Agriculture Bank Insurance Joint – Stock Corporation (ABI)  _Benefit from high interest rate environment

 INVESTMENT THESIS

• Agribank Insurance (ABIC hereinafter) is the pioneer in the secured credit insurance provider in Vietnam market.
• ABIC owns well dispersed risk business model according to the large sample rule, making its remarkable profitability. The company records impressive low compensation fee rate (around 22% of net premium). That in line with well advantage from parent company-Agribank helps it rapidly expand market, maintaining steady premium growth as well as sector-lowest combined ratio. As the results, ROE of ABIC is at sector-highest level, two-folded ROE of peers.
• Until June 2022, Banca insurance with Agribank is potential. There is just 65% of total Agribank’s client are insured by ABIC. Loan outstanding in Agribank’s asset which are insured by ABIC is just 20.8%/total loan.
• ABIC still has room to improve profit margin from higher interest rate environment and diversify investment portfolio, which help to improve financial income.

RISK

• The premium growth mostly depends on credit growth of Agribank