its strong brand through many communications activities:

Vietinbank insurance awarded as strong brand in

Vietnam (2014-2017)

years consecutively

04In terms of branding communication, VBI has comprehensively transformed. Accordingly, the activity is performed multi-dimensionally through various channels with innovations on modern communication, most notably by meeting the demands of the 4.0 technology era. The enhanced customer interaction through VBI’s fan page on Facebook and the My VBI application creates a strong impression upon the public. In addition, the change of the brand identity (image and signs) in accordance with VietinBank’s name has been made nationwide.

“

There are many tangible and intangible values that constitute the VBI brand. This includes leadership capacity, network size, information technology platforms and partner systems ... All of these factors are converging to create the momentum for VietinBank Insurance constantly growing with the goal of becoming the leading non-life insurance retailer in Vietnam by 2020. At present it is one of the 8 largest non-life insurers in Vietnam in terms of market share. We are proud that VietinBank Insurance is in the process of becoming a market leader in applying high technology solutions in insurance management and distribution.

AWARE » BELIEVE » UNDERSTAND » EXPERIENCE » SHARE

In 2017, VietinBank Insurance achieved a quite remarkable level of business growth and concomitantly affirmed its branding position in the top 10 Most Prestigious Insurers in Vietnam. It was also recognized and evaluated by international organization for the title of “ Insurer with Best Customer Services” by the UK’s Global Banking & Finance Review. This accreditation reflects our outstanding insurance performance based upon revenue, market share, customer services, competitive capacity and advanced technology.

In terms of brand positioning, VietinBank Insurance’s development strategy is manifested by improving the quality of products and services, customer experiences through the insurance purchase, online inspection and claim payment via the My VBI phone application. The development of the member company network, transaction offices, branches strengthen our brand identification across the country.

highlightsin

2017

• Each VBI-er is a brand ambassador

• Spread strongly through the network of 155 Vietinbank branches and 1.000 transaction points

• Improve customers’ mindset on the importance of insurance

• Advertising widely VBI brand with the mission of share the risk, be more professional, creative, distinguished in brand image

• VBI Brand sends true value to customers

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CHAPTER 22017 BUSINESS PERFORMANCE AND 2018 STRATEGIC ORIENTATION VietinBank InsuranceCOMMUNITY SUPPORT

In November 2017, VBI implemented a charity programme “sharing love and going to school together” at Giao Thien commune, Lang Chanh district, Thanh Hoa province, mobilising VND 120 million. This activity helped the communities recover from the natural disaster that caused huge damages to the locality.

Voluntary blood donation and community health care activities: actively participate and complete the activities of distributing porridge to children undergoing medical treatment at the National Hospital of Paediatrics under the program “porridge with love” of the Vietinbank’s Youth Union.

Gratitude and remembrance activities: on the occasion of Vietnam’s war Invalids and Martyrs Day 27/07, VBI Youth Union members took part in gratitude and remembrance activities in Martyr Cemetery Ha Dong, Hanoi, contributing to the propaganda of patriotic traditions and the glorious history of the nation.

2018 plan.

Community support activities will be further strengthened. VBI will focus on educational support for poor and disabled children, environmental protection. It is considered as one of VBI core activities to show commitment to accompany and toward community in our development strategy.

COMMUNITY SUPPORT

VBI actively participates in Vietinbank’s social security activities in general and those of VBI in particular, thereby demonstrating corporate social responsibility to the community, including the implementation of the national objective of hunger alleviation and poverty reduction for economic development.

Activities are being implemented in a practical and effective manner, attracting the enthusiastic participation of VBI staff in social security protection, solving community-level difficulties and giving support to remote and special disadvantaged areas. VBI always determines that this activity is both propaganda and education for employees, showing the social responsibility and promoting the image of VietinBank Insurance to the community.

Vietinbank Insurance will compensate your risk Bring more value to life

For community protection

“

“

2017 Annual report

4746

• General information• Report of Management• Independent auditors’ report • Balance sheet• Income statement• Cash flow statement• Notes to the financial statements

VietinBank Insurance

FINANCIAL STATEMENT AND ILLUSTRATION

03

2017 Annual report

4948

CHAPTER 3FINANCIAL STATEMENT AND ILLUSTRATION VietinBank Insurance

BOARD OF MANAGEMENT

Members of the Board of Management during the period from 1 October 2017 to 31 December 2017 and at the date of the financial statement are:

BOARD OF SUPERVISION

Members of the Corporation’s Board of Supervision during the period from 1 October 2017 to 31 December 2017 and at the date of the financial statement are:

LEGAL REPRESENTATIVE

The legal representative of the Corporation during the period from 1 October 2017 to 31 December 2017 and at the date of this report is Mr. Le Tuan Dung – Title: General Director.

AUDITORS

The auditors of the Corporation are Ernst & Young Vietnam Limited.

Name Position Date of appointment

Ms. Le Thi Huyen Trang Head of Supervision Appointed on 28 November 2017

Ms. Nguyen Ngoc Quynh Member Appointed on 28 November 2017

Ms. Nguyen Thai Dung Member Appointed on 28 November 2017


Mr. Le Tuan Dung General Director Appointed on 28 November 2017

Mr. Nguyen Hong Phong Deputy General Director Appointed on 28 November 2017

Ms. Tran Thi Huong Thuy Deputy General Director Appointed on 28 November 2017

GENERAL INFORMATION

GENERAL INFORMATION

BOARD OF DIRECTORS

CORPORATION

Vietinbank Insurance Corporation (the “Corporation”) was previously known as Vietinbank Insurance Company Limited, which was wholly owned by Vietnam Joint Stock Commercial Bank for Industry and Trade. Vietinbank Insurance Company Limited was established in Vietnam pursuant to the first Establishment and Operation Licences No. 21 GP/KDBH granted by the Ministry of Finance dated 12 December 2002 and the Amended Licenses No. 21/GPDC5/KDBH granted by the Ministry of Finance dated 17 December 2008.

On 31 December 2015, Vietnam Joint Stock Commercial Bank for Industry and Trade issued Decision No. 660/NQ-HDQT-NHCT44 on the approval of the proposal to change the company form to a joint stock company. Granted by Ministry of Finance under Amended Business License No. 21/GPDC23/KDBH on 2 November 2017, Vietinbank Insurance Company Limited was transformed into Vietinbank Insurance Joint Stock Corporation on 1 October 2017.

Members of the Corporation’s Board of Directors during the period from 1 October 2017 to 31 December 2017 and at the date of the financial statement are:

Registered Company name Vietinbank Insurance Joint Stock Corporation

Head office’s address 10th & 11th Floor, No. 126 Doi Can Street, Ba Dinh District, Hanoi

Operating activitiesProvide general insurance products, reinsurance, loss survey, investing activities and other activities that are in line with prevailing laws and regulations

Location and branch network 19 branches nationwide

Employee 465 persons at 31 December 2017

Charter Capital VND 500,000,000,000 at 31 December 2017


Ms. Nguyen Hong Van Chairman Appointed on 28 November 2017

Mr. Le Tuan Dung Member Appointed on 28 November 2017

Ms. Tran Thi Huong Thuy Member Appointed on 28 November 2017

The following summarizes some key information about the Corporation:

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CHAPTER 3FINANCIAL STATEMENT AND ILLUSTRATION VietinBank InsuranceINDEPENDENT AUDITORS’ REPORT

INDEPENDENT AUDITORS’ REPORT

We have audited the accompanying financial statements of Vietinbank Insurance Joint Stock Corporation (“the Corporation”) as prepared on 29 March 2018 and set out on pages 6 to 60, which comprise the balance sheet as at 31 December 2017, the income statement and the cash flow statement for the period from 1 October 2017 (the date of legal form transformation into joint stock company) to 31 December 2017 and the notes thereto.

Management’s responsibility

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Vietnamese Accounting Standards, Vietnamese Enterprise Accounting System, the accounting guidance applicable to insurance companies and the statutory requirements relevant to preparation and presentation of financial statements, and for such internal control as management determines is necessary to enable the preparation and presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these 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 requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the 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 fair presentation of the 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 Corporation’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view, in all material respects, of the financial position of the Corporation as at 31 December 2017 and of the results of its operations and its cash flows for the period from 1 October 2017 to 31 December 2017 in accordance with Vietnamese Accounting Standards, Vietnamese Enterprise Accounting System, the accounting guidance applicable to insurance companies and the relevant statutory requirements to preparation and presentation of the financial statements.

Ernst & Young Vietnam Limited

Reference: 60968897/19811373

Hanoi, Vietnam, 29 March 2018

Saman BandaraDeputy General DirectorAudit Practising RegistrationCertificate No.: 2036-2018-004-1

Luong Thi Phuong DungAuditor Audit Practising Registration Certificate No.: 3054-2014-004-1

To: The Shareholders Vietinbank Insurance Joint Stock Corporation

REPORT OF MANAGEMENT

REPORT OF MANAGEMENT

Hà Nội, Việt NamNgày 29 tháng 3 năm 2018

Lê Tuấn DũngTổng Giám đốc

Management of Vietinbank Insurance Joint Stock Corporation (“the Corporation”) presents its report for the period from 1 October 2017 (the date of legal form transformation into joint stock company) to 31 December 2017.

STATEMENT OF MANAGEMENT’S RESPONSIBILITY IN RESPECT OF THE

FINANCIAL STATEMENTS

Management is responsible for the financial statements of each financial period which give a true and fair view of the state of the financial position of the Corporation and of its results of operations and cash flows for the period. In preparing those financial statements, the management is required to:• Select suitable accounting policies and apply them consistently;• Make judgements and estimates that are reasonable and prudent;• State whether applicable accounting standards have been followed, subject to any material departures

disclosed and explained in the financial statements; • Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

Corporation will continue in business.

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 to ensure that the accounting records comply with the applied accounting system. It is also responsible for safeguarding the assets of the Corporation and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Management has complied with the above requirements in preparing the accompanying financial statements.

STATEMENT BY MANAGEMENT

Management does hereby state that, in its opinion, the accompanying financial statements give a true and fair view of the financial position of the Corporation as at 31 December 2017 and of the results of its operations and its cash flows for the period from 1 October 2017 to 31 December 2017 in accordance with the Vietnamese Accounting Standards, Vietnamese Enterprise Accounting System and accounting guidance applicable to insurance companies, and with the statutory requirements relevant to preparation and presentation of financial statements.

For and on behalf of Management

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Code ITEMS Notes 31 December 2017

VND

1 October 2017

VND

31 December 2016(restated)

VN

200 B. NON-CURRENT ASSETS 493,453,124,767 465,433,861,489 44,212,376,609

210 I. Long-term receivables 9,794,824,809 9,507,615,415 7,288,297,997

216 1. Other long-term receivables 9,794,824,809 9,507,615,415 7,288,297,997

216.1 1.1. Statutory deposit 8 8,000,000,000 8,000,000,000 6,000,000,000

216.2 1.2. Other long-term receivables 1,794,824,809 1,507,615,415 1,288,297,997

220 II. Fixed assets 30,893,355,263 31,927,600,421 18,689,426,101

221 1. Tangible fixed assets 9 29,357,425,716 30,192,197,202 16,869,874,054

222 • Costs 42,421,740,610 42,137,219,246 25,935,567,730

223 • Accumulated depreciation (13,064,314,894) (11,945,022,044) (9,065,693,676)

227 2. Intangible assets 10 1,535,929,547 1,735,403,219 1,819,552,047

228 • Costs 4,295,639,256 4,295,639,256 3,795,525,000

229 • Accumulated amortisation (2,759,709,709) (2,560,236,037) (1,975,972,953)

250 III. Long-term investments 5 430,131,097,891 404,728,097,891 642,097,890

255 1. Held-to-maturity investments 430,131,097,891 404,728,097,891 642,097,890

260 IV. Other long-term assets 22,633,846,804 19,270,547,762 17,592,554,621

261 1. Long-term prepaid expenses 11.3 21,589,184,829 18,582,995,060 16,905,001,919

262 2. Deferred tax assets 28.2 1,044,661,975 687,552,702 687,552,702

270 TOTAL ASSETS 1,697,616,829,965 1,595,780,828,179 1,470,231,227,333

BALANCE SHEET

BALANCE SHEET


VND

1 October 2017

VND


VN

100 A. CURRENT ASSETS 1,204,163,705,198 1,130,346,966,690 1,426,018,850,724

110 I. Cash and cash equivalents 4 93,004,321,195 28,126,573,843 95,472,354,263

111 1. Cash 17,004,321,195 23,126,573,843 25,472,354,263

112 2. Cash equivalents 76,000,000,000 5,000,000,000 70,000,000,000

120 II. Short-term investments 5 578,683,639,365 600,225,000,000 920,044,956,188

121 1. Trading securities - - 271,737,486,640

123 2. Held-to-maturity investments 578,683,639,365 600,225,000,000 648,307,469,548

130 III. Short-term receivables 6 187,883,654,553 201,844,896,657 133,210,187,055

131 1. Short-term trade receivables 134,971,141,322 152,795,030,375 107,201,084,374

131.1 1.1. Insurance receivables 134,971,141,322 152,795,030,375 107,201,084,374

132 2. Short-term advances to suppliers 3,786,139,366 5,147,370,654 1,390,339,541

136 3. Other receivables 53,982,167,929 44,218,437,328 24,934,704,840

137 4. Provision for doubtful debts (4,855,794,064) (315,941,700) (315,941,700)

140 IV. Inventories 7 1,410,178,304 710,118,575 924,215,468

141 1. Inventories 1,410,178,304 710,118,575 924,215,468

150 V. Other short-term assets 52,160,486,259 43,634,034,564 32,278,584,744

151 1. Prepaid expenses 11 44,726,065,147 37,760,119,206 26,594,906,257

151.1 1.1. Unallocated commission expense 11.1 36,356,975,539 31,439,541,800 26,582,550,720

151.2 1.2. Other prepaid expenses 11.2 8,369,089,608 6,320,577,406 12,355,537

152 2. Deductible VAT 7,434,421,112 5,873,915,358 5,683,678,487

190 VI. Tài sản tái bảo hiểm 291,021,425,522 255,806,343,051 244,088,553,006

1911. Reinsurance assets from unearned

premium reserve17.1 117,709,219,217 121,888,761,938 129,544,438,998

192 2. Reinsurance assets from claim reserve 17.2 173,312,206,305 133,917,581,113 114,544,114,008

B01 - DNPNT 31 DECEMBER 2017

2017 Annual report

5554


Hanoi, Vietnam29 March 2018

Mr. Quach Van HaPreparer

Ms. Luu Thi Linh NhamDirectorFinance & Accounting Division

Mr. Le Tuan DungGeneral Director

BALANCE SHEET


VND

1 October 2017

VND


VN

300 C. LIABILITIES 1,083,884,017,817 999,925,820,234 869,840,902,615

310 I. Current liabilities 1,083,831,382,817 999,925,820,234 869,840,902,615

311 1. Trade payables 12 143,062,368,969 173,448,032,978 163,596,296,967

311.1 1.1. Insurance payables 143,062,368,969 173,448,032,978 163,596,296,967

312 2. Short-term advance from customers 5,352,466,145 1,535,958,233 3,494,445,905

313 3. Tax and other statutory obligations 13 21,044,573,826 19,042,374,912 17,145,343,339

314 4. Payables to employees 20,383,835,735 16,378,230,991 22,707,650,727

315 5. Short-term accrued expenses 14 97,512,000 6,120,200,000 91,173,720

319 6. Other short-term payables 16 11,545,897,576 25,446,055,798 5,025,421,522

319.1 7. Un-earned commission revenue 15 38,626,973,142 39,039,700,932 40,290,376,300

322 8. Bonus and welfare funds 2,034,177,620 3,045,193,704 3,127,054,603

329 9. Technical reserves 17 841,683,577,804 715,870,072,686 614,363,139,532

329.19.1. Gross un-earned premium reserve 17.1 500,119,550,824 446,754,536,837 379,235,910,434

329.29.2. Gross claim reserve 17.2 317,992,179,936 248,297,189,037 219,327,692,622

329.3 9.3. Catastrophe reserve 17.3 23,571,847,044 20,818,346,812 15,799,536,476

330 II. Non-current liabilities 52,635,000 -

337 1. Other long-term liabilities 52,635,000 -


VND

1 October 2017

VND


VN

400 D. OWNERS’ EQUITY 613,732,812,148 595,855,007,945 600,390,324,718

410 I. Owners’ equity 18 613,732,812,148 595,855,007,945 600,390,324,718

411 1. Charter capital 500,000,000,000 500,000,000,000 500,000,000,000

417 2. Investment and development fund 27,891,106,343 27,891,106,343 24,884,787,906

419 3. Statutory reserve 21,299,323,241 20,405,433,031 17,926,512,276

421 4. Retained earnings 64,542,382,564 47,558,468,571 57,579,024,536

421a 4.1. Undistributed earnings by the end of prior periods

458,974,231 458,974,231 458,974,230

421b 4.2. Undistributed earnings of current period

64,083,408,333 47,099,494,340 57,120,050,306

440TOTAL LIABILITIES AND OWNERS’ EQUITY

1,697,616,829,965 1,595,780,828,179 1,470,231,227,333

B01 - DNPNT 31 DECEMBER 2017

BALANCE SHEET2017 Annual report

5756


PART 2: OPERATIONAL INCOME STATEMENTFOR THE PERIOD FROM 1 OCTOBER 2017 TO 31 DECEMBER 2017

Code ITEMS Notes The period from 1 October 2017 to

31 December 2017

VND

The period from 1 January 2016 to

31 December 2016

VND


31 December 2016

VND

01 1. Insurance revenue (01 = 01.1 + 01.2 + 01.3) In which:

19 VNDThe period from

1 January 2016 to 31 December 2016

668,372,039,266

01.1 • Direct written premium 19.1 VND 588,478,596,928 691,935,717,704

01.2 • Reinsurance premium assumed 19.2 35,855,822,063 83,791,039,414 89,043,197,917

01.3 • (Increase) in un-earned premium reserve (53,365,013,987) (67,518,626,404) (112,606,876,355)

02 2. Reinsurance premium ceded(02 = 02.1 + 02.2) In which:

20 (66,118,763,047) (178,044,279,840) (225,610,574,178)

02.1 • Reinsurance premium ceded (61,939,220,326) (170,388,602,780) (263,114,553,254)

02.2• (Decrease) in ceded premium reserve (4,179,542,721) (7,655,677,060) 37,503,979,076

03 3. Net insurance premiums (03 = 01 + 02)

217,805,466,570 426,706,730,098 442,761,465,088

04 4. Commission on reinsurance ceded and other insurance incomes (04 = 04.1 + 04.2)In which:

22,221,964,906 55,260,825,962 68,359,196,500

04.1 • Commission on reinsurance ceded 22,009,024,181 54,906,867,196 66,822,727,620

04.2• Other income from insurance activities 21 212,940,725 353,958,766 1,536,468,880

105. Total net revenue from insurance business (10 = 03 + 04)

240,027,431,476 481,967,556,060 511,120,661,588

11 6. Claim expensesIn which:

22 (130,591,611,630) (244,447,005,164) (199,490,394,983)

11.1 • Claim expenses (130,591,611,630) (244,447,005,164) (199,490,394,983)

12 1. Recoveries from reinsurance ceded 22.3 32,792,268,195 44,274,779,066 36,246,563,684

13 2. 8. (Increase) in direct and assumed claim reserve

(68,059,043,796) (26,638,682,525) (101,387,854,791)

143. 9. Increase in ceded claim reserve 37,758,678,089 17,042,653,215 45,878,303,371

15 10. Net claim expenses (15 = 11 + 12 + 13 + 14) 22 (128,099,709,142) (209,768,255,408) (218,753,382,719)

16 4. 11. (Increase) in catastrophe reserve 17.2 (2,753,500,232) (5,018,810,336) (5,178,643,624)

INCOME STATEMENT

B02 - DNPNTPART 1: OPERATIONAL INCOME STATEMENT THE PERIOD FROM 1 OCTOBER 2017 TO 31 DECEMBER 2017

INCOME STATEMENT

Code ITEMS The period from 1 October 2017 to 31

December 2017

VND

The period from 1 January 2017 to 30

September 2017

VND


December 2016

VND

101. Total operating income 240,027,431,476 481,967,556,060 511,120,661,588

12 2. Finance income 26,352,080,772 76,790,172,450 85,550,869,837

13 3. Other income 441,164,179 440,282,371 111,126,210

204. Total direct operating expenses (175,539,842,628) (397,637,801,587) (400,635,504,456)

22 5. Finance expense (17,386,834,098) (2,628,822,028) (12,495,017,624)

23 6. General and administrative expenses (51,323,683,241) (96,928,864,472) (108,405,911,055)

24 7. Other expenses (15,910,479) (29,503,925) (68,956,349)

50 8. Profit before corporate income tax (50=10+12+13+20+22+23+24)

22,554,405,981 61,973,018,869 75,177,268,151

519. Current corporate income tax

expense(5,033,711,051) (12,394,603,774) (15,340,017,984)

5210. Deferred corporate income tax

income357,109,273 - 289,118,576

60 11. Net profit for this period after corporate income tax (60=50+51+52)

17,877,804,203 49,578,415,095 60,126,368,743

B02 - DNPNT

2017 Annual report

5958



31 December 2017

VND


December 2016

VND


31 December 2016

VND

I. CASH FLOWS FROM OPERATING ACTIVITIES

01 1. Proceeds from sales and services rendered and other revenues 321,277,379,975 616,416,817,260 847,114,819,155

022. Expenditures paid to suppliers (228,203,770,930) (479,700,048,404) (675,886,687,120)

03 3. Expenditures paid to employees (30,406,232,847) (68,785,558,040) (84,047,216,625)

04 4. Paid interest expense (469,638,983) (2,085,005,094) -

05 5. Paid corporate income tax (3,000,000,000) (12,396,619,136) (13,285,646,604)

066. Other proceeds from operating

activities12,727,293,710 18,707,674,425 2,023,838,102

077. Other expenditures on operating

activities(21,364,452,167) (64,637,088,838) (50,413,061,810)

20Net cash flows from operating activities 50,560,578,758 7,520,172,173 25,506,045,098

II. CASH FLOWS FROM INVESTING ACTIVITIES

21 1. Expenditures on purchase and construction of fixed assets and long-term assets

(284,521,364) (16,701,765,772) (6,320,450,803)

23 2. Expenditures on loans and purchase of debt instruments from other entities (628,384,390,750) (2,286,550,109,250) (2,152,413,000,438)

24 3. Proceeds from lending or repurchase of debt instruments from other entities 624,105,653,495 2,202,284,065,437 2,138,862,233,551

27 4. Proceeds from interests, dividends and distributed profits 18,879,478,495 80,215,588,861 84,451,087,806

30 Net cash flows from/(used in) investing activities

14,316,219,876 (20,752,220,724) 64,579,870,116

PART 2: OPERATIONAL INCOME STATEMENT (CONTINUED)FOR THE PERIOD FROM 1 OCTOBER 2017 TO 31 DECEMBER 2017 FOR THE PERIOD FROM 1 OCTOBER 2017 TO 31 DECEMBER 2017

CASH FLOW STATEMENT

B02 - DNPNT B03 - DNPNT

OPERATIONAL INCOME STATEMENT

Code ITEMS Notes The period from 1 October 2017 to 31

December 2017

VND


December 2016

VND


December 2016

VND

17 12. Other operating expenses (17 = 17.1 + 17.2)

In which:23 (44,686,633,254) (182,850,735,843) (176,703,478,113)

17.1 • Commission expense (17,223,959,490) (47,172,982,375) (45,527,292,623)

17.2 • Other underwriting expenses (27,462,673,764) (135,677,753,468) (131,176,185,490)

18 13. Total direct operating expenses (18 = 15 + 16 + 17)

(175,539,842,628) (397,637,801,587) (400,635,504,456)

19 14. Gross insurance operating profit (19 = 10 + 18)

64,487,588,848 84,329,754,473 110,485,157,132

23 15. Finance income 24 26,352,080,772 76,790,172,450 85,550,869,837

24 16. Finance expense 25 (17,386,834,098) (2,628,822,028) (12,495,017,624)

25 17. Profit from financial activities (25 = 23 + 24)

8,965,246,674 74,161,350,422 73,055,852,213

26 18. General and administrative expenses 26 (51,323,683,241) (96,928,864,472) (108,405,911,055)

30 19. Net operating income (30 = 19 + 25 + 26)

22,129,152,281 61,562,240,423 75,135,098,290

31 20. Other income 27 441,164,179 440,282,371 111,126,210

32 21. Other expenses 27 (15,910,479) (29,503,925) (68,956,349)

40 22. Net other profit (40 = 31 + 32) 425,253,700 410,778,446 42,169,861

50 23. Profit before corporate income tax (50 = 30 + 40)

22,554,405,981 61,973,018,869 75,177,268,151

51 24. Current corporate income tax expense 28.1 (5,033,711,051) (12,394,603,774) (15,340,017,984)

52 25. Deferred corporate income tax income 28.2 357,109,273 - 289,118,576

60 26. Net profit for the year after corporate income tax (60 = 50 + 51 + 52)

17,877,804,203 49,578,415,095 60,126,368,743



Ms. Luu Thi Linh NhamDirector Finance & Accounting Division


CASH FLOW STATEMENT 2017 Annual report

6160


AS AT 31 DECEMBER 2017 AND FOR THE PERIOD FROM 1 OCTOBER 2017 TO 31 DECEMBER 2017

NOTES TO THE FINANCIAL STATEMENTS

B03 - DNPNTB09 - DNPNT

CASH FLOW STATEMENT



31 December 2017

VND


December 2016

VND


31 December 2016

VND

III. CASH FLOWS FROM FINANCIAL ACTIVITIES

33 1. Drawdown of borrowings 196,774,130,002 680,643,431,136 142,413,543,366

34 2. Repayment of borrowings (196,774,130,002) (680,643,431,136) (142,413,543,366)

36 3. Dividends paid to owners - (54,113,731,869) (47,906,177,541)

40Net cash flows used in financial activities - (54,113,731,869) (47,906,177,541)

50 Net cash flow during the year 64,876,798,634 (67,345,780,420) 42,179,737,673

60 Cash and cash equivalents at the beginning of fiscal year

28,126,573,843 95,472,354,263 53,292,616,590

61Effect of exchange rate fluctuations 948,718 -

70 Cash and cash equivalents at the end of fiscal year

4 93,004,321,195 28,126,573,843 95,472,354,263



Ms. Luu Thi Linh NhamDirector Finance & Accounting Division


CORPORATION

Vietinbank Insurance Corporation (the “Corporation”) was previously known as Vietinbank Insurance Company Limited, which was wholly owned by Vietnam Joint Stock Commercial Bank for Industry and Trade. Vietinbank Insurance Company Limited was established in Vietnam pursuant to the first Establishment and Operation Licences No. 21 GP/KDBH granted by the Ministry of Finance dated 12 December 2002 and and the Amended Licenses No. 21/GPDC5/KDBH granted by the Ministry of Finance dated 17 December 2008.

On 31 December 2015, Vietnam Joint Stock Commercial Bank for Industry and Trade issued Decision No. 660/NQ-HDQT-NHCT44 on the approval of the proposal to change the company form to a joint stock company. Granted by Ministry of Finance under Amended Business License No. 21/GPDC23/KDBH on 2 November 2017, Vietinbank Insurance Company Limited was transformed into Vietinbank Insurance Joint Stock Corporation on 1 October 2017.

Registered Company name Vietinbank Insurance Joint Stock Corporation

Head office’s address 10th & 11th Floor, No. 126 Doi Can Street, Ba Dinh District, Hanoi

Operating activitiesProvide general insurance products, reinsurance, loss survey, investing activities and other activities that are in line with prevailing laws and regulations.

Location and branch network 19 branches nationwide

Employee 465 persons at 31 December 2017

Charter Capital VND 500,000,000,000 at 31 December 2017

The following summarizes some key information about the Corporation:

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6362



Accordingly, the accompanying financial statements, including their utilisation are not designed for those who are not informed about Vietnam’s accounting principles, procedures and practices and furthermore 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 other than Vietnam.

Applied accounting documentation system

The Corporation’s applied accounting documentation system is the Journal Ledger system.

Fiscal year

The Corporation’s fiscal year starts on 1 January and ends on 31 December. The Corporation was officially transformed into a joint stock company starting from 1 October 2017 and accordingly, the first accounting period of Corporation commencing from 1 October 2017 to 31 December 2017.

Accounting currency

The Corporation maintains its accounting records in VND which is also its’ reporting currency.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation.

The cost of a tangible fixed asset comprises of its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use.

Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenance and repairs is charged to the income statement.

When tangible fixed assets are sold or retired, any gain or loss resulting from their disposal (the difference between the net disposal proceeds and the carrying amount) is included in the income statement.

Intangible assets

Intangible fixed assets are stated at cost less accumulated amortisation.

The cost of an intangible fixed asset comprises of its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash at banks and short-term, highly liquid investments with an original maturity of less than or equal to three months that are readily convertible into known amounts of cash and that are subject to an insignificant risk of change in value.

Receivables

Receivables comprise of trade receivables and other receivables that are initially recognized at cost and subsequently are recognized at cost.

Provision for impairment of receivables is made based on their overdue ages. The increase or decrease to the provision balance is recorded as the general and administrative expense in the income statement.

For overdue receivables, the Corporation adopts the provision policy as promulgated by the Ministry of Finance in Circular No. 228/2009/TT-BTC dated 7 December 2009 (“Circular No. 228”). Details on the basis of provision are as follows:

Overdue receivables Allowance rate

Over six (06) months to less than one (01) year 30%

From one (01) to less than two (02) years 50%

From two (02) to less than three (03) years 70%

From three (03) years 100%

BASIS FOR PREPARATION OF THE FINANCIAL STATEMENTS

Accounting standard and system

The Corporation’s financial statements are prepared in accordance with the Vietnamese Accounting System for non-life insurance companies issued by the Ministry of Finance in Circular No. 232/2012/TT-BTC (“Circular No. 232”) dated 28 December 2012 and Circular No. 200/2014/TT-BTC dated 22 December 2014 providing guidance on enterprise accounting system, and with Vietnamese Accounting Standards issued by the Ministry of Finance as per:

• Decision No. 149/2001/QD-BTC dated 31 December 2001 on the Issuance and Promulgation of Four Vietnamese Standards on Accounting (Series 1);

• Decision No. 165/2002/QD-BTC dated 31 December 2002 on the Issuance and Promulgation of Six Vietnamese Standards on Accounting (Series 2);

• Decision No. 234/2003/QD-BTC dated 31 December 2003 on the Issuance and Promulgation

of Six Vietnamese Standards on Accounting (Series 3);

• Decision No. 12/2005/QD-BTC dated 15 February 2005 on the Issuance and Promulgation of Six Vietnamese Standards on Accounting (Series 4);

• Decision No. 100/2005/QD-BTC dated 28 December 2005 on the Issuance and Promulgation of Four Vietnamese Standards on Accounting (Series 5).

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6564

CHAPTER 3FINANCIAL STATEMENT AND ILLUSTRATION VietinBank InsuranceFINANCIAL STATEMENTS

Employee benefits

Post-employment benefits

Post-employment benefits are paid to retired employees of the Corporation by the social insurance agency which belongs to the Ministry of Labour, Invalids and Social Affairs. The Corporation is required to contribute to these post-employment benefits by paying social insurance premiums to the social insurance agency at the rate regulated.

Unemployment benefits

According to Social Insurance Law and Decree No. 127/2008/ND-CP dated 12 December 2008 by the Government, the Unemployment insurance fund is implemented from 1 January 2009, to which, employees contribute 1% of their salary, employers contribute 1% of salary of their employees participating in the unemployment insurance, and the Government contributes 1% of salary of all those participating in the unemployment insurance from the State budget.

Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenance and repairs is charged to the income statement.

When intangible fixed assets are sold or retired, any gain or loss resulting from their disposal (the difference between the net disposal proceeds and the carrying amount) is included in the income statement. Land use rights

The advance payment for land rental, of which the land lease contracts have effectiveness prior to 2003 and Land use right certificate being issued, are recorded as intangible fixed asset according to Circular No. 45/2013/TT-BTC issued by the Ministry of Finance on 25 April 2013 guiding the management, use and depreciation of fixed assets.

Depreciation and amortisation

Depreciation and amortisation of tangible fixed assets and intangible assets are calculated on a straight-line basis over the estimated useful lives of these assets as follows:

Prepaid expenses

Prepaid expenses are reported as short-term or long-term prepaid expenses on the balance sheet and amortised over the period for which the amounts are paid or the period in which economic benefits are generated in relation to these expenses.

Investments

3.7.1 Held to maturity investments

Held-to-maturity investments are stated at their acquisition costs. After initial recognition, held-to-maturity investments are measured at recoverable amount. Any impairment loss incurred is recognised as expense in the financial statements and deducted against the value of such investments.

Payables and accruals

Payables and accruals are recognised for the amount to be paid in the future for goods and services received, whether or not billed to the Corporation.

Buildings and structures 5 - 25 years

Motor vehicles 8 years

Office equipment 3 - 7 years

Land use rights with definite term As per regulated period

Technical reserves

The technical reserves are calculated based on Official Letter No. 2821/BTC-QLBH, which was approved by Ministry of Finance on 13 March 2018, include (a) technical reserves for non-life insurance and (b) technical reserve of health insurance. The reserve appropriation methodologies are based on Circular No. 50/2017/TT-BTC (“Circular No. 50”) dated 1 July 2017 issued by the Ministry of Finance.

Details of such reserving methodologies are as follows:

a) Technical reserves for non-life insurance

(i) Unearned premium reserve

Unearned premium reserve is calculated as a percentage of total premium or in accordance with a coefficient of the insurance contracts’ terms, as such:

• For insurance policies with a term of less than 1 year: for line of cargo insurance delivered by road, water, inland water, railway and airway, unearned premium reserve is made at 25% of the total insurance premium. For other insurance lines, unearned premium reserve is calculated at 50% of the total insurance premium.

• For insurance policies with a term of more than 1 year, unearned premium reserve is calculated based on the 1/8 method. This method assumes that premiums for all insurance contracts issued in a quarter equally spread along the quarter. In other word, all insurance contracts of a particular quarter are assumed to be effective at that mid-quarter. Unearned premium reserve is calculated based on the following formula:

• Gross and assumed unearned premium reserve is presented as liabilities. Unearned premium reserve of outward reinsurance is presented as reinsurance asset.

Unearned premium reserve

= + Unearned premium ratePremiums

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(ii ) Claim reserve

Claim reserve includes the reserve for outstanding claims and for claims incurred but not reported.

For insurance policies, reinsurance has a term of less than 1 year: For insurance of goods transported by land, sea, inland waterways, railways and airways, premium reserve are entitled to deduct 25% of the premium. For other insurances, 50% of total premium.• Outstanding claim reserve is established based on the estimated claim payments for each claim for which

the insurer is liable, which is either notified to the insurer or requested for payment but is still unresolved at the end of the fiscal year after deducting the amount recoverable from reinsurers;

• Reserve for incurred but not reported claims for which the insurer is liable (IBNR) is established for each insurance operation as per formula below:

b) Technical reserve for health insurance

(i) Mathematical reserve

The indemnity reserve includes the indemnity reserve for unresolved claims and the indemnity for claims arising out of unspent or unspent liability. • Regarding health insurance policies with a term of more than 1 year, except the policies which only cover

death or total permanent disability, mathematical reserve is calculated based on the 1/8 method. • Regarding health insurance policies provided by a non-life insurer or foreign branch which only cover death

or total permanent disability, mathematical reserve is set aside based on a coefficient of the remaining days of insurance policies.

• Mathematical reserve is recorded in un-earned premium reserve account in the balance sheet.

(ii) Unearned premiums reserve

Regarding insurance policies with a term of less than or equal to 1 year, unearned premiums reserve is calculated at 50% of the total insurance premiums.

(iii) Claim reserve

• Outstanding claim reserve is established based on the estimated claim payments for each claim for which the insurer is liable, which is either notified to the insurer or requested for payment but is still unresolved at the end of the fiscal year after deducting the amount recoverable from reinsurers.

• Reserve for incurred but not reported claims for which the insurer is liable (IBNR) is established for each insurance operation as per formula below:

(iii) Catastrophe reserve

• Catastrophe reserve is accrued annually until such reserve reaches 100% of the retained premiums of the current fiscal year and is made based on retained premiums according to Circular No. 50.

• Catastrophe reserve is presented as liabilities.

On 28 December 2005, the Ministry of Finance issued Decision No. 100/2005/QD-BTC governing the publication of four new accounting standards, one of which is Vietnamese Accounting Standard (“VAS”) 19 – Insurance Contract. Following the issuance of this Standard, starting from January 2006, the provision of catastrophe reserve 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 No. 73”) on the details of the implementation of the Law on Insurance Business and amendments to certain articles of the Law on Insurance Business, the Corporation has elected to adopt the policy of providing for the catastrophe reserve at 1% of total retained premiums for the year 2017.

• Gross and assumed reinsurance claim reserve is presented as liabilities; claim reserve of outward reinsurance is presented as reinsurance asset.

• Gross and assumed reinsurance claim reserve is presented as liabilities; claim reserve of outward reinsurance is presented as reinsurance asset.

iv) Equalization reserve

• Equalization reserve for health insurance is established at 1% of net premium and recognised in catastrophe reserve account on balance sheet.

Reserve for payment of losses which have incurred but not yet reported for the current fiscal year

Reserve for payment of losses which have incurred but not yet reported for the current fiscal year

=

=

+

+

+

+

+

+

Net operating revenue of current fiscal year

Net operating revenue of current fiscal year

Indemnity for losses arising in the current fiscal year

Indemnity for losses arising in the current fiscal year

Average delay in claim intimation of current fiscal year

Average delay in claim intimation of current fiscal year

Net operating revenue of the previous fiscal year

Net operating revenue of the previous fiscal year

Average delay in claim intimation of previous fiscal year

Average delay in claim intimation of previous fiscal year

Total indemnity for claims incurred but not reported at the end of the last three years

Total indemnity for claims incurred but not reported at the end of the last three years

Total indemnity for losses arising in the last three years

Total indemnity for losses arising in the last three years

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Statutory reserve fund

The statutory reserve fund is established in order to supplement the Corporation’s charter capital and ensure its solvency. The allocation to the statutory reserve fund are made annually at five percent (5%) of after-tax profit until the balance reaches ten percent (10%) of its charter capital in compliance with Decree No. 73.

Transactions in foreign currencies

Transactions in currencies other than the Corporation’s reporting currency of are recorded at the actual transaction exchange rates at transaction dates which are determined as follows:• Transactions resulting in receivables are recorded

at the buying exchange rates of the commercial banks designated for collection;

• Transactions resulting in liabilities are recorded at the selling exchange rates of the commercial banks designated for payment;

• Capital contributions are recorded at the buying exchange rates of the commercial banks designated for capital contribution;

• Payments for assets or expenses without liabilities initially being recognised is recorded at the buying exchange rates of the commercial banks that process these payments.

At the end of the year, monetary balances denominated in foreign currencies are translated at the actual exchange rates at the balance sheet dates which are determined as follows:• Monetary assets are translated at buying

exchange rate of the commercial bank where the Corporation conduct transactions regularly;

• Monetary liabilities are translated at selling exchange rate of the commercial bank where the Corporation conduct transactions regularly.

All foreign exchange differences incurred during the year and arising from the revaluation of monetary accounts denominated in foreign currency at year-end are taken to the income statement.

Appropriation of net profits

Net profit after tax is available for appropriation to investors/shareholders after approval in the annual general meeting, and after making appropriation to reserve funds and remuneration to Board of Directors in accordance with the Corporation’s Charter and Vietnam’s regulatory requirements.

(ii) Interest

Revenue is recognised as the interest accrues (taking into account the effective yield on the asset) unless recovery is in doubt.

(iii) Other income

The occasional revenues other than the revenues related to insurance activities, interest such as income from the liquidation or sale of fixed assets, office rental income …

Expense recognition

(i) Claim expense

Claim expense is recognized at the point of time when the claim documents are completed and approved by authorized persons. Any claim that is not yet approved by authorized persons is considered as an outstanding claim and included in claim reserve.

(ii) Commission expense Commission is calculated at percentage of direct premiums for specific line of insurance as stipulated in Circular No. 50. Commission expense is allocated and recognized in the income statement for direct premiums earned during the period.

(iii) Agent support expense

Agent support expense is recorded for corresponding insurance contracts underwritten in the financial year and does not exceed 50% of commission rate per insurance business line.

(iv) General administrative expenses

General and administrative expenses are recognized on an accrual basis.

(v) Operating lease

Rentals paid under operating leases are charged to the income statement on a straight-line basis over the term of the lease.

(vi) Other expenses

Other expenses incurred as a result of events or transactions which are from ordinary activities of the enterprise, include: costs of liquidation, sale of fixed assets and uncollectable receivables, fines payables for violating economic contracts, penalties...

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Corporation and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, excluding trade discount, rebate and sales return. The following specific recognition criteria must also be met before revenue is recognised:

(i) Gross written premiums

Gross written premiums are recognized in accordance with Circular No. 50 on financial regime applicable to insurers, reinsurers, insurance brokers and foreign non-life insurance branches.

Specifically, gross written premium is recognized as revenue at the point of time when the following conditions are met: (1) the insurance contract has been entered into by the insurer and the insured; and (2) the premium has been paid by the insured or (3) there is agreement between the Corporation and the insured on premium payment period. If the Corporation and its customers mutually agree a method of insurance premium payment on an instalment basis, only the insurance premium which is due in accordance with the instalment contract shall be taken to revenue for the period. In accordance with Circular No. 50, premium payment period shall not exceed 30 days from policy inception date. For instalment contracts, non-life insurers are required to record revenue from insurance premium of the first instalment as of the insurance contract’s effective date and record revenue from premium of the following instalments only when the policy holder makes full premium payment under the agreement of the contract. If policyholder cannot make full premium payment as agreed in the contracts, insurance contract shall be automatically terminated after contractual premium payment date. Prepaid premium before due date is recorded as “Short-term advance from customer” in the balance sheet.

Premium return and premium reduction are considered as revenue deduction and must be booked. At period end, these amounts are net-off to gross written premium to calculate net written premium.

Recognition of reinsurance activities

(i) Reinsurance ceded

Reinsurance premium ceded under treaty reinsurance agreements are recognized when gross written premiums within the scope of the treaty agreements are recognized.

Reinsurance premium ceded under facultative reinsurance agreements is recognized when the facultative reinsurance agreement has been entered into by the Corporation and when gross written premiums within the scope of the facultative agreements are recognized.

Reinsurance recovery is recognized when there is evidence of liability on the part of the reinsurer.

Reinsurance commission is recognized when there is a corresponding reinsurance premium ceded. At the end of accounting period, the part of reinsurance commission which is not included in income and expense of period corresponding to unearned premium of reinsurance ceded shall be determined and allocated in the subsequent periods based on registered method of unearned premium reserve.

(ii) Reinsurance assumed

Reinsurance assumed under treaty arrangement:• Revenue and expenses relating to reinsurance

assumed under treaty arrangements are recognized when the statement of account is received from the cedants.

Reinsurance assumed under facultative arrangement:• Reinsurance premium assumed is recognized when

the facultative reinsurance agreement has been entered into by the Corporation and a statement of account (for each facultative reinsurance agreement) has been received from the cedants;

• Claim expenses for reinsurance assumed is recognized when there is evidence of liability of the Corporation and when a statement of account has been sent to the Corporation;

• Reinsurance commission is recognized when the reinsurance premium is ceded and when a statement of account has been sent to the Corporation. At the end of accounting period, the part of reinsurance commission which is not included in expense of period corresponding to unearned premium of reinsurance assumed shall be determined and allocated in the subsequent periods based on registered method for unearned premium reserve.

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Taxation

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted by the balance sheet date.

Current income tax is charged or credited to the income statement, except when it relates to items recognised directly to equity, in which case the current income tax is also dealt with in equity.

Current income tax assets and liabilities are offset when there is a legally enforceable right for the Corporation to set off current tax assets against current tax liabilities and when the Corporation intends to settle its current tax assets and liabilities on a net basis.

Deferred tax is provided using the balance sheet liability method on temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amount for financial reporting purpose. Deferred tax liabilities are recognised for all taxable temporary differences, except where the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which at the time of the related transaction affects neither the accounting profit nor taxable profit or loss.

Deferred tax assets are recognised for all deductible temporary differences, carried forward unused tax credit and unused tax losses, to the extent that it is probable that taxable profit will be available against which deductible temporary differences, carried forward unused tax credit and unused tax losses can be utilised, except where the deferred tax asset in respect of deductible temporary difference which arises from the initial recognition of an asset or liability which at the time of the related transaction, affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred income tax assets is audited at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Previously unrecognised deferred income tax assets are re-assessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled based on tax rates and tax laws that have been enacted at the balance sheet date.

Deferred tax is charged or credited to the income statement, except when it relates to items recognised directly to equity, in which case the deferred tax is also dealt with in the equity account.

Deferred tax assets and liabilities are offset when there is a legally enforceable right for the Corporation to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority on either the same taxable entity or when the Corporation intends either settle current tax liabilities and assets on a net basis or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Current tax

Deferred tax

Cash equivalents are bank deposits with original term of less than or equal to three (03) months and interest rate at 4.2% to 5.5% per annum.

CASH AND CASH EQUIVALENTS

Standard 31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

Cash on hand 2,633,725,090 3,453,512,531 3,056,738,097

Cash at banks 14,370,596,105 19,673,061,312 22,415,616,166

VND 12,744,934,634 19,562,751,972 22,276,077,108

Foreign currencies 1,625,661,471 110,309,340 139,539,058

Cash equivalents (*) 76,000,000,000 5,000,000,000 70,000,000,000

Total 93,004,321,195 28,126,573,843 95,472,354,263

Use of estimates

The preparation of the financial statements requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities. These estimates and assumptions also affect the income and expenses and the resultant provisions. Such estimates are necessarily based on assumptions about several factors involving varying degrees of judgment and uncertainty and actual results may differ resulting in future changes in such provisions

2017 Annual report

7372


INVESTMENTS

31 December 2017 30 September 2017 31 December 2016

CostVND

Carrying valueVND

CostVND

Carrying valueVND

CostVND

Carrying valueVND

Held-to-maturity investments

Bond - - - - 271,737,486,640 271,737,486,640

Corporate Bond - - - - 220,000,000,000 220,000,000,000

Government Bond - - - - 51,737,486,640 51,737,486,640

- - - - 271,737,486,640 271,737,486,640

Maturity date of investment - - - -

Short-term

Short-term deposit 214,725,000,000 214,725,000,000 235,225,000,000 235,225,000,000 540,450,169,548 540,450,169,548

Bond 363,958,639,365 363,958,639,365 365,000,000,000 365,000,000,000 107,857,300,000 107,857,300,000

Corporate Bond 363,958,639,365 363,958,639,365 365,000,000,000 365,000,000,000 107,857,300,000 107,857,300,000

578,683,639,365 578,683,639,365 600,225,000,000 600,225,000,000 648,307,469,548 648,307,469,548

Long-term

Long-term deposit 77,417,097,891 77,417,097,891 200,417,097,891 200,417,097,891 417,097,890 417,097,890

Bond 352,219,000,000 352,219,000,000 203,816,000,000 203,816,000,000 - -

Government Bond 102,219,000,000 102,219,000,000 51,189,500,000 51,189,500,000 - -

Corporate Bond 250,000,000,000 250,000,000,000 152,626,500,000 152,626,500,000 - -

Other investments 495,000,000 495,000,000 495,000,000 495,000,000 225,000,000 225,000,000

430,131,097,891 430,131,097,891 404,728,097,891 404,728,097,891 642,097,890 642,097,890

Total 1,008,814,737,256 1,008,814,737,256 1,004,953,097,891 1,004,953,097,891 648,949,567,438 648,949,567,438

2017 Annual report

7574


SHORT-TERM RECEIVABLES INVENTORIES

STATUTORY DEPOSIT

31 December 2017 VND

1 October 2017 VND


VND

Insurance receivables 134,971,141,322 152,795,030,375 107,201,084,374

Gross written premium receivables 25,150,068,998 31,993,344,800 23,301,198,126

Reinsurance assumed receivables 43,916,974,481 62,670,840,754 37,475,090,129

Reinsurance ceded receivables 65,904,097,843 55,130,932,084 46,424,796,119

Receivables from co-insurers - 2,999,912,737 -

Short-term advances to suppliers 3,786,139,366 5,147,370,654 1,390,339,541

Other receivables 53,982,167,929 44,218,437,328 24,934,704,840

Bank deposit interest receivables 7,089,026,699 7,798,734,899 11,756,296,363

Bond coupon receivables 9,754,459,642 2,215,595,059 2,249,823,187

Other receivables 37,136,650,234 34,202,076,016 10,926,553,936

Shortage of assets awaiting resolution 2,031,354 2,031,354 2,031,354

Total receivables 192,739,448,617 202,160,838,357 133,526,128,755

Allowance for doubtful debts (4,855,794,064) (315,941,700) (315,941,700)

Net receivables 187,883,654,553 201,844,896,657 133,210,187,055


1 October 2017 VND


Pre-printed certificates 118,518,040 132,324,240 134,533,140

Stationery 791,606,500 237,892,266 475,684,329

Instruments and tools 500,053,764 339,902,069 313,997,999

Total inventories 1,410,178,304 710,118,575 924,215,468

The Corporation is maintaining a statutory deposit equivalent to VND 8,000,000,000 as required in Point 2 - Article 16 of Decree No. 73.

2017 Annual report

7776


TANGIBLE FIXED ASSETS

Buildings

VND

Office equipment

VND

Motor vehicles

VND

Total

VND

Costs

As at 1 January 2017 - 2,566,304,981 23,369,262,749 25,935,567,730

Newly purchased 9,740,696,149 232,818,855 6,228,136,512 16,201,651,516

Liquidation & Disposal - - - -

As at 1 October 2017 9,740,696,149 2,799,123,836 29,597,399,261 42,137,219,246

Newly purchased - 284,521,364 - 284,521,364


As at 31 December 2017 9,740,696,149 3,083,645,200 29,597,399,261 42,421,740,610

Accumulated depreciation

As at 1 January 2017 - 1,815,107,809 7,250,585,867 9,065,693,676

Depreciation for the 56,691,882 233,142,302 2,589,494,184 2,879,328,368


As at 1 October 2017 56,691,882 2,048,250,111 9,840,080,051 11,945,022,044

Depreciation for the period 59,268,786 91,804,117 968,219,947 1,119,292,850


As at 31 December 2017 115,960,668 2,140,054,228 10,808,299,998 13,064,314,894

Net book value

As at 1 January 2017 - 751,197,172 16,118,676,882 16,869,874,054

As at 1 October 2017 9,684,004,267 750,873,725 19,757,319,210 30,192,197,202

As at 31 December 2017 9,624,735,481 943,590,972 18,789,099,263 29,357,425,716

INTANGIBLE ASSETS

Land use right VND

Computer softwareVND

TotalVND

Costs

As at 1 January 2017 - 3,795,525,000 3,795,525,000

Increase during the period 500,114,256 - 500,114,256

As at 1 October 2017 500,114,256 3,795,525,000 4,295,639,256

Increase during the period - - -

As at 31 December 2017 500,114,256 3,795,525,000 4,295,639,256

Accumulated amortisation

As at 1 January 2017 - 1,975,972,953 1,975,972,953

Amortization during the period 2,910,718 581,352,366 584,263,084

As at 1 October 2017 2,910,718 2,557,325,319 2,560,236,037

Amortization during the period 3,043,023 196,430,649 199,473,672

As at 31 December 2017 5,953,741 2,753,755,968 2,759,709,709

Net book value

As at 1 January 2017 - 1,819,552,047 1,819,552,047

As at 1 October 2017 497,203,538 1,238,199,681 1,735,403,219

As at 31 December 2017 494,160,515 1,041,769,032 1,535,929,547

2017 Annual report

7978


PREPAID EXPENSES

Unallocated commission expenses

Other prepaid expenses

Long-term prepaid expenses

TRADE PAYABLES

TAXES AND OTHER STATUTORY OBLIGATIONS

31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

Beginning balance 31,439,541,800 26,582,550,720 18,141,252,956

Commission paid during the period 22,141,393,229 52,029,973,455 53,968,590,387

Allocated to expenses during period (17,223,959,490) (47,172,982,375) (45,527,292,623)

Ending balance 36,356,975,539 31,439,541,800 26,582,550,720

31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

Prepaid operating lease 53,886,000 320,566,000 -

Other short-term prepaid expenses 8,315,203,608 6,000,011,406 12,355,537

Total 8,369,089,608 6,320,577,406 12,355,537

31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

Prepaid operating lease 10,606,420,826 10,735,092,479 10,743,610,430

Tools and equipment 7,432,178,630 6,481,405,497 3,992,268,558

Other long-term prepaid expense 3,550,585,373 1,366,497,084 2,169,122,931

Total 21,589,184,829 18,582,995,060 16,905,001,919

31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

Insurance activities

Payables for ceding activities

106,048,646,036 122,324,205,304 135,769,763,196

Payables to co-insurers 762,437,188 2,873,602,716 608,708,330

Claim payables 28,309,292,690 36,039,074,376 19,533,190,866

Commission payables 7,759,271,884 12,077,170,980 7,479,299,819

Other trade payables 182,721,171 133,979,602 205,334,756

Total 143,062,368,969 173,448,032,978 163,596,296,967

1 January 2017 VND

Movement during the period 31 December 2017VND

Payables VND

Paid VND

Value added tax 8,151,723,167 35,184,435,476 33,617,272,239 9,718,886,404

Corporate income tax 7,217,295,360 17,428,314,825 15,3896,619,136 9,248,991,049

Personal income tax 876,380,643 6,821,589,611 6,484,290,088 1,213,680,166

Other taxes 899,944,169 475,611,853 512,539,815 863,016,207

Total 17,145,343,339 15,484,509,027 56,010,721,278 21,044,573,826

2017 Annual report

8180


Reserve for direct insurance and inward

reinsurance VND

Reserve for outward reinsurance

(reinsurance assets)VND

Net reserve

VND

1 January 2017

Unearned premium reserve 379,235,910,434 (129,544,438,998) 249,691,471,436

Claim reserve 219,327,692,622 (114,544,114,008) 104,783,578,614

Outstanding claim reserve 201,466,697,024 (105,216,190,609) 96,250,506,415

Incurred but not reported reserve 17,860,995,598 (9,327,923,399) 8,533,072,199

Total 598,563,603,056 (244,088,553,006) 354,475,050,050

Balance at 1 October 2017


Mathematical reserve for health care insurance

- - -

Unearned premium reserve for non – life insurance

446,754,536,837 (121,888,761,938) 324,865,774,899

Claim reserve 248,297,189,037 (133,917,581,113) 114,379,607,924


Reserve for incurred but not reported claim

17,860,995,598 (9,327,923,399) 8,533,072,199

Total 695,051,725,874 (255,806,343,051) 439,245,382,823

Balance at 31 December 2017 -


Mathematical reserve for health care insurance

12,703,309,269 (65,535,321) 12,637,773,948

Unearned premium reserve for non – life insurance

487,416,241,555 (117,643,683,896) 369,772,557,659

Claim reserve 317,992,179,936 (173,312,206,305) 144,679,973,631


Reserve for incurred but not reported claim

24,392,952,554 (13,294,684,392) 11,098,268,161

Total 818,111,730,760 (291,021,425,522) 527,090,305,238

31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

Opening balance 39,039,700,932 40,290,376,300 26,505,064,767

Increased during the period 21,596,296,391 53,656,191,828 80,608,039,153

Allocated during the period (22,009,024,181) (54,906,867,196) (66,822,727,620)

Closing balance 38,626,973,142 39,039,700,932 40,290,376,300

SHORT-TERM ACCRUED EXPENSES

UNEARNED COMMISSION REVENUE

OTHER PAYABLES

TECHNICAL RESERVES

31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

VBI Saigon Pico building management fee

97,512,000 - 91,173,720

Training expense - 5,670,200,000 -

Risk management advisory expense - 450,000,000 -

Total 97,512,000 6,120,200,000 91,173,720

31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

Social Insurance payables 70,791,458 63,794,604 21,692,139

Health Insurance payables 16,251,841 16,809,651 5,931,495

Unemployment Insurance payables 8,066,109 8,821,822 1,011,295

Trade union fee 17,431,218 82,318,245 56,866,700

External services expenses - 14,743,076,904 -

Other payables 11,433,356,950 10,531,234,572 4,939,919,893

Total 11,545,897,576 25,446,055,798 5,025,421,522

Unearned commission revenue is the deferred commission on reinsurance ceded to be allocated in the next accounting period in accordance with Circular No. 232.

2017 Annual report

8382


Product 31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

Property and Damages 118,429,285,669 118,259,791,005 100,441,278,390

Hull and P&I 14,246,890,476 13,849,806,977 10,718,653,868

Cargo 15,802,881,068 14,230,924,923 11,253,547,378

Health and Personal Accident 138,130,116,212 114,194,213,119 88,290,919,084

Automobile 147,673,306,650 137,766,850,999 120,311,203,959

Fire 63,219,576,936 45,791,215,575 46,074,890,205

Liability 2,617,493,813 2,661,734,239 2,145,417,550

Total 500,119,550,824 446,754,536,837 379,235,910,434


VND

1 October 2017

VND

31 December 2016

VND


Hull and P&I 17,321,670,918 8,385,815,769 5,584,421,370

Cargo 14,309,925,879 11,987,893,685 11,104,248,609


Automobile 53,687,903,485 44,626,795,469 42,843,996,419

Fire 45,598,291,350 35,975,028,327 23,309,194,379

Liability 401,944,000 280,000,000 190,094,000

Total 293,599,227,382 230,436,193,439 201,466,697,024


VND

1 October 2017

VND

31 December 2016

VND


Hull and P&I 6,120,000,000 - -

Cargo 1,126,160,657 - -

Health and Personal Accident 497,942,224 11,320,330 149,364,829

Automobile 13,735,198,715 11,605,099,400 10,728,321,987

Fire 26,102,147,546 23,159,657,717 15,809,591,697

Liability - - -

Total 160,017,521,913 124,589,657,714 105,216,190,609

31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

Opening balance 20.818.346.812 15.799.536.476 10.620.892.852

Increased during the period 2.753.500.232 5.018.810.336 5.178.643.624

Used during the period - - -

Closing balance 23.571.847.044 20.818.346.812 15.799.536.476


VND

1 October 2017

VND

31 December 2016

VND


Hull and P&I 1,885,379,337 2,082,271,227 1,682,064,944

Cargo 1,812,507,728 2,293,558,295 2,012,837,629


Automobile 40,153,908,111 38,217,752,872 33,051,351,178

Fire 27,272,539,636 18,340,089,012 24,993,067,138

Liability 850,965,217 870,629,061 1,038,948,297

Total 117,709,219,217 121,888,761,938 129,544,438,998

UNEARNED PREMIUM RESERVE

Gross unearned premium reserve Premium reserve and reinsurance premium

Claim reserve Outstanding claim reserve for direct insurance and inward reinsurance

Catastrophe reserve

Outstanding claim reserve for ceded reinsurance (Reinsurance assets)

Ceded unearned premium reserve (Reinsurance assets)

2017 Annual report

8584


OWNERS’ EQUITY

Charter capitalVND

Investment and development fund

VND

Statutory reserveVND

Retained earningsVND

TotalVND

As at 1 January 2016 500,000,000,000 22,223,333,599 14,920,193,839 51,026,606,078 588,170,133,516

Profit for the year - - - 60,126,368,743 60,126,368,743

Allocation to funds - 2,661,454,307 3,006,318,437 (5,667,772,744) -

Profit transferred to parent company - - - (47,906,177,541) (47,906,177,541)

As at 31 December 2016 500,000,000,000 24,884,787,906 17,926,512,276 57,579,024,536 600,390,324,718

Balance at 1 January 2017 500,000,000,000 24,884,787,906 17,926,512,276 57,579,024,536 600,390,324,718

Profit for the period - - - 49,578,415,095 49,578,415,095

Allocation to funds (*) - 3,006,318,437 2,478,920,755 (5,485,239,192) -

Profit transferred to parent company - - - (54,113,731,868) (54,113,731,868)

Balance at 30 September 2017 500,000,000,000 27,891,106,343 20,405,433,031 47,558,468,571 595,855,007,945

Balance at 1 October 2017 500,000,000,000 27,891,106,343 20,405,433,031 47,558,468,571 595,855,007,945

Profit for the period - - - 17,877,804,203 17,877,804,203

Allocation to funds (*) - - 893,890,210 (893,890,210) -

Balance at 31 December 2017 500,000,000,000 27,891,106,343 21,299,323,241 64,542,382,564 613,732,812,148

(*) As per Official Letter No. 942/TGĐ/NHCT11 dated 5 June 2017 regarding the appropriation of net profits for the year 2016, the Corporation set aside an amount equal to 5% of profit after tax of the year 2016 to investment and development fund and transferred VND 54,113,731,868 to Vietnam Joint Stock Commercial Bank for Industry and Trade.

Statutory reserve was calculated at 5% of profit after tax for the period, with maximum amount equal to 10% of charter capital as per Decree No. 73.

2017 Annual report

8786


OWNERS’ EQUITY (CONTINUED)

Contributed capital

Capital transactions with owners and distributions of profits

31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

Vietnam Joint Stock Commercial Bank for Industry and Trade

489,150,000,000 500,000,000,000 500,000,000,000

Contributed by VPBank Securities Company Limited

5,000,000,000 - -

Contributed by other shareholders

5,850,000,000 - -

Total 500,000,000,000 500,000,000,000 500,000,000,000

The period from 1 October 2017 to 31

December 2017VND


September 2017 VND


December 2016 VND

Contributed capital

Beginning balance 500,000,000,000 500,000,000,000 500,000,000,000

Ending balance 500,000,000,000 500,000,000,000 500,000,000,000

Distribution of profits - (54,113,731,868) (47,906,177,541)

INSURANCE REVENUE


December 2017VND


September 2017 VND


December 2016 VND

Gross written premiums

Deductions from gross premiums

303.421.049.881

(1.987.628.340)

594.754.374.335

(6.275.777.407)

710.392.344.721

(18.456.627.017)

Direct written premiums

Reinsurance premium assumed

Reinsurance premium ceded

Increase in gross un-earned premium reserve

Decrease in un-earned ceded premium reserve

301,433,421,541

35,855,822,063

(61,939,220,326)

(53,365,013,987)

(4,179,542,721)

588,478,596,928

83.791.039.414

(170,388,602,780)

(67,518,626,404)

(7,655,677,060)

691,935,717,704

89.043.197.917

(263,114,553,254)

(112,606,876,355)

37,503,979,076

Total 217,805,466,570 426,706,730,098 442,761,465,088

ProductThe period from 1

October 2017 to 31 December 2017

VND


September 2017 VND


December 2016 VND

Property and Damages

Hull and P&I

Cargo

Health and Personal Accident

Automobile

Fire

Liability

36,314,160,106

6,927,044,149

16,521,588,342

121,293,142,047

84,618,674,157

34,396,645,825

1,362,166,915

128,816,363,220

21,558,957,987

43,822,472,285

92,811,385,487

207,364,321,935

90,897,542,257

3,207,553,757

150,628,217,994

19,876,370,189

43,464,422,179

143,605,247,724

240,411,216,323

90,041,031,445

3,909,211,850

Total 301,433,421,541 588,478,596,928 691,935,717,704


2017 Annual report

8988




VND


September 2017 VND


December 2016 VND


Hull and P&I

Cargo


Automobile

Fire

Liability

17,831,349,312

33,181,930

2,529,826,959

14,950,784,508

42,062,934

460,076,897

8,539,523

45,496,774,137

106,680,989

337,636,686

36,241,300,880

361,184,147

684,888,892

562,573,683

50,254,338,784

1,560,937,547

1,549,767,332

32,976,590,443

211,191,597

2,108,748,964

381,623,250

Total 35,855,822,063 83,791,039,414 89,043,197,917

REINSURANCE PREMIUM CEDED



VND


September 2017 VND


December 2016 VND


Hull and P&I

Cargo


Automobile

Fire

Liability

14,304,266,726

1,147,331,285

3,065,586,666

2,543,046,078

22,157,105,610

17,864,901,247

856,982,714

67,461,470,193

2,636,542,400

4,184,444,244

1,336,077,259

57,245,545,079

36,680,178,024

844,345,581

127,674,212,834

3,364,129,887

8,051,350,516

5,858,126,792

66,102,702,355

49,986,134,276

2,077,896,594

Tổng cộng 61,939,220,326 170,388,602,780 263,114,553,254

Reinsurance premiums assumed

OTHER INCOME FROM INSURANCE ACTIVITIES


December 2017VND


September 2017 VND


December 2016 VND

Policy management fee

Other income from reinsurance activities

18,709,530

194,231,195

94,883,343

259,075,423

263,329,110

1,273,139,770

Total 212,940,725 353,958,766 1,536,468,880



VND


September 2017 VND


December 2016 VND


Hull and P&I

Cargo


Automobile

Fire

Liability

15,816,818,286

2,382,335,532

5,786,408,132

22,422,094,393

50,405,254,759

3,214,605,103

195,360,000

15,558,694,397

4,520,462,248

14,308,480,830

50,219,392,917

103,342,947,299

11,363,843,927

356,000,000

7,870,676,220

2,618,055,884

8,994,268,065

41,659,264,389

90,315,294,865

10,683,677,287

219,937,000

Total 100,222,876,205 199,669,821,618 162,361,173,710

NET CLAIM EXPENSES


December 2017VND


September 2017 VND


December 2016 VND

Claim expensesDirect claim expensesClaim expense on inward reinsurance

130,591,611,630100,222,876,20530,368,735,425

244,447,005,164199,669,821,61844,777,183,546

199,490,394,983162,361,173,71037,129,221,273

Recovery from reinsurance ceded (32,792,268,195) (44,274,779,066) (36,246,563,684)

Increase in direct and assumed claim reserve 68,059,043,796 26,638,682,525 101,387,854,791

(Increase) in ceded claim reserve (37,758,678,089) (17,042,653,215) (45,878,303,371)

Net claim expenses 128,099,709,142 209,768,255,408 218,753,382,719

Direct claim expenses

2017 Annual report

9190




VND


September 2017 VND


December 2016 VND


Hull and P&I

Cargo


Automobile

Fire

Liability

7,797,516,669

3,569,490,955

2,274,309,896

16,443,692,825

9,631,906

49,097,825

224,995,349

18,530,936,071

8,571,990

-

26,011,928,787

23,825,377

201,921,321

-

22,830,993,587

1,192,749,631

61,633,112

12,959,860,897

23,496,295

60,487,751

-

Total 30,368,735,425 44,777,183,546 37,129,221,273

Claim expense on reinsurance assumed



VND


September 2017 VND


December 2016 VND


Hull and P&I

Cargo


Automobile

Fire

Liability

15,766,444,227

-

7,600,000

180,689,298

14,392,449,414

2,428,387,256

16,698,000

8,262,537,785

32,331,455

-

205,720,695

28,885,436,200

6,888,752,931

-

6,349,231,457

-

-

203,306,611

24,780,131,328

4,913,894,288

-

Total 32,792,268,195 44,274,779,066 36,246,563,684

Recoveries from reinsurance ceded


December 2017VND


September 2017 VND


December 2016 VND

Commission expenses

Insurance risk assessment expenses

Agent management activities

Loss prevention

Other insurance expenses

Labour costs

Stationaries, tools & equipment

Expenses for external services

Other expenses

17,223,959,490

202,713,282

3,977,459,103

130,957,612

23,151,543,767

4,993,940,856

24,864,985

240,245,086

17,892,492,840

47,172,982,375

148,584,190

2,044,951,807

249,405,361

133,234,812,110

36,978,236,158

122,577,779

2,063,821,352

94,070,176,821

45,527,292,623

1,711,349,695

4,143,049,036

1,112,588,946

124,209,197,813

33,357,777,848

140,854,016

2,695,464,855

88,015,101,094

Total 44,686,633,254 182,850,735,843 176,703,478,113


December 2017VND


September 2017 VND


December 2016 VND

Interest income from deposits at banks

Interest income from bonds

Gain from exchange rate difference

5,036,490,900

20,672,143,978

643,445,894

29,541,603,180

46,682,196,089

566,373,181

27,563,252,891

57,090,806,277

896,810,669

Total 26,352,080,772 76,790,172,450 85,550,869,837

OTHER OPERATING EXPENSES

FINANCE INCOME

2017 Annual report

9392



December 2017VND


September 2017 VND


December 2016 VND

Interest expense

Loss on exchange rate difference

Other finance expenses

469,638,983

1,042,786,341

15,874,408,774

2,085,005,094

415,240,305

128,576,629

796,370,864

530,775,986

11,167,870,774

Total 17,386,834,098 2,628,822,028 12,495,017,624


December 2017VND


September 2017 VND


December 2016 VND

Employee expense

Tool and equipment expense

Depreciation expense

Expense for external services

Provision for doubtful debts

Other expenses

33,458,057,822

2,368,041,775

675,252,993

2,583,824,483

4,539,852,364

7,698,653,804

44,425,110,265

8,355,176,787

3,391,045,952

10,286,375,867

-

30,471,155,601

57,060,160,370

8,271,062,451

3,095,173,625

9,119,294,377

239,673,023

30,620,547,209

Total 51,323,683,241 96,928,864,472 108,405,911,055

FINANCE EXPENSES

GENERAL AND ADMINISTRATIVE EXPENSES

OTHER INCOME AND EXPENSES


December 2017VND


September 2017 VND


December 2016 VND

Other income

Other income

Rental income

441,164,179

156,460,145

284,704,034

440,282,371

46,412,507

393,869,864

111,126,210

111,126,210

-

Other expenses

Other expenses

(15,910,479)

(15,910,479)

(29,503,925)

(29,503,925)

(68,956,349)

(68,956,349)

Total 425,253,700 410,778,446 42,169,861

CORPORATE INCOME TAX

The Corporation is subject to paying corporate income tax (“CIT”) at the rate of 20% of its taxable profits from 2017 (2016: 20%).

The Corporation’s tax returns are subject to examination by the tax authorities. Because the application of tax laws and regulations is susceptible to varying interpretations, amounts reported in the financial statements could be changed at a later date upon final determination by the tax authorities.

Corporate income tax expense


December 2017VND


September 2017 VND


December 2016 VND

Current CIT expense

Deferred tax income

5,033,711,051

(357,109,273)

12,394,603,774

-

15,340,017,984

(289,118,576)

Total 4,676,601,778 12,394,603,774 15,050,899,408


December 2017VND


September 2017 VND


December 2016 VND

Accounting profit before tax 22,554,405,981 61,973,018,869 75,177,268,151

Adjustments to increaseAccrued insurance commissions for current periodForeign exchange lossesPenalty for late payment of taxOther non-deductible expenditure

5,636,864,9683,879,635,9431,344,922,170

41,966,971370,339,884

-----

-3,739,649,910

14,771,303-

727,468,507

Adjustments to decrease (3,740,898,150) - -

Foreign exchange gainsAccrued insurance commissions from prior periods

(1,248,236)(3,739,649,914)

--

(316,657,701)(3,077,586,946)

Taxable profit 24,450,372,799 61,973,018,869 76,264,913,224

Tax rate 20% 20% 20%

CIT expense for the period 4,890,074,560 12,394,603,774 15,252,982,645

Adjustment for under accrual of tax from prior year(s) 143,636,491 - 87,035,339

Total CIT expenses 5,033,711,051 12,394,603,774 15,340,017,984

The current corporate income tax payable is determined based on taxable income for the period. Taxable profit distinguishes from accounting profit reported on the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible for tax purpose. The Corporation’s liability for current tax is calculated using tax rates that have been enacted by the balance sheet date.

Reconciliation between CIT expense and the accounting profit multiplied by CIT rate is presented below:

2017 Annual report

9594


The following are the deferred tax assets recognised by the Corporation, and the movements thereon, during the period from 1 October 2017 to 31 December 2017:

Deferred tax

Balance sheet Income statement

31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

The period from 1 October

2017 to 31 December

2017VND

The period from 1 January

2017 to 30 September

2017 VND

The period from 1 January

2016 to 31 December

2016VND

Deferred tax asset 1,044,661,975 687,552,703 687,552,703 357,109,273 - 289,118,576

Commissions on premium receivables

775,927,188 747,929,982 747,929,982 27,997,207 - 132,412,592

Foreign exchange losses 268,984,434 2,954,261 2,954,261 266,030,173 - 2,954,261

Foreign exchange gains (249,647) (63,331,540) (63,331,540) 63,081,893 - 153,751,723

Net deferred tax credited to income statement

357,109,273 - 289,118,576

TRANSACTIONS WITH RELATED PARTIES

Significant transactions with related companies during the year were as follows:

Company Relationship Transaction The period from 1 October 2017

to 31 December 2017VND

The period from 1 January 2017

to 30 September 2017 VND

The period from 1 January 2016

to 31 December 2016VND

Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)

Parent


71,412,491,532 33,572,608,970 96,220,655,368

Interest income from term deposit

1,903,949,955 4,686,533,333 5,772,526,412

Profit transferred to parent company

- (54,113,731,869) (47,906,177,541)

Commission expense (3,560,753,684) (8,175,829,586) -

Vietinbank Finance Leasing Co., Ltd

Affiliate


11,189,526 315,067,852 254,007,022

Interest income from term deposit

83,080,279 231,766,943 -

Vietinbank Securities JSC AffiliateGross written premiums

443,868,100 43,921,850 445,602,200

Vietinbank Fund Management Co., Ltd

AffiliateGross written premiums

158,200,000 60,661,000 178,654,000

Vietinbank AMC AffiliateGross written premiums

252,700,000 63,896,151 577,646,222

Vietinbank Gold & Jewellery Co., Ltd

AffiliateGross written premiums

155,395,445 57,541,978 -

Vietinbank Money Transfer AffiliateGross written premiums

106,300,000 19,491,696 -

2017 Annual report

9796



December 2017

VND


September 2017

VND


December 2016

VND

Salaries and bonus 1.040.524.670 3.121.574.011 2,836,780,995

Total 1.040.524.670 3.121.574.011 2,836,780,995

The period from 1 October 2017 to 31 December 2017

VND

The period from 1 January 2017 to 30 September 2017

VND

Remuneration 75,000,000 -

Total 75,000,000 -

Related company Relationship Description Receivables VND

PayablesVND

Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)

Parent Cash at bank 12,218,966,975 -

Term deposits 176,500,000,000 -

Interest from term deposits 3,756,294,444 -

Premium receivables 305,409,118 -

Compulsory deposit 864,867,222 -

Vietinbank Finance Leasing Co., Ltd

Affiliate Premium receivables 5,000,000,000

Interest from term deposits 250,069,444 -

Amounts due to and due from related companies at the balance sheet date are as follows:

Remuneration to members of Board of Directors:

Remuneration to members of Board of Management:

Apart from salaries and bonus, the Board of Management is not entitled to any other benefits.

COMMITMENTS AND CONTINGENCIES

Operating lease commitments

The Corporation leases office premises under an operating lease. Future rental amounts due under operating leases as at the period-end were as follows:

Foreign contractor withholding tax

The Corporation accounted for the FCT on reinsurance premiums ceded to overseas reinsurers from countries without Double Tax Treaty with Vietnam or from countries with Double Tax Treaty with Vietnam, have submitted adequate supporting documents to the Tax Authority.

Other off-balance sheet items

ITEMS 31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

Operating lease commitments due

Less than 1 year

From 1 – 5 years

More than 5 years

179,301,699

9,946,736,153

10,513,894,894

257,766,575

5,455,237,677

10,581,812,204

68,646,575

2,290,015,562

10,782,611,208

Total 20,639,932,746 16,294,816,456 13,141,273,345

ITEMS 31 December 2017

VND

1 October 2017

VND

31 December 2016

VND

Insurance policies signed but not yet effective (VND) 66,937,416,979 47,388,027,852 57,660,881,327

Bad debt written off (VND) 7,805,133,147 7,805,133,147 7,805,133,147

Foreign currency (USD) 71,255.34 4,220.62 5,758.41

Foreign currency (EUR) 385.05 385.05 385.02

2017 Annual report

98

CHAPTER 3FINANCIAL STATEMENT AND ILLUSTRATION FINANCIAL STATEMENTS

Claim development table

The table below presents estimates of cumulative claim incurred and cumulative payment to date:

ITEMS

Accident year

2014 2015 2016 2017 Tổng số

At end of accident year 1 2 3 4 5

I. Estimate of cumulative claims incurred

1 74,702 124,472 253,311 402,284

2 104,539 154,653 262,738 -

3 117,032 186,183 - -

4 135,921 - - -

Current estimate of cumulative claims incurred (1)

135,921 186,183 262,738 402,284 987,125

II. Cumulative claim payment

1 36,453 73,385 120,645 201,974

2 72,069 131,047 213,259 -

3 85,274 171,022 - -

4 108,641 - - -

Cumulative claim payment to date (2) 108,641 171,022 213,259 201,974 694,896

III. Net outstanding claim reserve (3) = (1) – (2)

27,280 15,161 49,479 200,309 292,229

IV. Current estimate of surplus (4) (61,218) (61,711) (9,427) -

(132,357)

V. Percentage of current estimate of surplus over current estimate of cumulative claims incurred (5) = (4)/(1)*100%

(45%) (33%) (4%) 0% (13%)

10th - 11th floor, VietinBank Building,No.126 Doi Can, Ba Dinh Dist, Hanoi

19001566www.vbi.vietinbank.vn

2017 Annual report

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