INFLATION | INSURANCE | ELECTRICITY

“How long is life to live among mindless fools, but how short it is to reach the heights of wisdom?” once said Renchin Byamba, one of the founders of modern Mongolian literature.

If you’re the one who’s in the pursuit of learning something, don’t stop and don’t mind the fools, but more importantly keep reading to get a little wiser.

  📌 DID YOU KNOW?

Here are a few interesting facts about the Mongolian language:

1. Mongolian belongs to the Altaic language group, which includes the Turkic, Mongolic and Tungusic language families and possibly also the Japonic and Koreanic languages.

2. This might be the reason why Mongolians learn Turkish and Korean faster than other languages.

3. Cyrillic was introduced in the 1940s under the influence of the Soviet Union.

4. The government announced that the transition to the traditional Mongolian script will be official by 2025, but it’s unlikely to happen due to the population being highly accustomed to Cyrillic.

🔒 PROMISING INSURANCE INDUSTRY

In 2021, compared to the banking industry with $14.4 billion in total assets, the insurance industry has only $148.5 million in total assets. While a small industry, there is much room to grow. There are 15 ordinary insurance companies, 1 long-term insurance company, 1 reinsurance company operating today. Unlike the USA, where life and health insurance account for 53% of the premiums, Mongolia’s long term insurance is 0.7%, which indicates that it is important to raise customer awareness of the importance of long-term insurance services and unlock the potential of the industry.

Industry Performance 2021: 

• $67.4 million in claims reserves (+11.6% YoY).

• $86.4 million in insurance premiums (+20.8% YoY); of which, ordinary insurance companies accounted for $85.8 mil (99.3%), and $0.6 mil (0.7%) for long-term insurance companies.

• Claims ratio of 49.6% (+6.2% YoY). Overall 15.2% increase in claims. 

• 0.63% penetration rate compared to 12% in US (2020)

Earnings season

In February, as earnings season rolls in, we are looking at the 4 MSE listed insurance companies that make up 41.5% of the industry’s total assets. 

Ard Insurance (AIC): 243% YoY growth in Net Profits. Ard Insurance showed tremendous three-fold growth in net profits in 2021. Amounting $2.48 million in net income, it was the most profitable company in the industry. The main factors were cutting down the reinsurance payments in half and a further 270% increase in investment income. In 2021, their share price exhibited 71.2% YoY growth and their market cap was $11.5 million at the end of the year.

Bodi Insurance (BODI): Leading in insurance premiums. In 2021, Bodi Insurance earned $18.9 million in insurance premiums. Compared to 2020, this is an astounding 59,4% growth, composing 22.3% of the industry’s total premiums. As their main income surged, their net profits increased by 21.4%. Similarly, in 2021, their share price increased by 20%, making their market cap $12.3 million at the end of the year.

Mandal Insurance (MNDL): Most total assets. Accounting for 13.8% of the industry’s total assets, Mandal Insurance has the largest total assets of $20.5 million among the industry leaders. Compared to 35.5 YoY growth in 2020, their total assets increased by 24.1%. In 2021, their share price almost doubled in value, their end of the year market cap hit $21 million.

Mongol Daatgal (MDIC): 30% decrease in Net Profits. Mongol Daatgal has the most diversified insurance products among others, offering 76 in total. Last year, they earned $10.2 million in insurance premiums, a 26.5% YoY growth. However, their net profits dropped by 30%, compared to a 54% surge in 2020. This was mostly due to a 15.1% increase in total claims. In 2021, Mongol Daatgal’s share price increased by 67.7%, raising their market cap to $78.2 mil.

Investment Climate

On Feb 24, 2021, insurance legislation made changes in the insurer’s solvency criteria, increasing the maximum amount of capital in corporate debt instruments for insurance companies to invest in. Following this change, insurance companies' overall investment in capital markets increased by 140.2%, totaling $22.6 million. Investment funds in the form of deposits, certificates of deposit, and securities investments account for 57.7% of the total assets of insurance companies. In 2021, insurance companies earned a total of $11.7 million in interest income from investments.

📢 THE HU AT COACHELLA 2022

Coachella, one of the largest and most famous music festivals in the world, will start in April this year. Although the tickets are already sold out, you can join their waitlist here.

But why?

As to why we’re promoting this, the reason is The HU, a Mongolian folk rock and heavy metal band that’s turning heads all around the globe. They will perform during the first week of the festival, so if you’re the lucky one who managed to get the tickets, don’t miss the chance to enjoy some musical inspiration from Mongolia there.

Not into Coachella? 

After the event The HU is touring through the United States. Take a look at the plan on their official website to see if you can attend one of their concerts.

More about The HU:

• Their most well-known music video on Youtube has over 92 million views.

• The band’s name The HU, is the Mongolian root word for human being.

• They coined their genre “Hunnu Rock”.

Follow them on Spotify!

⚡ THE ELECTED: ELECTRIC ENERGY

Electric power consumption per capita in Mongolia is more than 6 times less than in the US - not because we’re all living in yurts with no lights, but because America has a broad range of energy-intensive industries. However, this ratio is bound to decrease.

And speaking of the power grid: 

• Structure: There are 9 coal-fired, 3 diesel-fired, and 18 renewable energy power plants. Most production is concentrated among the 9 coal-burning stations, which account for as much as 88.9% of total output. Last year, the country’s overall electricity generation amounted to around 7 billion kWh.

• Export/import: Mongolia’s winters are brutal. They are so cold that during the winter months energy demand nearly doubles, making imports inevitable. Though, thanks to the recent expansion of Thermal Power Plant No. 4, imports dramatically decreased and we now covering it's domestic energy needs almost fully on its own.  

• Financials: In 2020, the total revenue from operations of energy companies equaled $451 million, while the whole power system accounted for approximately 3% of the GDP.

If we take a look at the renewables: 

• Crazy potential: Since Mongolia boasts over 260 sunny days each year on average, it’s no surprise that the country’s combined wind and solar power potential is estimated to be 5.5 trillion kWh of clean electricity generation per year. That’s enough to cover the energy demand of the whole region of northeast Asia. 

• Northeast Asian Super Grid: The international community has already recognized this huge potential. The Northeast Asian Super Grid, a project to establish an interconnected electric power system among Mongolia, China, Russia, Japan, and South Korea, is, perhaps, the most significant of all the proposed energy plans to utilize the rich renewable resources. If the plan goes through, Mongolia would become one of the largest exporters of electricity in the world.

In the end, with all the great resources it’s quite unfortunate that there are occasional power outages caused by the already obsolete state of some power stations. Well, we expect the worst and hope that Mongolia will turn into a renewable energy power giant in the near future.

🔔 DATA STORY

According to the National Statistics Office, inflation in Mongolia hit 14.6% as of Jan 2022. It was the highest reading since October 2012, as prices for gas, food, and housing significantly rose over the last year. Considering the global trend, the increase in consumer prices in the country comes as no surprise. 

🏃 QUICK STORIES

📌 APU expands into Russia’s alcohol market. From Feb 7 - 11, APU participated in ProdExpo, Russia’s largest international food exhibition, promoting their alcohol products. APU’s continuous effort to increase their exports has been successful, as their Russian exports increased by 220% last year. 

📌 Golomt bank approved to go public. Last year the Parliament adopted an amendment to the Banking Law which requires all systemically important banks to become publicly listed companies. Golomt bank that covers as much as 20% of the country’s banking sector has recently received approval from the central bank to fulfill the new requirement.

📌 $28.1 million Repurchase Agreement. The Bank of Mongolia conducted a long-term repo operation (LTRO) on February 21, 2022. They announced a repo trade of up to $34.8 million and fulfilled the Trade and Development, Golomt, and Bogd banks’ request to raise a total of $28.1 million.

📌 First air cargo shipment from Mongolia to Brunei. MIAT Mongolian Airlines Travel has successfully completed its first air cargo flight to Bandar Seri Begawan, a city in Brunei. Freight airplanes of MIAT regularly fly to other locations such as Beijing, Hong Kong, and Seoul. 

📷 A GLIMPSE OF MONGOLIA

About: The Fine Arts Zanabazar Museum is not only a famous tourist destination, but also the favorite museum of many Mongolians. It showcases artworks that convey the spiritual and artistic journey the Mongolian traditions had gone through for many centuries.

Fun facts: 

• The building where the museum is located was built by a Russian merchant in 1905.

• The museum is named after Undur Gegeen Zanabazar, the first supreme spiritual authority of the Gelugpa (Yellow Hat) lineage of Tibetan Buddhism in Mongolia.

Enjoy the museum ONLINE. 

Tip: There’s a small cafe called The Green Zone nearby that’s usually visited by foreigners. Vegan and vegetarian options are available!

ESSENTIAL LINKS

• Not sure where to eat in Ulaanbaatar? Food and drink reviews in English. (Dodddo0)

• 5 tips to survive Mongolia’s brutal winter. (Breathe Mongolia)

• Must know geography facts! (Geography Now)

• Are the Mongolian stereotypes true? (Real Mongolia)