Tune Ins Holdings Berhad (948454-K) - Financial Results 3Q 2013 - Analyst Presentation Nov 2013
Agenda 1. 3Q 2013 Group Financial Results : Key Highlights 2. 3Q 2013 Pro Forma Results 3. Online Insurance Business 4. Tune Insurance Malaysia Berhad (TIMB) 2
1. 3Q 2013 Group Financial Results : Key Highlights 3
3Q 2013 Results - Key Highlights Continued Growth Group operating revenue RM 98.8 million up 44.3% v 3Q 2012 and RM 282.3 million up 107.3% v YTD 2012 Online travel sales Up 48.8% v 3Q 2012 and 36.0% v YTD 2012 TIMB sales RM 80.5 million up 51.0% v 3Q 2012 and RM252.3 million up 39.3% v YTD 2012 Continued diversification 55% of online travel business from non-malaysian markets up from 50% in 3Q 2012 TIMB non-motor insurance up from 45.0% in 3Q 2012 to 65.0% in 3Q 2013 Increased Profits Group PAT - RM 17.6 million up 59.3% v 3Q 2012 and RM50.2 million up 81.5% v YTD 2012 Online travel - RM 13.5 million up 48.0% v 3Q 2012 and RM37.0 million up 44.3% v YTD 2012 TIMB PAT - RM 5.0 million down 42.4% v 3Q 2012 and RM19.3 million up 45.1% v YTD 2012 Strong Balance Sheet Total assets RM 976 million. TIMB CAR Increased from 226% as at 31 Dec 2012 to 269.5% as at 30 Sept 2013. Zero debt Low Risk Investments YTD Investment income RM 18.2 million; equities < 1% 4
3Q 2013 Key Updates Grow with AirAsia Travel insurance now available in 16 markets with launch of Myanmar and Taiwan. Launched Travel insurance for Zest Air in the Philippines effective June 2013. Provide travel insurance to Air Asia India customers. Work ongoing in conjunction with Air Asia launch. Improve online take-up rates and tailor sales & marketing Digital advertising and remarketing via Google launched in June 2013 Tune Ted as Brand Ambassador for Tune INSURE brand SMS / edm reminders to customers without ancillary 1-5 days before departure Replicate and expand travel insurance business model Launched travel insurance for international passengers of Cebu Pacific Air in June Development of platform for sale of other insurance products online. Ongoing business development with other major travel providers Capture synergies from TIMB integration and diversify product offering Renewed Motor Quota Share treaty with leading reinsurers and better commission terms. Continued optimisation of agency force including relocating branches, e.g. Kluang branch launched in Aug 2013. Continued product diversification (65% non-motor) including TIMB insuring groups assets (subject to underwriting) Strategic Acquisitions Signed Conditional SPA for acquisition of 70% stake in of PT Batavia Mitratama Insurance; pending regulatory approval Discussions underway in other core markets 5
Unaudited Financial Results (Statutory*) Group PAT increased 82% to RM50.2 million YoY; Group PBT increased 65% to RM53.0 million YoY 3Q 2013 2Q 2013 3Q 2012 (Restated) 3Q vs 2Q Variance 3Q vs 3Q Variance YTD 2013 YTD 2012* (Restated # ) Y-o-Y 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 98,810 96,707 68,462 2.2 44.3 282,263 136,155 107.3 Net Earned Premiums 61,452 61,551 57,035 (0.2) 7.7 175,305 103,446 69.5 Investment Income 1 4,793 5,516 8,058 (13.1) (40.5) 18,189 11,064 64.4 Fees & commission income 6,163 6,635 2,272 (7.1) 171.4 20,388 3,632 461.3 Net Claims (21,495) (27,331) (25,375) (21.3) (15.3) (70,693) (35,376) 99.8 Other Expenses (30,839) (30,457) (28,084) (2.7) 9.8 (90,174) (50,591) 78.2 Profit before Tax 20,074 15,914 13,906 26.1 44.4 53,015 32,175 64.8 Profit after Tax 17,623 17,323 11,060 1.7 59.3 50,169 27,635 81.5 * Based on statutory accounts (TIMB was acquired on 23 May 2012 thus only 4 months results included in YTD 2012). # Restated after Purchase Price Allocation adjustments for May 2012 OCA acquisition (Additional amortisation and depreciation expenses of RM0.5 million (net of tax) for YTD 2013 and RM 0.2 million for YTD 2012). 1 Investment income = investment income + realised gains & losses + other operating income 6
2. 3Q 2013 Pro Forma 1 Results 1 Per IPO prospectus : The pro forma results were prepared to reflect the financial result for FY2010, FY2011 and FY2012 had the TIMB acquisition been made in 2009. 7
Pro Forma Operating Revenue Year-on-year increase through growth in Online sales and TIMB non-motor sales % of Pro Forma Operating Revenue Online TIMB 14.6% 85.4% 17.6% 82.4% 20.0% 80.0% 19.9% 80.1% 23.0% 76.6% 24.5% 75.5% 21.6% 78.0% 24.0% 75.5% RM mil 400 350 300 250 200 150 100 50-301 319 340 250 282 68 97 99 2010 2011 2012 YTD 2012 YTD 2013 3Q 2012 2Q 2013 3Q 2013 Gross operating revenue has increased 12.9% v YTD 2012 whereas gross written premium has increased 28.8% v YTD 2012 and by 42.6% v 3Q 12 reflecting the focus on quality not quantity immediately following the acquisition of TIMB Key: 2010 2011 2012 2013 8
Pro Forma Net Earned Premiums 1 Year-on-year growth despite motor quota share % of Pro Forma Net Earned Premiums Online TIMB 25.8% 74.2% 25.8% 74.2% 31.3% 68.7% 29.9% 70.1% 39.8% 60.2% 41.3% 58.7% 29.1% 70.9% 36.4% 63.6% 41.8% 58.2% RM mil 250 200 150 100 50-165 211 217 162 175 169 2010 2011 2012 YTD 2012 YTD 2013 YTD 2013 (Excl MMIP) 57 62 61 3Q 2012 2Q 2013 3Q 2013 YoY increase due to growth in Online business, offsetting decline in TIMB s net earned premium reflecting focus on underwriting profits including a 25% motor quota share undertaken to help derisk the motor portfolio. Key: 1 Net earned premium = gross earned premium received - premiums ceded to external reinsurers 2010 2011 2012 2013 9
Pro Forma Net Claims 1 & Net Claims Ratio 2 Continued improvement in net claims and net claims ratio RM mil (%) 120 100 80 56.6% 52.1% 45.8% 56.4% 40.3% 34.7% 44.5% 44.3% 35.0% 60.0% 50.0% 40.0% 60 40 20-94 110 100 2010 2011 2012 YTD 2012 YTD 2013 YTD 2013 (Exc MMIP) 91 71 59 25 27 22 3Q 2012 2Q 2013 3Q 2013 30.0% 20.0% 10.0% 0.0% Results reflecting continued focus on the expeditious settlement of outstanding claims as well as a more balanced sales portfolio and focus on quality business Key: 1 Net claims comprises of gross claims paid and gross change to contract liabilities as well as claims ceded to reinsurers and change to contract liabilities ceded to reinsurers 2 Net claims divided by net earned premium 2010 2011 2012 2013 10
Pro Forma Profit After Tax PAT up 78% vs YTD 2012 RM mil 70 60 50 40 30 20 10-36 60 49 28 50 54 2010 2011 2012 YTD 2012 YTD 2013 YTD 2013 (Exc MMIP) 11 17 18 3Q 2012 2Q 2013 3Q 2013 PAT growth reflecting substantial growth in online sales, zero debt and continued growth in TIMB offsetting decline in investment income given more prudent investment strategy Key: 2010 2011 2012 2013 11
Pro Forma Key Operating Ratios Travel insurance and TIMB both contribute to good underwriting margins Pro Forma Management Expense Ratio 1 and Combined Ratio 2 ME Ratio (%) Combined Ratio (%) 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 83.9% 14.0% 77.8% 78.7% 11.5% 18.6% 17.1% 87.9% 78.5% 73.7% 23.8% 24.6% 2010 2011 2012 YTD 2012 YTD 2013 YTD 2013 (Exc MMIP) 100.1% 78.1% 16.1% 18.1% 83.1% 75.0% 24.4% 23.7% 2Q 2012 3Q 2012 2Q 2013 3Q 2013 120.0% 90.0% 60.0% 30.0% 0.0% Combined ratio QoQ improvement in underwriting margin reflecting reduced management expenses and a lower claims ratio. ME ratio Prudent provisioning in respect of Best Re adds 1.9% to 3Q Management expenses Key: 1 Management Expense divided by Net Earned Premiums 2 Sum of Net Claims, Management Expenses & Net Fees and Commissions divided by Net Earned Premiums 2010 2011 2012 2013 12
3. Online Insurance Business 13
Sales and Profit Strong growth in travel insurance sales and profit Gross Sales before Reinsurance (RM mil) + 36.0% + 48.8% 98.68 72.58 23.98 35.69 3Q 2012 3Q 2013 YTD 2012 YTD 2013 Commentary Gross sales before reinsurance increased 48.8% vs 3Q 2012 providing a similar increase in net profit. Good contributions from all major markets, in particular China and Thailand. Profit After Tax (RM mil) + 44.3% + 48.0% 37.0 25.6 9.1 13.5 3Q 2012 3Q 2013 YTD 2012 YTD 2013 14
Number of Policies Issued Continued growth in markets outside Malaysia in 3Q 2013 particularly China and Thailand China 8% (5%) Others 8% (6%) China 8% (5%) Others 7% (5%) Singapore 5% (6%) Singapore 5% (6%) Indonesia 14% (14%) Malaysia 45% (50%) Indonesia 15% (13%) Malaysia 46% (52%) Thailand 20% (19%) Thailand 19% (19%) 2.09 million Policies Issued in 3Q 2013 (vs. 1.39 million in 3Q 2012) 5.74 million Policies Issued YTD 2013 (vs. 4.32 million YTD 2012) Malaysia 57% in FY 2011, 51% in FY 2012, 46% in YTD 2013 Key (font colour): 2012 2013 15
Number of Policies Earned Revenue is recognised when a customer commences their journey China 8% (6%) Others 7% (5%) China 7% (5%) Others 6% (4%) Singapore 5% (6%) Singapore 5% (6%) Indonesia 17% (14%) Malaysia 46% (51%) Indonesia 16% (13%) Malaysia 47% (53%) Thailand 17% (18%) Thailand 19% (19%) 2.03 million Policies Earned in 3Q 2013 (vs. 1.47 million in 3Q 2012) 5.53 million Policies Earned YTD 2013 (vs. 4.38 million YTD 2012) Malaysia 52% in FY 2012, 47% in YTD 2013 Key (font colour): 2012 2013 16
4. Tune Insurance Malaysia Berhad (TIMB) 17
Gross Written Premium and Net Written Premium Fire and Online Travel Insurance drive increase in Premium Gross Written Premium (RM mil) Commentary + 39.3% Gross Written Premium ( GWP ) + 51.0% 181.1 252.3 GWP increased YoY and QoQ mainly driven by increase in Fire and Online Travel Insurance. 53.3 80.5 3Q 2012 3Q 2013 YTD 2012 YTD 2013 Net Written Premium ( NWP ) Excluding motor insurance, NWP increased YoY by RM20 million or 85%. Net Written Premium (RM mil) - 0.4% 102.8 102.4 + 7.7% 32.3 34.8 3Q 2012 3Q 2013 YTD 2012 YTD 2013 18
Portfolio Mix Portfolio well balanced as drive for quality agents selling the right mix of products continues Portfolio Mix Commentary Fire 6.0% Misc 15.0% PA & Medical 27.0% Motor 35.0% Marine 17.0% PA & Medical 10.0% Fire 6.0% Misc 15.0% Marine 14.0% Motor 55.0% Continued efforts undertaken to rebalance TIMB s business portfolio to more profitable segments of non-motor business. Portfolio mix (M:NM) for YTD 2013 is 31%:69% vs 48%:52% for YTD 2012 3Q 2013 3Q 2012 Total as at June 2013 No of Agents 3Q 2013 Total as at Sep 2013 Recruited Terminated Suspended (A) (B) (C) (D) (E=A+B-C-D) 1,115 78 40 22 1,131 19
Profit After Tax Another quarter of underwriting profits Profit After Tax (RM mil) - 42.4% + 45.1% 19.3 Commentary Profit after tax decreased QoQ mainly due to lower investment income, particularly in realised gain on sale of investment and interest income. Profit after tax increased YoY mainly due to balanced portfolio with more profitable segments of non-motor business resulted in lower claims and net fees & commissions. 13.3 8.7 5.0 3Q 2012 3Q 2013 YTD 2012 YTD 2013 20
Investment & Other Income YoY decrease reflecting minimal equity holding from which to realise gains Investment & Other 1 Income (RM mil) Portfolio Mix -27.4% Portfolio Mix As at 30 Sep 2013-45.9% 21.7 15.8 Equity securities 1.0% Loans 0.1% Wholesale fund 12.2% Debt securities 28.2% Deposits with FI 43.7% 7.0 3.8 3Q 2012 3Q 2013 YTD 2012 YTD 2013 Investment Yield # 1.1% * 0.6% * 2.9% 2.6% 3Q 2012 3Q 2013 YTD 2012 YTD 2013 1 Other includes realised gains & losses and other operating income * Investment yield for 3 months # Investment income (exclude rental income) / investment 21
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 September 2013 and announced by the Company on the Main Market of Bursa Malaysia Securities Berhad on 18 November 2013. 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. 22