Minimum allocated capital of branches of foreign reinsurers in Vietnam

Minimum allocated capital of branches of foreign reinsurers in Vietnam (Internet image) 

On July 1, 2023, the Government issued Decree 46/2023/ND-CP on elaboration of the Law on Insurance Business 2022

1. Minimum allocated capital of branches of foreign reinsurers in Vietnam

Specifically, in Clause 2, Article 36 of Decree 46/2023/ND-CP, minimum allocated capital of branches of foreign reinsurers:

- Reinsurance business, non-life reinsurance, or both non-life reinsurance and health reinsurance: VND 400 billion;

- Reinsurance business, life reinsurance, or both life reinsurance and health reinsurance: VND 450 billion;

- Reinsurance business, all life reinsurance, non-life insurance, and health reinsurance: VND 700 billion.

2. Minimum allocated capital of branches of foreign non-life insurers in Vietnam

Pursuant to Clause 1, Article 36 of Decree 46/2023/ND-CP, minimum allocated capital of branches of foreign non-life insurers:

- Non-life insurance business (except for the cases specified at Points b and c of Clause 1, Article 36 of Decree 46/2023/ND-CP) and health insurance: VND 250 billion;

- Insurance business as prescribed at Point a of Clause 1, Article 36 of Decree 46/2023/ND-CP and aviation insurance and satellite insurance: VND 300 billion;

- Insurance business as prescribed at Point a of Clause 1, Article 36 of Decree 46/2023/ND-CP, aviation insurance and satellite insurance: VND 400 billion.

Note: If branches of foreign non-life insurers which are established, organized, and operating before the effective date of Decree 46/2023/ND-CP have a charter capital lower than the minimum allocated capital specified in Article 36 of Decree 46/2023/ND-CP, they must, before January 1, 2028, top up their capital to the required minimum level and put down a deposit as prescribed.

3. Business sectors or activities of insurance companies, reinsurance companies, foreign insurance branches in Vietnam

According to Article 63 of the Law on Insurance Business 2022, the operation contents of insurance enterprises, reinsurance enterprises and foreign branches in Vietnam are as follows:

- Insurers and foreign non-life insurers' branches can be involved in the following range or area of business activities:

+ Insurance, reinsurance or reinsurance cession business;

+ Management of funds and investment of funds generated in the insurance industry;

+ Provision of insurance ancillary services;

+ Other activities directly related to the insurance industry.

- Reinsurance companies and foreign reinsurance branches can be involved in the following range or area of business activities:

+ Reinsurance, reinsurance cession sector;

+ Management of funds and investment of funds generated from rendering reinsurance services;

+ Other activities directly related to reinsurance services.

- Insurance companies and foreign non-life insurance branches can choose only one of the types of insurance specified in clause 1 of Article 7 of the Law on Insurance Business 2022 to start their business, except in the following cases:

+ Life insurance companies are involved in the health insurance sector;

+ Non-life insurance companies and foreign non-life insurance branches are involved in business of health insurance products, each of which has the maximum insurance term of 01 year, and casualty insurance products, each of which has the maximum insurance term of 01 year;

+ Health insurance companies are involved in business of casualty insurance products, each of which has the maximum insurance term of 01 year.

More details can be found in Decree 46/2023/ND-CP, effective as of July 1, 2023, except for Article 33, the articles specified in Section 6, Chapter II, Articles 81, 82, 83, Clauses 1, 2, 3, 4, 5 and 6 Article 93 of Decree 46/2023/ND-CP takes effect as of January 1, 2023.

Ho Quoc Tuan

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