Tune Ins Holdings Berhad - Financial Results June Analyst Presentation August 2014

Transcription

1 Tune Ins Holdings Berhad - Financial Results June 2014 Analyst Presentation August 2014

2 Agenda 1 Key Highlights 2 2Q & 1H 2014 Results 3 4 Online Insurance Business Tune Insurance Malaysia Berhad (TIMB) 2

3 Agenda 1 Key Highlights 3

4 Q2FY14 KEY FINANCIAL HIGHLIGHTS OVERVIEW RM 14.6m profits in 2Q14 on the back of revenue of RM 101 million contributed primarily from its online business which recorded an increase in profits of 12% and revenue of 14% yoy. Significant investments internationally including new companies in Thailand and Middle East as well as domestic investments in online platform and marketing ONLINE 12% PAT growth yoy with the May launch of a new partnership via a joint venture with Cozmo Travel LLC ( Cozmo ) in MENA region which achieved over 24,000 policy sales during its first two months of operation Currently present in more than 30 countries across 4 continents, whether directly or through local partnerships Riding on expansion mode of its main airline partners Expected upswing of travellers and flights going in and out of the new and vibrant KLIA2 MALAYSIA : TUNE INSURANCE MALAYSIA BERHAD (TIMB) PBT before MMIP of RM5.5 mil, flat growth yoy; Revenue up yoy at RM183.8 mil for 1H14 PAT shows a decline of 69% due to an MMIP cash call in the same period in 2013 leading to 2Q13 PAT more than PBT An MMIP cash call is expected in 2H14 which will provide a tax allowance for TIMB for 2H14 Strong growth in 1H14 will naturally lead to an increase in UPR reserve which will gradually be released over the coming months for 2H14 THAILAND : TUNE INSURANCE PUBLIC CO. LTD (TIPCL) Acquisition of OSI (renamed to TIPCL) in May 14 with the company contributing to the bottom line of RM0.34mil as at June 14 Commenced extremely positively and will be a significant contributor to group profits and value in 2015/2016 Recent focus has been on investments in people, products, processes and technology to cope with the expected exponential growth in business 4

5 Q2FY14 KEY DEVELOPMENT & UPDATES Leverage on AirAsia s Growth and Assets Profitability Launched Korea & Japan for TAAX Launching inbound Korea in August Launch of Investor Relations App in June & LINE Account in July Replicate & Expand Travel Insurance Business Model Launched 8 new markets with 14 countries in the Mena region Cebu launched new markets - Cambodia, Indonesia & Brunei Establish Digital Innovation and Drive Business to Consumer Platform Testing & improvement - EDM blasts selectively to database with different tag line messages Capture Synergies from TIMB Integration & Diversify Product Offering Insurance for Foreign Worker tied-up with United Nation Refugee Set up Sibu branch in April Enhance Revenue Streams via Strategic Acquisitions Acquired 49% interest in OSI and Permpoonsub Broker Co Ltd and OSI renamed to Tune Insurance Public Company Limited ( TIPCL ) 5

6 REGIONAL FOOTPRINT COVERING >30 COUNTRIES ACROSS 4 CONTINENTS Belgium England Europe Germany Netherlands Spain Morocco Italy France Africa Bahrain Qatar U.A.E Oman Egypt Asia China Myanmar India Laos Thailand Malaysia Indonesia Singapore Korea Taiwan Vietnam Philippines Brunei Japan Macau Hong Kong Cambodia Australia Australia 6

7 STRATEGIC ACQUISITION IN THAILAND- INTEGRATION ON TRACK Transaction Highlights Acquisition of 49% stake in OSI (currently renamed to TIPCL) and PPS with cash purchase consideration of THB 408,653,974 (equivalent to approximately RM million or USD mil) Valuation : Price of net asset of 1.7x based on OSI net asset as at 31 Dec 13 & considering a 5 year commitment to continue utilizing TIPCL to provide Osotspa with insurance products as well as a write-back from Best Re provisions Source of funding : Proceeds earmarked for strategic investments from the IPO and internally generated funds Acquisition Integration Mar April May June July Aug Sept 4Q 2014 Submission of application in respect of a proposed acquisition of shares in OSI OIC approved on the 49% of acquisition of shares in OSI Completion of the acquisition of OSI and PPS New Directors on board new organization chart Renamed to TIPCL New corporate website Business planning on going Strategic Priorities To launch travel insurance for TAA & TAAX New brand launch New insurance system (phase 1) To launch travel insurance for MAA & IAA Launch new businesses: Group business Affinity business New infrastructure New insurance system (phase 2) Offer and Grow Travel Insurance Grow Profitably Existing Osotspa Businesses Leverage on Shareholders Network Drive Innovation via Implementation of a Digital Platform Operate low risk and capital-light business model 7

8 LOOKING AHEAD PLAN IN 2HFY14 Leverage on AirAsia s Growth and Assets Profitability Improve data intelligence by focusing on non-purchasers analysis and propensity modelling To launch Inbound products Sri Lanka, Nepal, Jeddah & India To launch warrant insurance for Air Asia To revert to prior sales process following Q2 test Replicate & Expand Travel Insurance Business Model Establish Digital Innovation and Drive Business to Consumer Platform To launch new markets for Cebu Japan, Dubai & Vietnam Leverage on knowledge and experience gained from new market entrance / partnerships for future tie-ups To launch new markets Kuwait & KSA Progressively focus on B2C and B2B2C leveraging digital database and affinities to reduce marketing cost To adopt a unified branding across all entities & place increased emphasis on Tune Direct & shared services Capture Synergies from TIMB Integration & Diversify Product Offering Maintain motor portfolio to be less than 35% Maintain a sustainable ICTL of at least 200% Recruitment of quality agents continues Enhance Revenue Streams via Strategic Acquisitions TIPCL - Underwrite online insurance, agency and broker businesses, as well as offer products through new channels and partnerships, and continue to leverage on the diversified businesses of Osotspa Group 8

9 SNAPSHOT OF FINANCIAL RESULTS 2Q vs 1Q Q2 vs Q2 Y-o-Y Q Q Q YTD Jun 14 YTD Jun 13 Variance Variance Variance (RM 000) (RM 000) (RM 000) (%) (%) (RM 000) (RM 000) (%) A B C A vs. B A vs. C D E D vs. E Operating Revenue 101, ,952 96,707-11% +5% 215, , % Gross Written Premiums 99, ,708 98,790-20% +1% 224, , % Net Earned Premiums 60,518 64,187 61,551-2% -2% 124, , % Investment Income 1 5,818 10,394 5,516-44% +5% 16,212 13, % Net fees & commission (9,648) (10,064) (8,351) -4% +16% (19,712) (15,257) +29% Net Claims (24,461) (26,318) (27,331) -7% -11% (50,779) (49,198) +3% Management and other Expenses (16,822) (16,055) (15,471) +5% +8% (32,877) (27,950) +18% Finance costs (1,903) -100% Share of results of JV (30) % -100% (30) % Share of results of associates % +100% % PBT (before MMIP) 18,114 25,144 16,364-28% +11% 43,258 35, % PBT 15,714 22,144 15,914-29% -1% 37,858 32, % PAT (before MMIP) 17,031 23,396 17,773-27% -4% 40,427 34, % PAT 14,631 20,396 17,323-28% -16% 35,027 32,546 +8% ROE (annualised) 15% 20% 19% -5% -4% 17% 18% -1% ROA (annualised) 6% 8% 7% -2% -1% 7% 7% - 1 Investment income = investment income + realised gains & losses + other operating income + fair value gains 9

10 Agenda 2 2Q & 1H 2014 Results 10

11 Operating Revenue QoQ - Improved through growth in Online business and TIMB non-motor sales Online* TIMB* 18% 82% 29% 71% 23% 77% 23% 77% 22% 78% 24% 76% 23% 77% RM mil Year YTD Jun 13 YTD June 14 Q2FY13 Q2FY14 Q1FY14 YoY increased mainly contributed by: - higher GEP in TIMB for Medical, Marine Hull, Travel and Fire class of businesses; and - continuous growth in Online GEP in key markets of Malaysia, China, Thailand, and Philippines QoQ (Q214 vs Q213) slight increase due to: - minimal increase in TIMB GEP where the increase in travel business, offset by the drop in marine and offshore class of businesses; and - Online: in line with the growth of 15% in number of policies earned Vs Q113 * % are based on gross figures before conso adjustment

12 Gross Written Premiums QoQ Consistent GWP underpinned by the growth of TIMB Online* 22% 23% 22% 21% 22% 22% 20% TIMB* 78% 77% 78% 79% 78% 78% 80% RM mil Year YTD Jun 13 YTD June 14 Q2FY13 Q2FY14 Q1FY14 YoY (1H14 Vs 1H13) increase driven by: - substantial increase in GWP of TIMB mainly for Medical, Marine Hull, TPA & PA and Fire class of businesses - higher GWP in Online in Malaysia, Philippines and China market QoQ (Q214 vs Q213) minimal increase mainly contributed by growth in TIMB in PA & TPA * % are based on gross figures before conso adjustment

13 Net Earned Premiums 1 QoQ Flat NEP mainly due to higher cession to reinsurers in TIMB Online 31% 41% 39% 42% 37% 43% 42% TIMB 69% 59% 61% 58% 64% 57% 58% RM mil Year YTD Jun 13 YTD June 14 Q2FY13 Q2FY14 Q1FY14 YoY increase due to growth in Online business in key markets and growth in TIMB for non-motor class of businesses. QoQ (Q214 vs Q213) flat NEP due to higher cession to reinsurers in TIMB 1 Net earned premium = gross earned premium received - premiums ceded to external reinsurers

14 Key Operating Ratios QoQ - Slight increase in combined ratio contributed by higher ME partially mitigated by good claims performance Combine ratio2 (%) 78.7% 77.9% 80.4% 82.7% 83.1% 83.4% 82.1% Commission (%) 14.2% 14.9% 13.4% 15.8% 13.6% 15.9% 15.7% Net claim (%) 45.9% 39.0% 43.2% 40.7% 44.4% 40.4% 41.0% ME1 (%) 18.6% 24.0% 23.8% 26.2% 25.1% 27.1% 25.4% Year YTD Jun 13 YTD June 14 Q2FY13 Q2FY14 Q1FY14 Combined ratio YoY and QoQ increase due to higher ME ratio & commission ratio in TIMB as a results of the higher commission paid out to non-motor segments which has higher regulated commission rate ME ratio YoY increase mainly due to (1) higher employee expenses for historic union settlement; (2) marketing costs and travelling & accommodation expenses for new market expansion. ME was consistent if excluding the aforesaid 2 factors. QoQ increase due to decrease in NEP while minimal fluctuation in ME 1 Management Expense divided by Net Earned Premiums 2 Sum of Net Claims, Management Expenses & Net Fees and Commissions divided by Net Earned Premiums 14

15 Investment Income QoQ Higher investment yield from wholesale funds RM mil Year YTD Jun 13 YTD June 14 Q2FY13 Q2FY14 Q1FY14 Consistent contribution from investment income YoY and QoQ, where major portion is contributed by tax exempted wholesale funds Higher investment QoQ mainly contributed by higher investment yield by placement in new wholesale funds

16 Profit Before Tax QoQ PBT (before MMIP) growth mainly driven by Online Online 34% 60% 55% 69% 68% 80% 60% TIMB 66% 40% 44% 31% 32% 20% 40% RM mil 43 PBT (before MMIP) 58 PBT Year YTD Jun 13 YTD June 14 Q2FY13 Q2FY14 Q1FY14 YoY increase of RM5 mil (excluding MMIP impact: RM8 mil) driven by strong earnings from Online partially offset by higher ME in TIMB QoQ (Q214 vs Q213) (excluding MMIP impact) increase mainly driven by the growth of NEP from Online and also a small contribution from the share of results of associates in Thailand Before MMIP 16

17 Profit After Tax QoQ Flat PAT (before MMIP) underpinned by higher NEP from Online partially offset by higher ME and tax expense Online 41% 64% 56% 74% 63% 87% 65% TIMB 59% 36% 44% 26% 37% 13% 35% RM mil PAT (before MMIP) PAT Year YTD Jun 13 YTD June 14 Q2FY13 Q2FY14 Q1FY14 YoY increase of RM3 mil driven by strong earnings from Online, partially offset by higher ME in TIMB and higher tax expense (tax relief arising from payment of MMIP in YTD Jun 13). Excluding MMIP impact, it double up the YoY increase to RM6 mil. QoQ (Q214 vs Q213) slight decrease (excluding MMIP impact) due to higher NEP from online mitigated by higher ME and higher tax expense (tax relief arising from payment of MMIP in Q213). An MMIP cash call is expected in 2H14 which will provide a tax allowance for TIMB for 2H14. QoQ (Q214 vs Q114) decrease of RM5 mil (excluding MMIP impact: RM5.6 mil) due to realized gains resulting from sale of TIMB building recorded in Q1FY Before MMIP

18 Agenda 3 Online Insurance Business 18

19 Online Business - Key Highlights Continued Growth Increased Profit Gross Sales before Reinsurance (RM mil) + 7.8% Profit After Tax (RM mil) +21.3% % % Q Q YTD Jun 13 YTD Jun 14 Q Q YTD Jun 13 YTD Jun 14 Gross Sales before Reinsurance PAT Gross sales before reinsurance increased 2% vs 2Q13 with main contribution from Malaysia and Philippines. RM13.7 million up 12% vs 2Q13 contributed by larger earned premium primarily from more people flying with insurance 19

20 Number of Policies Earned Revenue is recognised when a customer commences their journey (date of departure per customer booking) China 7% (6%) Others 8% (6%) China 8% (7%) Others 7% (6%) Singapore 4% (5%) Singapore 4% (5%) Indonesia 13% (16%) Malaysia 51% (49%) Indonesia 14% (15%) Malaysia 48% (48%) Thailand 17% (18%) 2.03 million Policies Earned in Q Thailand 19% (19%) (vs million in Q2 2013) 4.18 million Policies Earned YTD Jun 14 (vs million YTD Jun 13) Key (font colour):

21 Number of Policies Issued Continued growth in major markets particularly Malaysia, China, Thailand, and Philippines China 6% (8%) Others 7% (6%) China 7% (7%) Others 7% (6%) Singapore 4% (5%) Singapore 4% (5%) Indonesia 13% (17%) Malaysia 54% (47%) Indonesia 13% (16%) Malaysia 51% (47%) Thailand 16% (17%) 1.87 million Policies Issued in Q Thailand 18% (19%) (vs million in Q2 2013) 3.94 million Policies Issued YTD Jun 14 (vs million YTD Jun 13) 2Q14 - Total Policies Issued increased by 1.1% yoy in spite of the recent implementation of test / refine techniques to improve take up rate Key (font colour):

22 Agenda 4 Tune Insurance Malaysia Berhad (TIMB) 22

23 Gross Written Premium and Net Written Premium Medical, travel and fire insurance continued to be the drivers Gross Written Premium (RM mil) Net Written Premium (RM mil) +28.7% % % % Q Q YTD Jun 13 YTD Jun 14 Q Q YTD Jun 13 YTD Jun 14 Gross Written Premium ( GWP ) GWP increased YoY (1H14 vs 1H13) mainly driven by increase in Medical, PA & TPA and Fire class of businesses. GWP increased QoQ (Q214 vs Q213) largely due to higher GWP from Travel class, but offset by decrease in Medical and Offshore class of businesses. Net Written Premium ( NWP ) NWP increased YoY and QoQ in line with the growth of GWP. NWP recorded an improved and sustained retention ratio of 44% of GWP (1H14: 39%) as a result of management s continued effort to maintain its strategic focus on higher retention profitable businesses i.e. PA, Franchise, Foreign Workers and Marine Cargo. 23

24 Portfolio Mix Portfolio well balanced as drive for quality agents selling the right mix of products continues Rebalancing portfolio continued Non- Motor Motor 52% 48% Fire, 18% Misc, 14% PA & Medical, 22% Motor, 29% Marine, 17% 68% 75% 32% 25% FY12 FY13 YTD 14 Fire, 17% Misc, 13% PA & Medical, 30% Motor, 25% Marine, 15% No of agents Total as at Dec 2013 No of Agents YTD Jun 2014 Total as at June 2014 Recruited Terminated Suspended (A) (B) (C) (D) (E=A+B-C-D) 1, ,130 Total as at Mar 2014 No of Agents Qtr Total as at June 2014 Recruited Terminated Suspended (A) (B) (C) (D) (E=A+B-C-D) 1, ,130 YTD Jun 2013 YTD Jun 2014 Continued efforts undertaken to rebalance TIMB s business portfolio to more profitable segments of nonmotor business. 24

25 Profit After Tax Stable underwriting profit margin (before MMIP) of 6% Underwriting profit/loss (before MMIP) (%) Profit After Tax (RM mil) % % -45.5% % Q Q YTD Jun 13 YTD Jun Q Q YTD Jun 13 YTD Jun 14 YoY decrease in underwriting profit (before MMIP) due to higher combined ratio, in particularly net commission and management expenses; Despite no major fluctuation in QoQ underwriting profit (before MMIP), QoQ profit after tax decrease RM4.4 mil due to higher provision for MMIP and higher income tax expenses (tax relief arising from the payment of MMIP in Q2 2013); Underwriting margin* (before MMIP and allowance for doubtful debts) of 6% for YTD Jun * Underwriting margin = underwriting profit before MMIP and allowance for doubtful debts/net earned premium

26 Investment & Other Income Investment & Other 1 Income (RM mil) Portfolio Mix (30 June 2014) -4.3% % 13.2 Loans, 0.1% Equity securities, 4.4% Debt securities, 25.0% Wholesale funds, 50.3% Deposits with FI, 20.2% Q Q YTD Jun 13 YTD Jun 14 Investment Yield # 1.0% * 1.0% * 1.8% 2.2% Q Q YTD June 13 YTD June 14 1 Other includes realised gains & losses and other operating income * Investment yield for 3 months # Investment income (exclude rental income)/investment 1H14 increased 10% yoy in investment & other income mainly driven by the realised gain from disposal of TIMB building in Q & investment income from wholesale funds ; Remain low risk investment with ~70% investment in deposits with FI & wholesale funds 26

27 Disclaimer This presentation has been prepared by Tune Ins Holdings Bhd ( Company ) in connection with the Interim Financial Statements (unaudited) for the financial period ended 30 June 2014 and announced by the Company on the Main Market of Bursa Malaysia Securities Berhad on 18 August Information contained in this presentation is intended solely for your reference. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning the Company. Neither we nor our advisors make any representation regarding, and assumes no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information contained herein. In addition, the information may contain projections and forward-looking statements that reflect the Company s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks factors and which may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the Company s assumptions are correct. Actual results may differ materially from those projected. 27