VIETINBANK INSURANCE ANNUAL · 2018. 9. 27. · 2 VietinBank Insurance 3 2016 Annual Report...

ANNUALR E P O R T

2016

V I E T I N B A N K I N S U R A N C E

vbi.vietinbank.vn

2 3VietinBank Insurance2016 Annual Report

VietinBank Insurance2016 Annual Report

A. 2016 KEY PERFORMANCE INDICATORS 2

B. OVERVIEW 6

C. CHAIRWOMAN’S STATEMENT 8

D. CORPORATE GOVERNANCE STRUCTURE 10

E. HIGHLIGHTS OF 2016 12

F.2016 BUSINESS PERFORMANCE AND 2017 STRATEGIC ORIENTATION

14

G. FINANCIAL STATEMENTS 32

REVENUEVND BILLION

TOTAL ASSETSVND BILLION

ROA%

PROFIT BEFORE TAXVND BILLION

“2016 marked a big step in VietinBank Insurance’s history with the company entering the Top 10 Most Prestigious Insurance Companies in Vietnam. Growth has been strong and continues to outpace the completion”.

OWNER’S EQUITYVND BILLION

ROE%

2016

2015

2014

2013

2012

2016

2015

2014

2013

2012

2016

2015

2014

2013

2012

2016

2015

2014

2013

2012

2016

2015

2014

2013

2012

2016

2015

2014

2013

2012

780,978

1,470,231

5,58%

75,177

600,390

10,12%

310,175

929,202

7,26%

63,221

573,871

8,72%

144,643

753,255

8,19%

63,029

559,177

8,47%

549,025

1,222,210

6,37%

68,464

588,170

9,1%

171,763

873,551

5,64%

48,053

555,306

6,47%

CONTENTS

2016 KEY PERFORMANCE INDICATORS

FINANCIAL STATEMENTSCHAIRWOMAN’S STATEMENT

2016 BUSINESS PERFORMANCE AND 2017 STRATEGIC ORIENTATION

OVERVIEW


VietinBank Insurance2016 Annual Report T�NG QUAN



OVERVIEW



VBI was originally formed by the combination of Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) and Asia Insurance Company of Singapore. Later on, VietinBank bought-out the foreign partner’s entire share in the company. After this, VietinBank Insurance (VBI) began the journey to becoming one of Vietnam’s leading insurers.

Thus, over the past 8 years, VBI has grown and entered the top 10 most prestigious insurers in the market and was the fastest growing insurance company in Vietnam for the period 2013-2016. VBI’s strategic is to be a “IT leading insurer”, brings customer friendly experiences, supply the most modern and innovative insurance services in Vietnam.

Starting from the first branches, VBI has so far expanded its network to 16 branches, 65 regional sales offices, 4,000 agents and more than 10,000 insurance selling points at VBI’s partner banks nationwide.

Having established a leading role forthe retail segment of Vietnam’s non-life insurance market, VBI will continue to make breakthroughs in providing comprehensive and

flexible insurance and financial products, complete its equitization strategic, select foreign strategic investors to improve business efficiency and bring added value to customers.

Journey to future achievement



OVERVIEW

VBI was the fastest growing insurance company in Vietnam for the period 2013-2016.



Dear Customers and Partners,

The Vietnamese Insurance industry continues along a path of strong growth in 2016 underpinned by stable socio-economic conditions resulting from the government’s policies focusing on administrative reform, inflation control and sound macro –economic management. At the same time, total non-life insurance premiums are estimated at VND 36,652 billion, a 15% increase over the same period in2015, the highest increase in recent five years.

Through dynamic management involving innovative solutions, 2016 was VBI’s most successful year with almost all business sectors exceeding set targets.Premium income reached VND 781 billion, a 42% increase compared to 2015 (more than double the overall market average growth rate of 15%); whilst profits reached VND75.1 billion, up 9.6% over 2015; the loss ratio remains at safe and conservative levels of 42.9%.

In 2016, the company has implemented many breakthrough initiatives in accordance with international standards to improve labour productivity, effective risk management and efficient operational systems control, which includes:

“2016 marked a big step in VietinBank Insurance’s history with the company entering the Top 10 Most Prestigious Insurance Companies in Vietnam. Growth has been strong and continues to outpace the completion”.

1.In keeping with our rapid growth strategy over medium term, we continue to transform operational models incorporating sophisticated automated systems and risk management processes such as the issuance of electronic and invoice certificates and the establishment of centralised claim inspection and settlement center.

2.Developing more new distribution channels in addition to traditional approaches such as through professional agents and online sales.

After 8 years engaging with the insurance market in Vietnam, VBI has risen to confirm its position in the “Top 10 reputation insurance companies in Vietnam” (published by Vietnam Report). VBI was honoured and delighted to receive many such titles. This includes as “Top 20 enterprises for strongly satisfying consumers’ interests”, “Top 100 Vietnamese Excellent Brand”, “Top 1000 corporate income tax payers in Vietnam”. An increasing number of award honours in the prestigious rankings has affirmed our strategic efforts and drive to improve business performance as well as building and developing the VBI’s brand.

Chair Woman’s Statement

STEPPING UP TO NEW ACHIEVEMENTS

For 2017, we have confidently set a revenue target of over VND 1 trillion, a 10% increase in total assets, a 10% increase in profit compared to 2016, and continuing to expand business network.

To achieve the above objectives, we will officially implement the equitization plan, select foreign strategic investors to improve financial capacity, improve the organizational model and update the modern management methods. In addition to expanding and diversifying distribution channels, VBI will focus on improving the quality of customer service with the goal of enhancingVBI’s role as a non-life insurance company with outstanding customer service in the market. Through product differentiation strategies, we will further strengthen VBI competitive thrust in the market. VBI will thus continue to pioneer the development and adoption of new technology solutions into sales and customer services.

2017 will come with new challenges ahead. I believe that with the solidarity and strong determination of the Board and all VBI staff, we will overcome all challenges together, to bring VBI to new achievements.

On behalf of the VBI Board of Directors, I would like to express our sincere gratitude to our valued customers, partners, Government management agencies and all VBI staff who have trusted, accompanied and supported us throughout the years. We remain committed to building and developing VBI, making it strong, in part through establishing and consolidating sustainable product lines with a view to contributing positively to the overall development of the insurance industry and Vietnam economy.

Sincerely!

CHAIRWOMANNGUY�N H�NG V�N



OVERVIEW FINANCIAL STATEMENTSCHAIRWOMAN’S STATEMENT


OVERVIEW



Ms. Nguyen Hong Van CHAIRWOMAN

Ms. Nguyen Hong Van graduated with a Master’s degree in Finance and Banking. She began working at VietinBank in 1990.She had previously assumed the following positions: Head of Planning and Investment Department, Head of Planning and ALCO Supporting Department. She is also currently serving as a Member of the Board of Directors of VietinBank.

Mr. Le Tuan Dung CHIEF EXECUTIVE OFFICER

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 over 20 years of experience in the insurance industry and has taken important positions including Head of Underwriting Department, Head of Reinsurance Department and Head of Branches at Post and Telecommunications Insurance Joint Stock Corporation and Deaputy CEO of Military Insurance Corporation.

Mr. Nguyen Hong Phong DEPUTY CHIEF EXECUTIVE OFFICER

Mr. Nguyen Hong Phong graduated with a Bachelor’s degree in Economics at Vietnam University of Commerce and a Master’s degree in Business Administration at Vietnam National Economics University. Prior to his assignment as VBI’s Deputy CEO in July 2013, he was Head of Branches and Head of Underwriting Department at Agriculture Bank Insurance Joint Stock Corporation and PetroVietnam Insurance Joint Stock Corporation – Northwest Branch.

Ms. Tran Thi Huong Thuy DEPUTY CHIEF EXECUTIVE OFFICER

Ms. Tran Thi Huong Thuy graduated with a Bachelor’s degree in Law at the Law University and a Master’s degree in Business Administration at Latrobe University. She has over 20 years of experience with Vietinbank in various managerial positions.She is currently serving as VBI’s Deputy CEO cum Human Resources Director.

Ms. Pham Thi Thanh ThuyCHIEF FINANCIAL OFFICER

Ms. Pham Thi Thanh Thuy graduated with a Bachelor’s degree in Economics and a Master’s degree in Finance and Banking from the Banking Academy. She has over 15 years of experience in accounting. Prior to her assignment as VBI’s Chief Financial Officer in May 2015, she was a Member of Supervisory Board and Head of Internal Audit Department of VietinBank Leasing Company.

Corporate Governance Structure



OVERVIEW



1.VBI received the title “Top

10 most reputation insurance companies in Vietnam”

On 27/07/2016, at Annual General Meeting of Vietnam CEO Summit 2016 in Hanoi, VBI was honored in the Top 10 most reputation insurance companies in Vietnam.This follows independent research conducted by 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.

Highlights of 2016

5.VBI has established

three new branches

During 2016, VBI established 3 new branches: VBI Trang An, VBI North East, VBI Ben Thanh, bringing the total number of branches to 16 which are located at key areas nationwide.

8.VBI has been listed in the “Top 1000 Corporate

Income Tax Payers in Vietnam” by Vietnam Report for 4 consecutive years

VBI has been honored in the top 1000 largest corporate income taxpayers of Vietnam in 2016 (V1000) announced by Vietnam Report in recognition and honoring corporations with excellent business results, compliance to legal obligations, tax policy and having high corporate income tax levels whilst also emphasizing social responsibility activities. In addition, in June 2016, VBI continued to be positively recognized by the Ha Noi Taxation Department at the conference “To commend organizations and individuals with good business results and well perform their tax obligations”.

3.VBI transform the

organizational structure at the Head Office

VBI has been structurally transformed as it moves towards equitization with a view to meeting the ever-evolving needs of the business. In the coming time, VBI will continue to improve its governance, develop new and diversified service and product systems within the context of state of the art IT systems, sales and after sales service systems.

2. VBI issued Electronic

insurance certificates and Electronic invoices

On 15/09/2016, VBI become one of the first insurance companies to issue electronic certificates and electronic invoices with many outstanding benefits to customers; Therefore, customers can access insurance benefits quicker, safer and easier by the most modern method in the insurance market.

6.VBI has successfully completed the 2016

business plan

VBI has received the award for outstanding achievementat the Business Performance of 2016 and Implementation of 2017 in Vietinbank annual conference. In 2016, VBI was assessed as completing all business targets excellently and comprehensively.

9.VBI has been honored with the “Enterprise for Strongly

Satisfying Consumers Interests in 2016”

This is designed to honor outstanding businesses and good quality products that meet the criteria of the program. The award is organized to promote the protection of consumers’ rights and at the same time it is expected to make consumers appreciate and be able to understand and protect legitimate and legal rights as well as raise awareness of all

people and business community.

7.VBI achievement

of ISO 9001:2015 certification

ISO 9001:2015 quality management system is one of the effective tools applied effectively by organizations and enterprises around the world to manage the quality of operations, improve the quality of services and products, and thereby contributing to enhance a corporation’scompetitive position. The adoption of this standard has helped VBI improve operations in implementation management, quality control, and enhancement of employee productivity. In addition, VBI has cut down time, cost and resources in all activities, thereby increasing profits and bring added value to customers.

10.10. VBI organized

Corporate Social Responsibility activities

VBI has organized a series of Corporate Social Responsibility activities such as “Warm clothes for children” to students in mountainous areas of Nghe An, gifts to children with congenital heart disease at the Department of Heart of E Hospital, participating to “Porridge with love” at the National Hospital of Pediatrics.In addition, VBI donated healthcare insurance for poor communities in 63 provinces across the country with the total insured value of up to VND 18.9 billion.

4.VBI was honored with the “Vietnam Excellence

Brand 2016” award

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



OVERVIEW





OVERVIEW

F.2016 BUSINESS PERFORMANCE AND 2017 STRATEGIC ORIENTATION

14

1.Overview of 2016 insurance market and 2017 forecast

16

2. 2016 Business Activities 18

- Human Resource Governance 19

- Improve Claim Settlement Quality 24

- Modernization of IT System 25

- Network and Sales Development 26

- Risk Management 27

- Product Development 28

- Corporate Social Responsibility Activities 30

- Branding and Communication 31



Overview of 2016 insurance market and 2017 forecast

In 2016, Vietnam’s insurance market grew very rapidly. According to data from the Insurance Supervisory and Authority of the Ministry of Finance, total premiums of the non-life insurance market were estimated at VND 36,652 billion, a 15% increase compared to 2015, the highest increase in the last 5 years. In 2016, claim payments for non-life insurance from insurance enterprises amounted to VND12,571 billion, a 5.36% decrease compared to 2015.

The financial capacity of insurers is growing steadily. In 2016, total assets of non-life insurance companies was estimated at VND 67,796 billion, a 7.52% increase over the same period; by the end of 2016, total underwriting reserves of non-life insurers were estimated at VND 18,959 billion, a 20.91% increase compared to 2015; total equity of non-life insurance companies by the end of 2016 has been estimated at VND 24,440 billion, a 5.43% increase over the same period.

Overview of 2016 non-life insurance market

In 2016, the legal system governing the insurance industry has been greatly improved, thereby contributing significantly to the development of the insurance market. Government’s Decree No.73/2016/ND-CP has a number of amendments and regulations including revision of investment regulations, allowing insurance enterprises to invest in local government bonds, fund certificates, amendments to certain provisions relating to information technology system, reinsurance (increase retention rates, maximum reinsurance ceded into the treaty), etc.

In addition, increasingly strong competition has resulted in improved customer services in the non-life insurance segment; covering enhanced personal services and associated customer reception facilities. Lots of sales channels are developed such as bancassurance and online sales facilities. In particular, the claim processes are more streamlined and efficient.

In general, 2016 is considered as a good year for Vietnam’s economy in general and the non-life insurance market in particular. This is a positive signal for economic growth in Vietnam and efforts to develop the insurance market in the coming years.

2017 is expected to be a promising year for the insurance market in general and non-life insurance in particular. According to a report from the World Bank, Vietnam has positive growth prospect over the medium term. The GDP growth is expected to increase to 6.3% in 2017. In addition, joining the EU – Vietnam Free Trade Agreement (EVFTA) and the ASEAN Economic Community (AEC) will bring many favorable factors to support the market development.

Beside this, it is to ensure the safe, healthy and effective market development; to enhance the competitiveness of insurers and bring them closer to international standards; and prepare for the implementation of international commitments. In 2017, according to the Insurance Supervisory and Authority, the non-life insurance is expected to grow by 9.4% inpremium income, estimated at VND 40,087 billion.

According to the strategy for development of the insurance market for the period of 2011-2020 approved by the Prime Minister in Decision No.193/QD-TTg, by 2020, the insurance market aims to achieve total revenue of 3% - 4% of GDP, the size of insurance reserve funds will increase by 4.5 times compared to 2010. The growth potential of the non-life insurance is also reflected in car insurance, property insurance and liability insurance, health insurance and travel insurance.

Forecast for 2017 non-life insurance market

In addition, new government policies on insurance (public property insurance, disaster insurance, etc.) which will soon be issued, constituting positive factors to promote the development of the market as well as great opportunities for insurance corporations.

It is expected that 2017 will be a turning point for construction and erection insurance through Circular No. 329/2016/TT-BTC stipulating compulsory construction insurance. The circular will take effect from March 1st 2017. This is an important legal basis, aiming at increasing the source of premium revenue of this line.

In 2017, non-life insurers have been promoting retail distribution through bancassurance, boosting online insurance system, reducing agent commission and administrative costs to insurance companies.

Having clearly defined the market development direction, opportunities and challenges to insurers, VBI has been actively developing its business strategy for 2017 to reach new achievements with the aim of taking the leading role in retail segment in the non-life insurance market in Vietnam.

TOTAL REVENUE OF THE NON-LIFE INSURANCE MARKET 2012-2016

2016

2015

2014

2013

2012

27.307

32.150

36.652

24.454

23.968

Unit (billion VND)



OVERVIEW



Business performance in 2016

2016 continues to be a successful year for VBI with the following breakthroughs: • Total revenue of VND 781 billion, up

42.25% over 2015.

• Total direct insurance premium revenue of VND 692 billion, up 42.39% over 2015, three times as much as the overall market average growth rate of 14.04%.

• Total reinsurance inward premium of VND 89 billion, up 43.55% over 2015.

• Profit before tax of VND 75.1billion, up 9.6% over 2015.

• Total assets totaling VND 1.470 billion, up 20.29% over 2015.

• Total underwriting reserve fund of VND 614 billion, up 55% over 2015.

Investment Revenue and Profit

Business investment in 2016 achieved positive results. VBI took good advantage of idle cash flows, restructured investments and turned over capital efficiently. The total value of VBI’s portfolio reached VND 990 billion in 2016, up 14.7% compared to 2015.

VBI 2016 INVESTMENT PORTFOLIO STRUCTURE

2016 Business Activities

Bond34%

Deposit66%

VBI’s investment revenue in 2016 was VND 85.6 billion, up 26.63% compared to 2015, focusing primarily on bond investment and capital turnover. Net profit from investment reached VND73billion making the growth rate of 28% compared to 2015. Over all profit from business activities was VND 75.1 billion, increasing 9.8% compared to 2015.

Business investment in 2016 has been efficient, safe with an effective use of idle cash flows, restructured investments and turned over capital reasonably, which raises the total average value of investment to VND1000 billion (increase 25% compared to 2015). Turnover then reached VND 83 billion, the performance achieved 104% predetermined plan.

In addition, in 2016, VBI kicked off the equitization process, looking for foreign investors and it is expected the equitization will be implemented and completed in 2017.

GROWTH CHART OF INVESTMENT PORTFOLIO VALUE (2013 - 2016 )

Asset – Owner’s equity

Total asset reached VND 1,470 billion, up 20.29% over 2015.

Owner’s equity reached VND 600billion, up 2% compared to 2015.

Return on asset (ROA) reached 5.58%and return on equity (ROE) reached 10.12%.

Compared with the average level of the insurance market, VBI’s indicators on Asset and Owner’s equity growth are in the overall range of the market (3%), while its ROE and ROA are higher than the average market level (5.7% and 8%).

Underwriting Reserve

Premium reserve at the end of the period was VND 379 billion, increasing 41.95% compared to beginning of the period. Claim reserve at the end of the period was VND 219 billion, an increase of 85.6% compared to beginning of the period. Large fluctuation reserve at the end of the period was VND 15.8 billion, an increase 49% compared to the beginning of the period.

Total underwriting reserve fund at December 31st 2016 was VND 614 billion, increase 55% compared to that of December 31st 2015.

This is considered as a significant cash flow for VBI’s financial investment activities. VBI’s underwriting reserve fund growth rate is three times compared to the overall market growth rate which is estimated at 23.5%.

2016

2015

2014

2013

990

692863

595

Unit (billion VND)

Human Resource Governance

In the past year, VBI has carried out a series of key tasks in recruiting, developing salary mechanisms, evaluating the level of accomplishment of the business objectives of the unit, staff and setting up working rules, issuing staff management and rotation regulations; additionally, in-service staff planning and between 2014-2016, high-ranking cadre planning to meet key personnel requirements.

Recruitment: Within the guideline for taking HR as the core for development, VBI is now one of the insurance companies that attract highly qualified candidates. In 2016, VBI recruited more than 160 highly qualified staff.

Staff training: In 2016, VBI has more than 500 staff members attened for internal training courses such as basic insurance, personal insurance, vehicles, property, engineering, cargo, negotiation and persuasion skills, sales skills, interview and recruitment skills. Almost 100 staff was sent to attend specialized training courses on motor vehicle insurance, cargo insurance, motor vehicle insurance, loss adjustment and taxation. Two staff has also completed the Actuary training program in accordance with Ministry of Finance’s regulation. It is noteworthy that there are currently 8 staff participating in ANZIIF’s international standard insurance training programme; additionally 20 staff have participated in study visits in the US and Korea.

Staff productivity and remuneration:In 2016, VBI continued to improve the salary levels to encourage staff motivation. The average income of employees in VBI in 2016 increased by 10% compared to 2015. The productivity of VBI in 2016 is VND 2.45 billion per person, an increase of 11% compared to 2015. This is the 30 times higher than for labor productivity generally in Vietnam in 2016 (i.e.VND 84.5 million/person).

Strategic orientation for 2017 human resource

VBI’s objective in 2017 is to complete the transformation into a Joint Stock Company.Therefore, VBI will promote the rotation of staff in helping them with develop the capacity and flexibility to undertake several inter-related positions.

To improve HR quality, VBI has developed a compulsory training framework for every position and in particular has strengthened internal training, E-learning and organized insurance training courses by prestigious international organizations for VBI staff.

In the insurance market, VBI aims towards the image of a dynamic and energetic company that always looks forward to the changes for improvement.

Human resource is one of the most important elements contributing to the success of VBI in recent years. In 2016, VBI continues to implement and improve human resource (HR) policies, focal projects and initiatives to improve and enhance HR quality.

NUMBER OF EMPLOYEES (2013-2016)

2016

2015

2014

2013

220

290

374

174

PRODUCTIVITY (2013-2016)

Unit: (VND Billion)

2013 2014 2015 2016

2,45

1,5

2,2

1,1



OVERVIEW



In 2016, VBI’s direct insurance revenue reached VND 692 billion, increasing 42.4% compared to 2015 and three times as much as the average growth of the market (14%).Motor vehicle insurance accounted for the largest portion in VBI’s insurance revenue with VND 240.4 billion, equivalent to 34.7% of total revenue. The next is property insurance with VND150.6 billion, accounting for 21.8% of total revenue. Personal insurance revenue reached VND 143.6 billion, accounting for 20.7% of total revenue. Engineering revenue was VND 79.5 billion, accounting for 16.4% of total revenue. The remaining insurance lines accounted for 22.8% of the sum.

Direct Insurance

Motor Vehicle Insurance

Motor vehicle insurance is the line accounting for the largest part of VBI’s revenue (34.7%).In 2016, this segment’s revenue was VND 240.41billion, an increase of 50.94% over 2015 (more than 2 times of average growth rate of whole market of 22.65%). Motor physical damage insurance revenue reached VND 216.62 billion, accounting for 90.33% total revenue. Other related motor vehicle insurance reached 23.79%, accounting for 9.67% total revenue. VBI’s total claim payment for motor vehicle insurance was VND 114.26 billion, accounting for 47.6% of total revenue (lower than the market’s loss ratio of 48%).

With regards to compulsory civil liability insurance, Circular 22/2016/TT-BTC on compulsory civil liability insurance for motor vehicle owners has been in effect since April 1st 2016. According to the Insurance Supervisory and Authority, Circular 22 has new advantages, the claim procedures are simplified, and the settlement level is higher, ensure the rights of the insured and is in line with the general development trend.

Motor vehicle insurance continues to be VBI’s key business line in 2017. Besides integrating Motor vehicle insurance with car loan products from VietinBank and other affiliated banks in the system, VBI also actively collaborates with showrooms and garages aiming at providing convenient motor vehicle insurance products that meet customers’ demand.

In order to maintain a high rate of renewal, VBI places particularly emphasis up on implementing solutions to enhance renewal process such as preferential and attentive care policies for customers with low damage rate.

Personal Insurance

This is VBI’s flagship product towards individual customers and saw a boom in revenue by reaching VND 143.6 billion, up 53.2% compared to 2015, accounting for 20.7% total direct insurance revenue and being the second highest premium revenue at VBI. VBI’s claim payments in 2016 were VND 54.6 billion and a loss ratio was 38.2%.

Recognizing that personal products are a potential type of insurance that will bring high revenue, VBI focused on simultaneously providing personal insurance products such as insurance packages for borrowers.

In 2017, VBI will continue to provide retail healthcare products for individual customers of VietinBank and cooperative banks such as OceanBank, GPBank and Indovina Bank. This is a market segment with high potential and a significant source of future customers.

In addition, VBI will promote the distribution channels through other professional agents, develop products to meet the requirements of each agent and distribution channels. In particularly, VBI will focus on building and implementing programs to increase income of efficient products such as insurance for borrowers, international and domestic travel insurance.

Property Insurance

Property insurance accounts for a high proportion in VBI’s insurance revenue structure. This includes the following products: compulsory fire and explosion insurance, standard fire and special perils insurance, property all-risks insurance, industrial all-risks insurance, and business interruption insurance. In 2016, property insurance revenue was VND 123.51billion, a 47.9% increase compared to 2015 and accounting for 17.8% of VBI’s total revenue by lines of business.

In 2016, VBI collaborated closely with VietinBank’s branches in providing insurance for mortgaged properties at the bank, especially disbursement for plants, manufactures, and ware houses etc.

The loss ratio for property insurance in 2016 was 22.6%, a safe level compared to the market’s level of 63.2%. This result was built on VBI’s continuous effort in risk control, especially with high risk exposures.

VBI’s orientation in 2017 is to focus on underwriting property insurance for VietinBank’s small and medium-sized clients and cooperative banks including OceanBank, GPBank and Indovina Bank. Furthermore, VBI will also continue to promote home fire and explosion insurance for individual borrowers of VietinBank and cooperative banks. In respect of risk control VBI will perform distant risk assessments via applying software on smart phones.



OVERVIEW



Engineering 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 2016, VBI’s engineering insurance generated 85.294 billion VND, accounting for 12.3% of total revenue by business lines, a 7.3% increase, with aloss ratio of 23.1%equivalent to 19.67 billion VND.

Taking advantage of being a member company of VietinBank, in 2016, VBI continued to closely coordinate with VietinBank’s branches to provide comprehensive package insurance to projects financed by VietinBank.

2017 marks a turning point for construction insurance with the issuance of Circular No. 329/2016/TT-BTC, stipulating compulsory insurance for construction investment which will be effective from March 1st 2017. This is an important legal basis to increase the source of premium revenue of this business. For 2017, VBI will still focus on exploiting the construction and installation projects financed by VietinBank and cooperative banks. At the same time, VBI will control strictly high risk exposures such as hydropower plants, machinery and equipment operating in areas with complex terrain.

Miscellaneous and Liability Insurance

In 2016, liability insurance revenue for the whole non-life market reached VND 832.172 billion, representing 3% of total non-life premiums. This figure shows that, despite a good growth, the proportion of liability premium income is still very small compared to the revenue of other businesses. Therefore, there is a high potential for this line. Another important basis to support the development of future liability insurance is the legal corridor relating to improved liability insurance. More and more areas of business must purchase statutory liability insurance: professional liability insurance for attorneys and valuers, professional liability insurance for physicians, professional liability insurance for architects and consulting engineers.

In 2016, VBI’s combined liability insurance premium is VND 36,808 billion, accounting for 5.4% of the company’s total revenue.

In 2017, VBI will continue to focus on providing deposit insurance for the entire banking system of VietinBank and cooperating banks such as OceanBank, GP Bank and Indovina Bank. Regarding other traditional products, VBI will focus on professional liability insurance such as professional insurance for design consultants and architects, lawyers, notaries, and healthcare facilities. In addition, VBI will provide a number of new insurance products such as guarantee insurance, animal husbandry insurance, export credit insurance, liability insurance for directors and officers (D&O).

Marine Insurance

According to the overall assessment of the Vietnam Insurance Association on the market of marine cargo and hull insurance, in 2016, the latter has grown but less than expect because of declines in revenue cargo insurance estimated at 7-10%. The marine shipping market has not yet recovered, lack of capital, shortage of goods, low freight while maintenance and material costs remain high. A high number of ships must stop operation. It is forecast that marine shipping industry in Vietnam and the world generally has been unstable throughout 2016-2017.

According to assessments from international institutions such as IMF, ADB, WB, the Vietnam GDP is expected to increase 6.3% in 2017. This shows that the trend in increasing production and business has not changed much. China’s slower growth also affects overall regional and global growth rate. These factors also affect Vietnam’s export growth in general and cargo insurance revenue in particular.

Given the difficult economic situation as mentioned above, in 2016, VBI will focus on cargo insurance for containerized goods and inland transportation. VBI strictly controls underwriting of bulk animal food insurance, packed goods for each customer and each commodity group to minimize the loss ratio. VBI’s major customers continue to insure their merchandise annually.

With marine hull, VBI focuses on hull insurance under condition B and applies salvage limits, international P&I insurance, hull insurance under condition A for vessels with certain selections on premium rate, deductible, terms of condition. Therefore, the loss ratio on marine hull insurance is low. Underwriting hull insurance is through VietinBank, premium collection is in accordance with regulations i.e. accept the cancellation of the policy immediately upon the customer’s failure to comply with the obligation to pay

premium in due time. Therefore, there is no outstanding premium arising from vessels to be insured with VBI.

Marine cargo insurance created revenue of VND 43.4 billion in 2016, accounting for 6.3% total revenue, the growth rate is 37.6% compared with 2016 revenue. 2016 marine cargo claim payment was VND 17.9 billion equivalent to loss ratio of 41.2% (this ratio dramatically increased compared to that of 2015, which was 9.18%).

In 2016, hull insurance revenue reached VND 19.866 billion, accounting for 2.9%,a 131.9% increase compared to 2015. The claim payment for hull insurance in 2016 is VND 5.988 billion equivalent to loss ratio of 30.1%. Vietnam hull insurance market has been making losses for 15 consecutive years, but this segment of VBI is still making profit due to the fact that underwriting is undertaken through VietinBank and VBI has not accepted renewals for high-loss type vessels.

In 2017, VBI will promote the following products: in land transit insurance, air cargo insurance, and containerized import-export cargo insurance. VBI will enhance cargo insurance by implementing good underwriting policies. Regarding target customers, VBI will focus on customers that open L/C or register bill payment through VietinBank and other cooperative banks.



OVERVIEW



Revenue from property insurance reached VND 33.2 billion, accounting for 37.3% of total revenue,a 67.9% increase. Revenue from engineering insurance reached VND 6.2 billion, accounting for 7.1% of total revenue, a 55.3% increase. Claim payments for reinsurance retention is 55% lower than that of the market average of 90%.

For 2017, reinsurance will remain a key operating platform with a view to contributing to the overall growth of the company with a revenue target of VND 120

billion, which is an ambitious but achievable 35% growth over 2016.

By continuing and strengthening close cooperation with local insurers to exchange reinsurance services, VBI will expand inward reinsurance from the international market through reinsurers, business exchange with foreign insurers of the same size in order to diversify the types of insurance, increase capacity for reinsurance arrangements as well as the revenue from reinsurance inward businesses.

In 2016, reinsurance revenue reached VND 89 billion, an increase of 43.55% compared to 2015. This is the year with the highest growth rate of reinsurance business in recent years, of which property and engineering insurance has demonstrated strong growth.

Reinsurance

Improve Claim Settlement Quality

During the year, VBI continued to be in the top group of insurance corporations offering efficient personal products. VBI has collaborated with Insmart Guarantee and Advisory System which is regularly reviewed to eliminate unqualified health facilities. Consultant doctors are experienced and enthusiastic and capable to advise and resolve difficult and large claims.

In 2017, VBI applies sanctions for cases of procedural violation, slow settlement for subjective reasons and reviews all VBI’sassociated garage thereby selected competent and cost effective garages will be contracted. This will help reduce loss ratio for motor vehicle insurance.

In addition, VBI will apply new online assessment and compensation software. This helps the claim settlement process to be done quickly and minimize fraudulent claims. In addition, VBI will develop quality standards for claim adjustment and regularly audit the process at the branch level. In particular, VBI will intensively train the head office’s claim staff, supervise closely independent inspection agencies to assure timely inspections and settlement, thereby ensuring the quality of the claim services in the fastest manner.

In 2016, VBI’s loss ratio was 27.9% (lower than the overall marke trate of 43%). Having said this, the rate still quite high of motor vehicles (37.58% ). The loss ratios of the remaining lines are with acceptably safe levels.

Modernization of IT System

2016 is a breakthrough year for sophisticated technological applications in VBI business operations. During the year, VBI successfully launched its applications of electronic invoices and certificates. VBI is the first non-life insurance company to adopt this new technology. The introduction of electronic invoices and certificates has helped management process and provided insurance services to customers in a modern, efficient and timely manner. It also facilitates cost effective management.

In addition, VBI has implemented the process of centralised claim settlements and on-line inspection of motor vehicles. Medical claim and direct billing procedures have helped improve settlements of car losses and health care claims respectively, and provide for timely claim processing and better customer care. At the same time, the process has assisted professional development and effective management.

Furthermore, VBI has also implemented a number of online services such as searches for electronic certificates and invoices. This helps clients to access quicker, safer and easier insurance benefits in the most modern form in the insurance market.

Orientation of IT development for 2017

In 2017, for the purpose of modernizing business management and customer care, VBI will continue to upgrade and deploy IT applications in business management and operations in order to improve efficiencies productivity and design online environments to increase interaction with customers and partners.

In particular, VBI will deploy an application of online claim payment checkup, loss notification and survey. Software for direct billing requests to partnership hospitals, and for motor vehicle repairing quotation to associated garages will be provided. The deployment of these online applications helps customers, and partners interact with VBI in a professional and modern way. It supports the handling of clients’ claims quickly and conveniently.

In addition, the assignment of processing the entire sales activities using information technology will be attentively deployed in 2017. Along with the successful implementation of electronic certificates and invoices, VBI will deploy online insurance model to expand the retail business on the internet.

With the positioning strategy of “IT leading insurer”. VBI always brings to customers experiences of the most modern and new insurance services in the market.



OVERVIEW



Network and Sales Development

Strengthen the development of branch and agent network.

In 2016, VBI has continued to expand its business activities in the direction of ensuring quality and efficiency, focusing onthe key and potential areas. During the year, VBI has established three new branches in the North East, Trang An, Ben Thanh, thus expanding its network to 16 branches and 65 regional sale offices to boost sales and improve customer services.In addition, agency activities have also experienced breakthroughs compared to 2015. The number of agents trained and certified is now up to 3932.

In 2017, with the aim to promote retail activities, VBI expects to establish five more new branches and 30 regional transaction offices. VBI will also promote its individual agency network with the target of 1,000 new individual agents.

Restructuring Sales Model

In September 2016, VBI launched a new retail model to promote modernization in retailing, satisfying the diversified insurance needs of individual consumers. With this new retail model, VBI’s sales staff has been significantly improved in terms of quantity and expertise, sales skills.

In 2017, VBI will continue to focus on key solutions in the retail segment including: organizational structures, models of modern retail strategy management; apply technology solutions, utility solution for friendly and convenient service products in all retail segments; renovation of risk management, effective management to each unit and individual retailers; optimizing operational process (shortening transaction times to be quick and convenient) for each customer segment.

Expanding network through cooperation with partners

In 2016, VBI made breakthrough-progress through expansion of relations and comprehensive cooperation with partner banks such as OceanBank, GPBank and IndovinaBank. In addition to Bancassurance, VBI has actively expanded its distribution channels to incorporate Ginet, Ebaohiem and Vietlife amongst others.The expansion of distribution channels will help drive revenue growth and improve service quality, business performance, asserting VBI’s brand value.

In 2017, VBI will continue to strengthen the cooperation with joint stock commercial banks in the market as well as other agents. VBI also continues to train its sales staff and implement Bancassurance models in many branches nationwide.

NUMBER OF VBI’S BRANCHES NUMBER OF VBI’S TRANSACTION OFFICES

2016

2015

2014

2013

2016

2015

2014

2013

3510

5013

6516

187

Risk Management

In 2016, VBI has centrally managed claim assessments and settlements as part of a general restructuring of the whole system and associated processes. In particular, a motor vehicle inspection center has been established; claims of branches in Hanoi are being centrally settled by Head office’s Claim Department; online claim assessments and settlements have been applied, new software for motor vehicle claims have been set up to optimize labor productivity.

In November 2016, VBI established a subordinate center for claim adjustment and settlement at the Head office. As a result, VBI manages claim payment for personal insurance in order to reduce fraud cases and at the same time, improve management and

business efficiency. In addition, VBI has looking for a consulting partner in system risk management.In 2016, the Company issued Regulations on the rates/limits to ensure safe business operations to make sure that business activities comply with legal financial regulations.

By 2017, VBI will introduce a number of improvements in the risk management system, include:• Application of information

technology to the centralized management of all records and documents throughout the Company.

• Invitation to qualified experts to train staff, jointly review and check compliance for all transactions arising.

• Cooperate with reputation partner to implement a project for setting up the risk management framework. Accordingly, the partner will provide risk management consultancy services to VBI for the purpose of enhancing compliance, promulgating international standardised and unique risk management regulations.



OVERVIEW



Product Development

Individual products

In 2016, VBI continues to strongly approach the retail market through Bancassurance. Total premium revenue through VBI’s Bancassurance in 2016 reached VND 536.5 billion,a growth rate of 102.6%. Of this, retail insurance premium revenue came to VND193.2 billion, accounting for over 36% of total premium revenue

During the year, VBI actively cooperated with VietinBank to launch promotions and customer care with various incentives such as premium discount, gift vouchers for dental care, health care gifts.Some typical promotions such as “Join and Fly”; “Happy Opening - get a card of 5 million”; “Lending Interest – Loan on Demand”; “Together with VietinBank to Hawaii Tropical Paradise”; “ Prioritised Customer Policy”;... have received the attention of a large number of customers.

through Bancassurance, a 104.3% increase compared to that of 2015.

In particular, VBI continued to closely cooperate with VietinBank to expand E-partner comprehensive card insurance for customers with revenue of VND15.3 billion, up 115.9% increase compared to 2015.

In 2017, VBI will continue to accelerate the deployment of products targeted to the individual segment. Recognizing the cross-selling of Bancassurance products and capturing the needs of customers, VBI will focus on core retail products relating to bank’s depositors and borrowers. For example: VietinCare for borrowers, VBI Health Care insurance, VietinCar motor vehicle insurance, E-partner comprehensive card insurance. Furthermore, insurance products such as international debit and creditcard fraud transaction, fire insurance for small businesses will also be deployed.

“VBI constantly innovates in providing comprehensive insurance products aimed at leading the retail segment in the Vietnamese non-life insurance market”

REVENUE CHART OF BANCASSURANCE PRODUCTS IN 2016

Corporate products

In 2016, VBI focused on exploiting corporate customers with three main types of products:property, engineering and cargo insurance. VBI’s total revenue of these three products in 2016 reached VND 251.3 billion, a 30% increase compared to 2015, accounting for 36.5% of total direct insurance revenue. Of this, premium revenue of property, engineering and cargo is VND 123.480 billion, VND 84.314 billion, VND 43.464 billion respectively.

During the year, in order to provide customers with premium incentives, VBI has launched a promotion program combining with VietinBank, e.g. “Emulation Movement Program of Cargo Insurance for Vietinbank Corporate Customers”. This promotion has resulted in premium income of VND16.672 billion, accounting for 38.4% of yearly cargo premiums in 2016.

In 2017, VBI continues product development for the corporate segment with the aim of specializing customers so as to understand thoroughly the needs and characteristics of each individual customer, then develop products suitable to each customer segment, improve product and service quality.

In pursuit of the 2017 market trend, in addition to further promoting the three main insurance products of property, engineering and cargo, VBI will coordinate with VietinBank to research and integrate insurance packages into the bank’s incentive programs in order to attract more customers. In particular, VBI will develop policies

for specific customers such as: small and medium enterprises, micro-enterprises, VietinBank staff members, prioritised customers.....

In 2017, VBI will invest in improving and renovating the quality of highly specialized insurance products such as property all risks to workshops, factories, general liability, to business activities,import and export cargo and inland transit, construction and erection all risks for investment projects of renovation, upgrade or new construction of business operation facilities or BT and BOT projects to large corporates. This is an important group of customers and accounting for a substantive part of VBI’s marketshare.

CHART OF REVENUE SHARE OF PRODUCTS FOR CORPORATE CUSTOMERS 2016

CargoInsurance17%

EngineeringInsurance

34%

PropertyInsurance49%

Unit: VND billion

Other insurance

Private home insurance VietinHome

Card insurance

Borrower insurance - VietinCare

Motor vehicle insurance VietinCar

Health care insurance -VBI Care

1.371

4.739

40.130

15.326

98.715

32.887



OVERVIEW



Corporate Social Responsibility Activities

VBI actively participates in livelihood security activities, thereby demonstrating corporate social responsibilities to the community, contributing to the implementation of hunger alleviation and poverty reduction for economic development. The activities are implemented in a practical and effective manner, attracting great participation of VBI staff in solving community’s difficulties, preventing natural disasters and floods; supporting remote and special difficult areas.

In 2016, VBI has implemented a charity program for health care insurance for 630 poor households in 63 provinces nationwide with a total insurance value up to VND18.9 billion.

In addition, VBI staff have actively participated in annual community support activities such as: “Humanitarian Blood Donation Day”; “Porridge with Love” at the National Hospital of Pediatrics.

Furthermore, VBI organized a series of programmes such as: “Warm clothes to children”: Staff visited and give presents to pupils in Na Hang district, Tuyen Quang province and in Anh Son district, Nghe An province with the total amount of VND150 million for each location; and forflood victims in Ha Tinh province with a total amount of VND 80 million;

In 2017, in addition to the annual activities mentioned above, VBI will coordinate with the old town Sen team to implement the program “transformation of waste landfill sites into a flower garden”. With this program, VBI will contribute to eliminating the landfill site and in raising public awareness of waste treatment and creating urban green spaces.

Branding and Communication

In 2016, in order to match the rapidly evolving trend of the digital age, which is characterized by digital and socialization integration, VBI has stepped up its investment in digital communications. In August 2016, VBI officially launched its Facebook fanpage to enhance interaction with customers. As of December 31st 2016, VBI Facebook has been liked and followed by nearly 24,000 people.

By strengthening digital marketing, according to Google Analytics, in 2016, the number of new customers visiting VBI website increased 308.93% from 13,962 to 57,095 people.

In 2017, VBI will continue to strengthen digital communication to promote brand recognition and revenue growth. In particular, VBI will research and deploy brand positioning strategy after completion of equitization at Vietinbank branches nationwide.

2016 continues to be a year that VBI affirms its branding position in Vietnam’s insurance market. In April 2016, VBI was honored to be in the Top 100 Excellent Brand of Vietnam for the second time.This achievement is recognition of efforts in building and developing VBI’s brand in past years.

In July 2016 in annual general meeting CEO Summit, VBI was listed in the Top 10 reputation insurance companies in Vietnam 2016. This independent research result has been evaluated by the Vietnam Report in co-operation with Vietnam Net Online Newspaper. The result is based on 3 main criteria: financial capacity, communication prestige and level of satisfaction of users for insurance products and services of enterprise.



OVERVIEW



G. FINANCIAL STATEMENTS 32

1. Consolidated Financial Statements 34

2. Notes to the Financial Statements 42



OVERVIEW



BOARD OF GENERAL DIRECTORS’ STATEMENT OF RESPONSIBILITY

The Board of General Directors of the Company is responsible for preparing the financial statements, which give a true and fair view of the financial position of the Company as at 31 December 2016, and its financial performance and its cash flows for the year then ended in accordance with Vietnamese accounting standards, accounting regime for insurance enterprises in Vietnam and legal regulations relating to financial reporting. In preparing these financial statements, the Board of General Directors is required to:

• select suitable accounting policies and then apply them consistently;• make judgments and estimates that are reasonable and prudent;• state whether applicable accounting principles 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

Company will continue in business; and• design and implement an effective internal control system for the purpose of properly preparing and presenting

the financial statements so as to minimize errors and frauds.

The Board of General Directors of the Company is responsible for ensuring that proper accounting records are kept, which disclose, with reasonable accuracy at any time, the financial position of the Company and that the financial statements comply with Vietnamese accounting standards, accounting regime for insurance enterprises in Vietnam and legal regulations relating to financial reporting. The Board of General Directors is also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of frauds and other irregularities.

The Board of General Directors confirms that the Company has complied with the above requirements in preparing these financial statements.

For and on behalf of the Board of General Directors,

The Board of General Directors of Vietinbank Insurance Company Limited (the “Company”) presents this report together with the Company’s financial statements for the year ended 31 December 2016.

Statement of the Board of General Directors

CHAIRWOMAN AND BOARD OF GENERAL DIRECTORS

Chairwoman

Ms. Nguyen Hong Van Chairwoman

Board of General Directors

Mr. Le Tuan Dung General Director

Mr. Nguyen Hong Phong Deputy General Director

Ms. Tran Thi Huong Thuy Deputy General Director (appointed on 11 October 2016)

LE TUAN DUNGGENERAL DIRECTOR

behalf f f f ofofofofofofofofofofofofoffofofofofoffofofofoofoooofofoff tttttttttttttttttttheheheheheheheheheheheheheheheheheheeheeheheheheeheeeheeh BBBBBBBBBBBBBBBBBBBooaooaooaoaoaoaaaoaoaoaoooaooooaooo rdrdrdrdrdrddrdrdrdrddrddrdrdrdrdrdddrdrddrdrrrdrrrd ooooooooooooooooooooooff f f f f ff ffffff fff f f fff fff GeGGGGGGGGGGGGeGGGeGGGGGGGGG neral Directors,

LE TUAN DUNG

To: The Chairwoman and the Board of General Directors of Vietinbank Insurance Company Limited

We have audited the accompanying financial statements of Vietinbank Insurance Company Limited (the “Company”), prepared on 21 March 2017 as set out from page 03 to page 28, which comprise the balance sheet as at 31 December 2016, the statement of income, statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with Vietnamese Accounting Standards, accounting regime for insurance enterprises in Vietnam and legal regulations relating to financial reporting and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur 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 auditors consider internal control relevant to the Company’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 Company’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 present fairly, in all material respects, the financial position of the Company as at 31 December 2016, and its financial performance and its cash flows for the year then ended in accordance with Vietnamese accounting standards, accounting regime for insurance enterprises in Vietnam and legal regulations relating to financial reporting.

NGUYEN TUAN ANHGi�m ��c Ki�m to�n Audit Practising Registration CertificateNo. 1291-2013-001-1

PHAM TUAN LINHAuditorAudit Practising Registration Certificate No. 3001-2014-001-1

Independent Auditors’ Report



OVERVIEW



Balance Sheet Issued under Circular No.232/2012/TT-BTC Balance Sheet (Continued)

As at 31 December 2016As at 31 December 2016

Unit: VND

ASSETS CODES NOTES 31/12/2016 31/12/2015

A. CURRENT ASSETS(100=110+120+130+140+150+190)

100 1,426,018,850,724 670,897,949,629

I. Cash and cash equivalents 110 5 95,472,354,263 53,292,616,590 1. Cash 111 25,472,354,263 15,292,616,590 2. Cash equivalents 112 70,000,000,000 38,000,000,000 II. Short-term financial investments 120 6 920,044,956,188 302,366,463,574 1. Short-term investments 121 920,044,956,188 302,366,463,574 III. Short-term receivables 130 133,210,187,055 131,997,516,713 1. Trade accounts receivable 131 115,653,691,738 113,310,242,268 1.1. Receivables of insurance contracts 131.1 7 107,201,084,374 105,861,179,235 1.2. Other trade accounts receivables 131.2 8,452,607,364 7,449,063,033 2. Advances to suppliers 132 1,390,339,541 3. Other receivables 135 16,482,097,476 18,763,543,122 4. Provision for short-term doubtful debts 139 (315,941,700) (76,268,677)IV. Inventories 140 924,215,468 187,190,670 1. Inventories 141 924,215,468 187,190,670 V. Other current assets 150 32,278,584,744 22,347,891,523 1. Short-term prepayments 151 26,594,906,257 18,315,464,520 1.1. Unallocated commission expenses 151.1 8 26,582,550,720 18,141,252,956 1.2. Other short-term prepayments 151.2 12,355,537 174,211,564 2. VAT deductibles 152 5,683,678,487 4,032,427,003 VI. Reinsurance assets 190 9 244,088,553,006 160,706,270,559 1. Unearned premium reserve for outward reinsurance 191 129,544,438,998 92,040,459,922 2. Claim reserve for outward reinsurance 192 114,544,114,008 68,665,810,637

B. NON-CURRENT ASSETS (200=210+220+250+260)

200 44,212,376,609 551,312,507,729

I. Long-term receivables 210 7,288,297,997 6,787,100,687 1. Other long-term receivables 218 7,288,297,997 6,787,100,687 1.1. Insurance deposits 218.1 6,000,000,000 6,000,000,000 1.2. Other long-term receivables 218.2 1,288,297,997 787,100,687 II. Fixed assets 220 18,689,426,101 15,975,669,276 1. Tangible fixed assets 221 10 16,869,874,054 14,230,881,588 - Cost 222 25,935,567,730 20,434,122,834 - Accumulated depreciation 223 (9,065,693,676) (6,203,241,246)2. Intangible assets 227 11 1,819,552,047 1,744,787,688 - Cost 228 3,795,525,000 3,130,400,000 - Accumulated amortization 229 (1,975,972,953) (1,385,612,312)III. Long-term financial investments 250 6 642,097,890 522,428,426,262 1. Other long-term investments 258 642,097,890 522,428,426,262 IV. Other long-term assets 260 17,592,554,621 6,121,311,504 1. Long-term prepaid expenses 261 16,905,001,919 5,722,877,378 2. Deferred tax assets 262 12 687,552,702 398,434,126

TOTAL ASSETS (270=100+200) 270 1,470,231,227,333 1,222,210,457,358

Unit: VND

RESOURCES CODES NOTES 31/12/2016 31/12/2015

C. LIABILITIES (300=310) 300 869,840,902,615 634,040,323,842 I. Current liabilities 310 869,840,902,615 634,040,323,842 1. Trade accounts payable 312 163,596,296,967 166,662,242,866 1.1. Payables on insurance contracts 312.1 13 163,596,296,967 166,662,242,866 2. Advances from customers 313 3,494,445,905 1,470,607,803 3. Taxes and amounts payable to the State budget 314 14 17,145,343,339 12,877,691,411 4. Payables to employees 315 22,707,650,727 16,336,929,134 5. Accrued expenses 316 91,173,720 91,173,720 6. Other current payables 319 15 5,025,421,522 13,302,023,302 7. Unearned commission incomes 319.1 15 40,290,376,300 26,505,064,767 8. Bonus and welfare funds 323 3,127,054,603 1,604,826,077 9. Underwriting reserves 329 16 614,363,139,532 395,189,764,762 9.1. Unearned premium reserves for direct insurance

and inward reinsurance

329.1 379,235,910,434 266,629,034,079

9.2. Claim reserves for direct insurance


329.2 219,327,692,622 117,939,837,831

9.3. Catastrophe reserve 329.3 15,799,536,476 10,620,892,852

D. EQUITY (400=410) 400 600,390,324,718 588,170,133,516 I. Owners' equity 410 17 600,390,324,718 588,170,133,516 1. Owners' contributed capital 411 500,000,000,000 500,000,000,000 2. Investment and development fund 417 24,884,787,906 22,223,333,599 3. Financial reserve fund 418 4. Compulsory reserve fund 419 17,926,512,276 14,920,193,839 5. Retained earnings 421 57,579,024,536 51,026,606,078

TOTAL RESOURCES (440 = 300+ 400) 440 1,470,231,227,333 1,222,210,457,358



OVERVIEW



Income StatementBalance Sheet (Continued)

As at 31 December 2016As at 31 December 2016

T�NG QUAN

ITEMS UNIT 31/12/2016 31/12/2015

1. Direct insurance contract of which the responsibility

is not yet incurred

VND 57,660,881,327 48,819,226,211

2. Bad debts written off VND 7,805,133,147 7,805,133,147

3. Foreign currencies

United States Dollar USD 5,758,41 10,625,76

Euro EUR 385,02 384,66

Unit: VND

ITEMS CODES 31/12/2016 31/12/2015

1. Net revenue from insurance activities 10 511,120,661,588 332,662,584,946 2. Financial income 12 85,550,869,837 67,651,046,744 3. Other income 13 111,126,210 394,193,176 4. Total expenses for insurance activities 20 400,635,504,456 249,186,021,626 5. Financial expenses 22 12,495,017,624 10,177,528,783 6. General and administration expenses 23 108,405,911,055 72,663,383,858 7. Other expenses 24 68,956,349 215,927,003 8. Total accounting profit before tax

(50 = 10+12+13-20-22-23-24)

50 75,177,268,151 68,464,963,596

9. Current corporate income tax expense 15,340,017,984 14,966,074,096 10. Deferred corporate income tax (income)/expense (289,118,576) 269,803,343 11. Net profit after corporate income tax

(60 = 50-51-52)

60 60,126,368,743 53,229,086,157

PART I: GENERAL INCOME STATEMENT

QUACH VAN HAPREPARER

21 March 2017

PHAM THI THANH THUYCHIEF ACCOUNTANT




OVERVIEW



Unit: VNDITEMS CODES 31/12/2016 31/12/2015

I. CASH FLOWS FROM OPERATING ACTIVITIES1. Receipt from insurance premium and commissions 01 847,114,819,115 602,741,230,639 2. Receipt from deducted expenses 03 35,593,482,631 11,003,313,568 3. Receipt from other operating activities 04 2,023,838,102 858,525,186 4. Payment for claim settlements 05 (209,158,710,216) (112,965,178,306)5. Payment for commissions and other insurance activities 06 (299,158,710,216) (159,645,075,391)6. Payment to suppliers for goods and services 07 (200,305,380,574) (162,257,547,068)7. Payment to employees 08 (84,047,216,625) (51,472,884,183)8. Payment for taxes and obligations to the State budget 09 (44,683,690,168) (35,854,785,566)9. Payment for other payables 10 (19,015,018,246) (9,428,689,337)10. Advances to employees and suppliers 11 (2,125,149,034) (5,311,518,360)Net cash generated by operating activities 20 25,506,045,098 77,667,391,182

II. CASH FLOWS FROM INVESTING ACTIVITIES1. Receipt from investments in other entities 21 2,138,862,233,551 843,942,896,000 2. Receipt from interest on other investments 22 84,451,087,806 67,908,707,416 3. Investments in other entities 24 (2,152,413,000,438) (966,150,485,914)4. Acquisition of fixed assets 25 (6,320,450,803) (6,924,839,316)Net cash generated by/(used in) investing activities 30 64,579,870,116 (61,223,721,814)

III. CASH FLOWS FROM FINANCING ACTIVITIES1. Proceeds from borrowings 31 142,413,543,366 116,786,801,600 2. Repayment of borrowings 34 (142,413,543,366) (116,786,801,600)3. Capital transferred to parent company 35 (47,906,177,541) (41,834,004,763)Net cash (used in) financing activities 40 (47,906,177,541) (41,834,004,763)Net increase/(decrease) in cash (50=20+30+40) 50 42,179,737,673 (25,390,335,395)Cash and cash equivalents at the beginning of the year 60 53,292,616,590 78,682,951,985 Effect of changes in foreign exchange rates 61 Cash and cash equivalents at the end of the year

(70=50+60+61)

70 95,472,354,263 53,292,616,590

M�U S� B 02-DNPNTIncome Statement (Continued) Cash Flow Statement

As at 31 December 2016 As at 31 December 2016

PART II: INCOME STATEMENT BY ACTIVITIES

Đn v t�nh: VND

ITEMS CODES NOTES 31/12/2016 31/12/2015

1. Insurance premium (01=01.1+01.2-01.3) 01 18 668,372,039,266 432,104,846,899 Direct insurance premium 01.1 691,935,717,704 486,403,991,314 Inward reinsurance premium 01.2 89,043,197,917 62,621,031,999 Increase in unearned premium reserves for direct

insurance and inward reinsurance

01.3 112,606,876,355 116,920,176,414

2. Outward reinsurance premium

(02=02.1-02.2)

02 19 225,610,574,178 137,861,572,183

Total outward reinsurance premium 02.1 263,114,553,254 186,830,919,843 Increase in unearned premium reserve for outward

reinsurance

02.2 37,503,979,076 48,969,347,660

3. Net insurance premium (03= 01 - 02) 03 442,761,465,088 294,243,274,716 4. Commission income from outward reinsurance and

other income from insurance activities (04 = 04.1 + 04.2)

04 68,359,196,500 38,419,310,230

Commission income from outward reinsurance 04.1 66,822,727,620 37,448,357,285 Other income from insurance activities 04.2 1,536,468,880 970,952,945 5. Net revenue from insurance activities (10 = 03 + 04) 10 511,120,661,588 332,662,584,946 6. Claim settlement expenses (11= 11.1) 11 199,490,394,983 118,219,542,428 Total claim settlement expenses 11.1 199,490,394,983 118,219,542,428 7. Claim receipts from outward reinsurance 12 36,246,563,684 14,444,495,510 8. Increase in claim reserves for direct insurance and

inward reinsurance

13 101,387,854,791 58,520,766,179

9. Increase in claim reserve for outward reinsurance 14 45,878,303,371 31,944,955,597 10. Total insurance claim settlement expenses

(15 = 11 - 12 + 13 - 14)

15 20 218,753,382,719 130,350,857,500

11. Increase in catastrophe reserve 16 5,178,643,624 3,621,941,035 Including: Claim settlement from catastrophe reserve 1,300,000,000 12. Other expenses for insurance activities

(17 = 17.1 + 17.2)

17 21 176,703,478,113 115,213,223,091

Insurance commission expense 17.1 45,527,292,623 31,625,098,440 Other expenses for insurance activities 17.2 131,176,185,490 83,588,124,651 13. Total expenses for insurance activities

(18 = 15 + 16 + 17)

18 400,635,504,456 249,186,021,626

14. Gross profit from insurance activities (19 = 10 - 18) 19 110,485,157,132 83,476,563,320 15. Financial income 23 22 85,550,869,837 67,651,046,744 16. Financial expenses 24 23 12,495,017,624 10,177,528,783 17. Gross profit from financial activities (25 = 23- 24) 25 73,055,852,213 57,473,517,961 18. General and administration expenses 26 24 108,405,911,055 72,663,383,858 19. Net profit from operating activities (30 = 19 + 25 - 26) 30 75,135,098,290 68,286,697,423 20. Other income 31 111,126,210 394,193,176 21. Other expenses 32 68,956,349 215,927,003 22. Other profit (40 = 31 - 32) 40 42,169,861 178,266,173 23. Accounting profit before tax (50 = 30 + 40) 50 75,177,268,151 68,464,963,596 24. Current corporate income tax expense 51 26 15,340,017,984 14,966,074,096 25. Deferred corporate income tax (income)/expense 52 (289,118,576) 269,803,343 26. Net profit after corporate income tax

(60 = 50 - 51 - 52)

60 60,126,368,743 53,229,086,157 QUACH VAN HAPREPARER

21 March 2017





OVERVIEW



Notes to the Financial Statements Notes to the Financial Statements (Continued)

These notes are an integral part of and should be read in conjunction with the accompanying financial statements

1.GENERAL INFORMATION

Structure of ownership

VietinBank Insurance Company Limited (the “Company”) is a one member limited liability company which is wholly owned by Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank). The Company is established in Vietnam pursuant to the first Establishment and Operation Licence No. 21 GP/KDBH granted by the Ministry of Finance on 12 December 2002 and amended Licences.

The number of employees of the Company as at 31 December 2016 was 374 (as at 31 December 2015: 290).

Operating industry and principal activities

The Company’s principal activities are to provide services of non-life insurance, reinsurance, prevention and limitation of risk and loss; loss survey and inspection; loss survey and inspection agents, claim settlement; third-party claim, fund management, capital investment and other business operations that are in line with prevailing laws and regulations.

Disclosure of information comparability in the financial statements

Comparative figures are the figures of the audiedaudited financial statements for the year ended 31 December 2015.

2. ACCOUNTING CONVENTION AND FINANCIAL YEAR

Accounting convention

The accompanying financial statements, expressed in Vietnam Dong (VND), are prepared under the historical cost convention and in accordance with Vietnamese accounting standards, accounting regime for insurance enterprises in Vietnam and legal regulations relating to financial reporting.

The accompanying financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Vietnam.

Financial year

The Company’s financial year begins on 01 January and ends on 31 December.

3. ADOPTION OF NEW ACCOUNTING GUIDANCE AND REGULATIONS

On 21 March 2016, the Ministry of Finance issued Circular No. 53/2016/TT-BTC (“Circular 53”) amending and supplementing certain articles of Circular No. 200/2014/TT-BTC dated 22 December 2014 of the Ministry of Finance guiding the accounting regime for enterprises. Circular 53 is effective for the financial years beginning on or after 01 January 2016. The Board of General Directors has adopted Circular 53 in the preparation and presentation of the Company’s financial statements for the year ended 31 December 2016.

On 01 July 2016, the Government issued Decree No. 73/2016/ND-CP (“Decree 73”) detailing the implementation of the Law on insurance business and the law on amendments to certain articles of the Law on insurance business.

Decree 73 is effective from 01 July 2016. The Company is waiting for the Circular which provides detail guidance on the implementation of Decree.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies, which have been adopted by the Company in the preparation of these financial statements, are as follows:

Estimates

The preparation of financial statements in conformity with Vietnamese accounting standards, accounting regime for insurance enterprises in Vietnam and legal regulations relating to financial reporting requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the financial year. Although these accounting estimates are based on the management’s best knowledge, actual results may differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Receivables

Receivables represent the amounts recoverable from customers or other debtors and are stated at book value less provision for doubtful debts.

Provision for doubtful debts is made for receivables that are overdue for six months or more, or when the debtor is in dissolution, in bankruptcy, or is experiencing similar difficulties and so may be unable to repay the debt. The Board of General Directors believes that receivables have been fully provided for in line with the Company’s business operation.

Tangible fixed assets and depreciation

Tangible fixed assets are stated at cost less accumulated depreciation.

The costs of purchased tangible fixed assets comprise their purchase prices and any directly attributable costs of bringing the assets to their working condition and location for their intended use. Tangible fixed assets are depreciated using the straight-line method over their estimated useful lives as follows:

CURRENT YEAR

(Years)

Office equipment 3 7

Motor vehicles 8



OVERVIEW



Intangible assets and amortisation

Intangible assets are stated at cost less accumulated amortisation. Intangible assets represent accounting software which is amortized using the straight-line method over the estimated useful life of 2 - 5 years.

Financial investments

Financial investments including bank deposits (short-term and long-term), investments in listed shares and investments in bonds are initially measured at cost, including purchase cost and directly attributable transaction costs, such as: transaction costs, communication costs, taxes and bank charges and other investments.Provision for impairment of investments in securities is made in accordance with current prevailing accounting regulations which allow provision to be made for freely traded securities whose carrying values are higher than market prices as at the balance sheet date.

The Company has not determined the fair value of its financial investments due to the lack of market information for determination of fair value of these financial investments at the reporting date. Foreign currencies

The balance of monetary items denominated in foreign currencies as at the balance sheet date is retranslated at the exchange rates on the same date. Exchange differences arising from the translation of these accounts are recognised in the income statement.

Revenue recognition

Direct insurance premium: Direct insurance premium is recognised when the insurance policy provided for clients comes into effect. The premium is recorded under each due date as per contract if the term of insurance policy lasts for several years.

Re-insurance premium: Premium from re-insurance inward activities is recorded when incurred at the amount stated on the reinsurers’ statement sent to the Company and confirmed by the Company. As at the reporting date, inward reinsurance premium under reinsurance arrangements of which the statement of settlement has not been sent by cedants is estimated based on historical data and the Company’s estimate.

Outward reinsurance premium is recorded at the amount transferred to the reinsurers, corresponding to the revenue of direct premium recorded in the year.

Commission income and other income from reinsurance activities are recorded on accrual basis. In the year, the entire commission income from outward reinsurance under outward reinsurance contracts signed in accordance with regulations of the financial regime is presented in the item “Commission income from outward reinsurance”.

At the year end, the Company determines unearned commission income from outward reinsurance corresponding to outward reinsurance premium not yet recognized in the year so as to allocate such commission income to the subsequent financial years at the rate of 25% for all types of cargo insurance and 50% for insurance service of other types.

Other revenues: interest income from bank deposits and bonds are recognized based on accrual basis; revenue from dividends are recognized based on announcement on dividend declaration; other revenues are recorded when incurred.

Expenditures

Claim settlement expenses of direct insurance are recorded as incurred, that is, when the Company accepts to settle the insured’s claims following respective settlement notice.

Claim settlements of inward reinsurance activities are recorded as incurred following the statement of accounts the reinsurers sent to the Company and the claim is accepted by the Company.

Claim recoverable from the reinsurers is recognized based on the receivable amount incurred corresponding to the claim settlement expenses recorded in the year and the ceded ratios.

Commission expenses for direct insurance and inward reinsurance are recognized corresponding to the direct insurance and inward reinsurance premium. In the year, the entire commission expenses from direct insurance and inward insurance are presented in the items “Commission expenses for direct insurance” and “Commission expenses for inward reinsurance”.

At the year end, the Company determines commission expenses for direct insurance and inward reinsurance which have not yet been recognized as expenses for the year corresponding to unearned direct premium and inward reinsurance premium so as to allocate such commission expenses to the subsequent financial years at the rate of 25% regarding all types of cargo insurance and 50% for insurance service of other types. Other expenses are recognized when incurred.

Taxation

Income tax expense represents the sum of the current tax payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years (including loss carried forward, if any) and it further excludes items that are never taxable or deductible.

Deferred tax is recognized on significant differences between carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using balance sheet liability method. Deferred tax liabilities are generally recognized for all temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized.

Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same tax authority and the Company intends to settle its current tax assets and liabilities on a net basis.

The determination of the current tax expense payable is based on the current interpretation of tax regulations. However, these regulations are subject to periodic variation and their ultimate determination depends on the results of the tax authorities’ examinations. Other taxes are paid in accordance with the prevailing tax laws in Vietnam.

Notes to the Financial Statements (Continued) Notes to the Financial Statements (Continued)



OVERVIEW



Payable provisions

Provisions are recognised when the Company has a present obligation as a result of a past event, and it is probable that the Company will be required to settle that obligation. Provisions are measured at the management’s best estimate of the expenditure required to settle the obligation as at the balance sheet date.

Insurance deposits

The Company is obliged to pay a deposit equal to 2% of the legal capital or at the minimum of VND 6 billion. The deposit is entitled to an amount of interest in accordance with the agreement reached with the deposit bank and could be withdrawn upon the termination of operation. Insurance deposit is only used to meet undertakings with insurance purchasers when its solvency is inadequate and upon written approval of the Ministry of Finance.

Underwriting reserves

The Company makes underwriting reserves as regulated in Article 96 of the Law on Insurance Business, Decree No. 73/2016/ND-CP dated 01 July 2016 by the Government, Circular No. 125/2012/TT-BTC on 30 July 2012 and Circular No 232/2012/TT-BTC on 28 December 2012 issued by the Ministry of Finance, accordingly:

Unearned premium reserve: The reserve is provided for at the rate of 25% of the premium retained for the year for all types of cargo insurance and at 50% of the premium retained for insurance services of other types.

Claim reserve: The reserve is provided for losses that incurred and reported including direct insurance and inward reinsurance, but not yet settled, using each claim dossier method based on the Company’s retention liabilities and the amount claimed by reinsurers for each estimated loss.

For the incurred but not reported (IBNR) losses, claim reserve is provided for based on statistical rate of the three consecutive years. The Board of General Directors believes that IBNR losses are carefully assessed and fully recorded. Catastrophe reserve: On 28 December 2005, the Ministry of Finance issued the Vietnamese Accounting Standard No. 19 “Insurance Contract” accompanied with Decision No. 100/2005/QD-BTC which came into effect since 2006. According to the Standard, an insurer shall not recognize as a liability any provisions for possible future claims, if those claims arise under insurance contracts that are not in existence at the reporting date, including catastrophe provisions. However, according to Decree No.73/2016/ND-CP issued by the Government on 01 July 2016 and Circular No.125/2012/TT-BTC issued by the Ministry of Finance on 30 July 2012, insurers must make catatrosphe reserves.

According to Official Letter No. 17924 dated 26 December 2012 of the Insurance supervisory authority of the Ministry of Finance, the Company is allowed to make catastrophe reserve of 1% retained premium during the year for all types of insurance, the reserve will be appropriated until it reaches 100% of retained earnings for the year.

Enterprise funds and reserves Charter capital is contributed by Vietnam Joint Stock Commercial Bank for Industry and Trade and stated in the Company’s charter. In the course of operation, the Company maintained its contributed charter capital no less than the legal capital as prescribed by law. When there is a change in charter capital, the Company will publicly announce its new charter capital.

The Company’s profit after offsetting losses in the previous year in accordance with corporate income tax law, paying corporate income tax as prescribed by law, deducting unreasonable actual expenses, making appropriate compulsory reserve fund as prescribed by law (known as Residual income) is allocated to funds according to the Company’s charter and current regulations of Vietnam Joint Stock Commercial Bank for Industry and Trade and law.

(i) Cash equivalents represent time deposits at domestic commercial banks with original term of three months or less.

5. CASH AND CASH EQUIVALENTS


Unit: VND

31/12/2016 31/12/2015

Cash on hand 3,056,738,097 3,877,703,389 Bank demand 22,415,616,166 11,414,913,201 Cash equivalents (i) 70,000,000,000 38,000,000,000

95,472,354,263 53,292,616,590



OVERVIEW



6. FINANCIAL INVESTMENTS 7. RECEIVABLES OF INSURANCE CONTRACTS

9. REINSURANCE ASSETS

8. UNALLOCATED COMMISSION EXPENSES

(i) Represents time deposits in VND or USD at banks and credit institutions with term of over 3 months which will mature within 01

year.

(ii) Represents corporate bonds which will mature within 1 year with interest rate from 9% per annum to 12% per annum. The Board

of General Directors assessed and believed that there would be no value deterioration of these bonds.

The Company has not determined the fair value of its financial investments due to the lack of market information for determination

of fair value of these financial investments at the reporting date.

Related party receivables are presented in Note 28 – Related party transactions and balances.


Unit: VND

CLOSING BALANCE OPENING BALANCE

COST PROVISION COST PROVISION

a) Trading securities 271,737,486,640 Total amount of bonds 271,737,486,640 • Hanoi Westgate Joint Venture Company Limited 100,000,000,000 • Vietnam National Coal - Mineral Industries Holding

Corporation Limited

120,000,000,000

• Government bonds 51,737,486,640

b) Held-to-maturity investments 648,949,567,438 824,794,889,836 b1) Short-term 648,307,469,548 302,366,463,574 • Short-term deposits (i) 540,450,169,548 182,625,163,574 • Bonds (ii) 107,857,300,000 119,741,300,000 • Saigon Garment - Match Joint Stock Company 90,000,000,000 • Kinh Bac Urban Development Corporation 17,857,300,000 12,741,300,000 • VPBank Securities Limited Company 80,000,000,000 • Bitexco Group 27,000,000,000

b2) Long-term 642,097,890 522,428,426,262 Long-term deposits 417,097,890 Bonds 522,428,426,262 • National Power Transmission Corporation 200,000,000,000 • Kinh Bac Urban Development Corporation 19,401,700,000 • Vietnam National Coal - Mineral Industries Holding

Corporation Limited

203,026,726,262

• Masan Joint Stock Company 100,000,000,000 Other investments 225,000,000

Unit: VND CLOSING BALANCE OPENING BALANCE

Unearned premium reserve for outward reinsurance 129,544,438,998 92,040,459,922 Claim reserve for outward reinsurance 114,544,114,008 68,665,810,637

244,088,553,006 160,706,270,559

Unit: VNDCURRENT YEAR PRIOR YEAR

Opening balance 18,141,252,956 12,159,480,483- Unallocated commission expenses incurred in the year 53,968,590,387 37,606,870,913 - Commission expenses allocated in the year (45,527,292,623) (31,625,098,440)

Closing balance 26,582,550,720 18,141,252,956

Unit: VND 31/12/2016 31/12/2015

Receivables regarding direct insurance premium 23,301,198,126 13,934,452,617Receivables regarding inward reinsurance 37,475,090,129 46,155,011,552Receivables regarding outward reinsurance 46,424,796,119 45,771,715,066Total receivables of insurance contracts 107,201,084,374 105,861,179,235



OVERVIEW



13. PAYABLES ON INSURANCE CONTRACTS

14. TAXES AND AMOUNT PAYABLE TO THE STATE BUDGET

15. OTHER CURRENT PAYABLES

12. DEFERRED TAX ASSETS

As at 31 December 2016, the cost of the Company’s fixed assets includes VND 778,115,025 of fixed assets which have been fully

depreciated but are still in use.

Related party payables are presented in Note 28 - Related party transactions and balances.


10. TANGIBLE FIXED ASSETS

11. INTANGIBLE FIXED ASSETS

Unit: VNDMOTOR

VEHICLESOFFICE

EQUIPMENTTOTAL

COSTOpening balance 17,818,936,946 2,615,185,888 20,434,122,834 New purchases 5,550,325,803 105,000,000 5,655,325,803 Other decreases (153,880,907) (153,880,907)Closing balance 23,369,262,749 2,566,304,981 25,935,567,730

ACCUMULATED DEPRECIATIONOpening balance 4,462,798,000 1,740,443,246 6,203,241,246 Charge for the year 2,787,787,867 228,545,470 3,016,333,337 Other decreases (153,880,907) (153,880,907)Closing balance 7,250,585,867 1,815,107,809 9,065,693,676

NET BOOK VALUEOpening balance 13,356,138,946 874,742,642 14,230,881,588 Closing balance 16,118,676,882 751,197,172 16,869,874,054

Unit: VNDCOMPUTER SOFTWARE

COSTOpening balance 3,130,400,000 New purchases 665,125,000 Closing balance 3,795,525,000

ACCUMULATED AMORTISATIONOpening balance 1,385,612,312 Charge for the year 590,360,641 Closing balance 1,975,972,953

NET BOOK VALUEOpening balance 1,744,787,688 Closing balance 1,819,552,047

Unit: VNDACCRUALS FOREIGN EXCHANGE DIFFERENCES TOTAL

Opening balance 615,517,389 (217,083,263) 398,434,126 Transfer to profit for the year 132,412,593 156,705,983 289,118,576 Closing balance 747,929,982 (60,377,280) 687,552,702

Unit: VNDOPENING BALANCE PAYABLE IN THE YEAR PAID IN THE YEAR CLOSING BALANCE

Value added tax on domestic goods and services 6,353,052,093 29,788,345,441 27,989,674,367 8,151,723,167 Corporate income tax 5,162,923,980 15,340,017,984 13,285,646,604 7,217,295,360 Other taxes and charges payable 1,361,715,338 3,822,978,671 3,408,369,197 1,776,324,812

12,877,691,411 48,951,342,096 44,683,690,168 17,145,343,339

Unit: VND31/12/2016 31/12/2015

Payables regarding outward reinsurance premium 135,769,763,196 128,342,973,174 Payables for co-insurers 608,708,330 4,955,680,294 Payables regarding claim compensation 19,533,190,866 27,106,270,141 Commission payables 7,479,299,819 6,155,173,891 Other payables 205,334,756 102,145,366

163,596,296,967 166,662,242,866

Unit: VND CURRENT YEAR PRIOR YEAR

1. Unearned commission incomeOpening balance 26,505,064,767 10,943,292,518 - Unearned commission income incurred in the year 80,608,039,153 53,010,129,534 - Commission income allocated in the year (66,822,727,620) (37,448,357,285)Closing balance 40,290,376,300 26,505,064,767

CLOSING BALANCE OPENING BALANCE

2. Other current payablesUnion fee 56,866,700 28,502,859 Other current payables 4,968,554,822 13,273,520,443

5,025,421,522 13,302,023,302



OVERVIEW



17. CAPITALS AND RESERVES

( (i) Following Official Letter No. 19096/TGD-NHCT11 dated 22 December 2016 of the parent company - Vietnam Joint Stock Commercial Bank for Industry

and Trade, the Company made appropriation for investment and development fund by 5% of profit after tax of 2015. The remaining will be allocated to the

parent company. In addition, the Company allocated to compulsory reserve fund by 5% of profit after tax until it reaches 10% of chartered capital under

Article 77, Decree No.73/2016/ND-CP dated 01 July 2016. In 2016, the Company has transferred VND 47,906,177,541 out of its retained earnings in 2015

to the parent company.


16. UNDERWRITTING RESERVES

Unit: VNDCLOSING BALANCE

CLAIM RESERVE AND UNEARNED PREMIUM RESERVE

DIRECT INSURANCE AND INWARD REINSURANCE

OUTWARD REINSURANCE

NET RESERVE

1. Claim reserve 219,327,692,622 (114,544,114,008) 104,783,578,614 Including:- Reserve for loss incurred and reported 201,466,697,024 (105,216,190,609) 96,250,506,415 - Reserve for loss incurred but not reported (IBNR) 17,860,995,598 (9,327,923,399) 8,533,072,199 2. Unearned premium reserve 379,235,910,434 (129,544,438,998) 249,691,471,436 Total 598,563,603,056 (244,088,553,006) 354,475,050,050

Detailed: CURRENT YEAR

1. CLAIM RESERVEDIRECT INSURANCE AND

INWARD REINSURANCEOUTWARD

REINSURANCENET CLAIM RESERVE

Opening balance 117,939,837,831 (68,665,810,637) 49,274,027,194 Provided in the year 101,387,854,791 (45,878,303,371) 55,509,551,420 Closing balance 219,327,692,622 (114,544,114,008) 104,783,578,614 S� D� CU�I N�M 219,327,692,622 (114,544,114,008) 104,783,578,614

CURRENT YEAR

2. UNEARNED PREMIUM RESERVEDIRECT INSURANCE AND

INWARD REINSURANCEOUTWARD

REINSURANCENET CLAIM RESERVE

Opening balance 266,629,034,079 (92,040,459,922) 174,588,574,157 Provided in the year 112,606,876,355 (37,503,979,076) 75,102,897,279 Closing balance 379,235,910,434 (129,544,438,998) 249,691,471,436

3. CATASTROPHE RESERVE CURRENT YEAR PRIOR YEAR

Opening balance 10,620,892,852 8,298,951,817 Provided in the year 5,178,643,624 3,621,941,035 Used in the year (1,300,000,000)Closing balance 15,799,536,476 10,620,892,852

Unit: VND

OWNERS’ CONTRIBUTED

CAPITAL

INVESTMENT AND

DEVELOPMENT FUND

FINANCIAL RESERVE FUND

COMPULSORYRESERVE FUND

RETAINEDEARNINGS

TOTAL

Prior year’s opening balance 500,000,000,000 14,584,685,979 12,214,739,531 47,071,936,610 573,871,362,120 Profit for the year 53,229,086,157 53,229,086,157 Allocation to compulsory reserve fund 14,584,685,979 (14,584,685,979) Increase from allocated profit

refund from parent company

2,717,000,000 44,000,000 2,761,000,000

Allocation to funds 4,921,647,620 2,661,454,308 (7,583,101,928) Allocation of profit to the parent company (41,834,004,763) (41,834,004,763)Other increases 142,690,002 142,690,002 Current year’s opening balance 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 (i) 2,661,454,307 3,006,318,437 (5,667,772,744) Allocation of profit to the parent company (47,906,177,541) (47,906,177,541)Current year’s closing balance 500,000,000,000 24,884,787,906 17,926,512,276 57,579,024,536 600,390,324,718



OVERVIEW



18. INSURANCE PREMIUM 20. TOTAL INSURANCE CLAIM SETTLEMENT EXPENSES

21. OTHER EXPENSES FOR INSURANCE ACTIVITIES

22. FINANCIAL INCOME

19. OUTWARD REINSURANCE PREMIUM


Unit: VND

CURRENT YEAR PRIOR YEAR

Total outward reinsurance premium 263,114,553,254 186,830,919,843 Property insurance 127,674,212,834 86,242,445,770 Hull and P&I insurance 3,364,129,887 1,194,120,700 Cargo insurance 8,051,350,516 5,500,000,000 Health and personal accident insurance 5,858,126,792 1,818,010,540 Motor vehicle insurance 66,102,702,355 42,596,550,708 Fire insurance 49,986,134,276 49,156,210,993 General liability insurance 2,077,896,594 323,581,132 (Increase) in unearned premium reserve for outward reinsurance (37,503,979,076) (48,969,347,660)

225,610,574,178 137,861,572,183

Unit: VND


Direct insurance premium 691,935,717,704 486,403,991,314 Property insurance 150,628,217,994 132,747,029,059 Hull and P&I insurance 19,876,370,189 8,411,480,764 Cargo insurance 43,464,422,179 30,337,054,665 Health and personal accident insurance 143,605,247,724 93,705,047,673 Motor vehicle insurance 240,411,216,323 159,301,912,538 Fire insurance 90,041,031,445 58,989,530,957 General liability insurance 3,909,211,850 2,911,935,658 Inward reinsurance premium 89,043,197,917 62,621,031,999 Property insurance 50,254,338,784 44,715,053,130 Hull and P&I insurance 1,560,937,547 2,123,880,029 Cargo insurance 1,549,767,332 1,196,855,646 Health and personal accident insurance 32,976,590,443 9,978,453,937 Motor vehicle insurance 211,191,597 689,441,651 Fire insurance 2,108,748,964 2,900,758,269 General liability insurance 381,623,250 1,016,589,337 (Increase) in unearned premium reserves for direct insurance


(112,606,876,355) (116,920,176,414)

668,372,039,266 432,104,846,899

Unit: VNDPRIOR YEAR PRIOR YEAR

Total claim settlement 199,490,394,983 118,219,542,428 Property insurance 30,701,669,807 21,713,188,454 Hull and P&I insurance 3,810,805,515 4,001,151,534 Cargo insurance 9,055,901,177 1,951,697,746 Health and personal accident insurance 54,619,125,286 26,152,814,098 Motor vehicle insurance 90,338,791,160 56,749,210,389 Fire insurance 10,744,165,038 7,651,480,207 General liability insurance 219,937,000 Claims receipts from outward reinsurance (14,444,495,510)Increase in claim reserves for direct insurance and inward reinsurance 58,520,766,179 (Increase) in claim reserve for outward reinsurance (31,944,955,597)

218,753,382,719 130,350,857,500


Commission expense 45,527,292,623 31,625,098,440 Expense of insured risk assessment 1,711,349,695 272,164,937 Agents management expense 4,143,049,036 2,699,988,525 Expense of risk limitation 1,112,588,946 1,889,887,173 Others 124,209,197,813 78,726,084,016

176,703,478,113 115,213,223,091


Bank and loan interests 27,563,252,891 9,482,531,944 Bond interests 57,090,806,277 57,481,451,323 Foreign exchange gain 896,810,669 568,452,366 Other financial income 118,611,111

85,550,869,837 67,651,046,744



OVERVIEW



23. FINANCIAL EXPENSES 26. CORPORATE INCOME TAX EXPENSE

27. SEGMENT REPORT

The Company’s business activities are mainly insurance business and investment from the capital of the insurance operation. Investment activity is a step in the insurance business cycle and the investments in other business areas are not significant. In addition, the Company operates in the same geographic area as well as the same economic environment. Therefore, the Board of General Directors of the Company has assessed and believed that the fact the Company did not prepare the segment report is consistent with the current business of the Company.

24. GENERAL AND ADMINISTRATION EXPENSES

25. PRODUCTION COST BY NATURE



Labour 57,060,160,370 41,043,677,382 Office equipment 8,271,062,451 6,494,079,177 Depreciation and amortisation 3,095,173,625 1,934,353,562 Taxes, fees and charges 882,851,991 437,337,113 Provisions 239,673,023 (55,405,630)Out-sourced services 9,119,294,377 5,643,759,570 Other monetary expenses 29,737,695,218 17,165,582,684

108,405,911,055 72,663,383,858


Cost of insurance activities 250.107.513.737 153.350.838.362 Raw materials and consumables 8.411.916.467 8.295.060.383 Labour 90.417.938.218 59.913.319.956 Depreciation and amortisation 3.206.575.799 2.047.651.759 Out-sourced services 97.681.472.641 43.501.111.045 Other monetary expenses 37.774.367.289 38.988.167.872

484.599.784.151 306.096.149.377


Current corporate income tax expense• Corporate income tax based on taxable profit in the current year 15,252,982,645 14,408,655,324

• Adjustments for corporate income tax expenses in previous years to the

current year

87,035,339 557,418,772

Total current corporate income tax expense 15,340,017,984 14,966,074,096


Profit before tax 75,177,268,151 68,464,963,596 Adjustments for taxable profitLess: non-taxable profit 3,394,244,647 6,589,234,192 • Dividends received • Unrealized foreign exchange gain 316,657,701 1,085,416,314 • Unpaid accruals of the prior year 3,077,586,946 3,005,046,187 • Other non-taxable profit 2,498,771,691 • Add back: Non-deductible expenses 4,481,889,720 3,618,158,433 • Unrealized foreign exchange loss 14,771,303 • Unpaid accruals of the current year 3,739,649,910 3,077,586,946 • Others 727,468,507 540,571,488 Taxable profit 76,264,913,224 65,493,887,838 Normal tax rate 20% 22%Current corporate income tax expense 15,252,982,645 14,408,655,324

Adjustments for corporate income tax expenses in previous years to the current year 87,035,339 557,418,772 Corporate income tax 15,340,017,984 14,966,074,096

Unit: VND


Interest expense 796,370,864 244,126,092 Foreign exchange loss 530,775,986 197,321,694 Other financial expenses 11,167,870,774 9,736,080,997

12,495,017,624 10,177,528,783



OVERVIEW



28. RELATED PARTY TRANSACTIONS AND BALANCES

LIST OF RELATED PARTIES:

In 2016, the Company entered into the following significant transactions with its related parties:

As at 31 December 2016, the Company has significant balances with its related parties as follows:

29. EVENTS AFFECTING THE COMPANY’S ACTIVITIES

On 31 December 2015, Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) issued Resolution No. 660/NQ-HDQT-NHCT44 approving the Company’s plan on transformation into Joint Stock Company. The time for determination of the Company’s value is 31 December 2015. Up to the reporting date, the equitisation has been being in progress.


RELATED PARTY RELATIONSHIP

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

Vietinbank Finance Leasing Co., Ltd. Having same owner

Vietinbank Securities JSC Having same owner

Vietinbank Fund Management Co., Ltd. Having same owner

Vietinbank Gold & Jewellery Co., Ltd. Having same owner

Vietinbank Assets Management Co., Ltd. (Vietinbank AMC) Having same owner

Unit: VNDCLOSING BALANCE OPENING BALANCE

Vietinbank- Contributed capital 500,000,000,000 500,000,000,000 - Bank demand 14,485,456,631 10,996,113,321 - Time deposits 94,417,097,890 83,000,000,000 - Accrued interest receivable 2,819,825,000 2,352,111,111 - Premium receivable 352,938,839 247,936,232

Vietinbank Leasing Co., Ltd.- Time deposits 5,000,000,000 5,000,000,000 - Accrued interest receivable 68,458,333 226,166,667

Vietinbank Securities JSC- Deposit for securities investments 754,434 748,931

VietinBank Gold & Jewellery Co., Ltd.- Premium receivable 134,800,000

Unit: VNDCURRENT YEAR PRIOR YEAR

Vietinbank- Premium revenue 96.220.655.368 87.450.083.703 - Deposit interest income 5.772.526.412 3.996.024.070 - Profit transfer to Owner 47.906.177.541 41.834.004.763

Vietinbank Leasing Co., Ltd.- Premium revenue 254.007.022 424.261.729 - Deposit interest income 225.347.222

Vietinbank Securities JSC- Premium revenue 445.602.200 365.797.000

Vietinbank Fund Management Co., Ltd.- Premium revenue 178.654.000 20.206.000 - Bond purchase 52.178.636.076

VietinBank AMC- Premium revenue 577.646.222

BOARD OF GENERAL DIRECTORS’ REMUNERATION CURRENT YEAR PRIOR YEAR

Salary and bonus 2.836.780.995 2.940.504.552



OVERVIEW



30. CLAIM SUMMARY 31.COMPARATIVE FIGURES

Comparative figures are the figures of the audited financial statements for the year ended 31 December 2015.

For the purpose of classifying expense in line with each type of business activities, the Company has reclassified figures in the financial statements for the year ended 31 December 2015 on the basis as follows:

• General and administration expense directly related to investment section has been reclassified as financial expense

• General and administration expense related to both investment activities and administration activities has been reclassified using average ratio for three consecutive years from 2013 to 2015, based on the proportion of gross profit of financial activities in total gross profit of financial activities and insurance business activities.

Accordingly, certain reclassification have been made to the figures of the income statement, details are as follows:

Unit: VND

REPORTED AMOUNT ADJUSTMENT ADJUSTED AMOUNT

[1] [2] [3] = [1]+[2]

STATEMENT OF INCOME N�m 2015 N�m 2015Financial expense 1,581,280,433 8,596,248,350 10,177,528,783 General and administration expense 81,259,632,208 (8,596,248,350) 72,663,383,858


Unit: VND

YEAR OF LOSSES 2014 2015 2016

AMOUNT OF CLAIM RESERVE/

CLAIM PAID ACCUMULATED

ACCUMULATED CLAIM RESERVE AMOUNTAt the end of year of losses 74,702,304,786 124,471,861,671 253,310,510,085 253,310,510,085 After 1 year 104,539,224,169 154,653,136,208 154,653,136,208 After 2 years 117,031,867,238 117,031,867,238 Claim reserve amount accumulated to the current year (1) 117,031,867,238 154,653,136,208 253,310,510,085 524,995,513,531

ACCUMULATED AMOUNT OF CLAIM PAID

At the end of year of losses 36,452,716,319 73,385,436,685 120,644,731,657 120,644,731,657 After 1 year 72,068,639,414 131,047,170,141 131,047,170,141 After 2 years 85,273,620,451 85,273,620,451 Amount of claim paid accumulated to the current year (2) 85,273,620,451 131,047,170,141 120,644,731,657 336,965,522,249

Total outstanding claim reserve (3)=(1)-(2)” 31,758,246,787 23,605,966,067 132,665,778,428 188,029,991,282

Outstanding claim reserve for losses incurred in 2013

and before

13,436,705,742

Total outstanding claim reserve at the year-end 201,466,697,024

QUACH VAN HAPREPARER

21 March 2017





OVERVIEW

62 VietinBank Insurance2016 Annual Report

V I E T I N B A N K I N S U R A N C E - V B I

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VIETINBANK INSURANCE ANNUAL · 2018. 9. 27. · 2 VietinBank Insurance 3 2016 Annual Report...

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