Q4 and FY2016 Analyst Presentation February 2017
2 1 EXECUTIVE SUMMARY o Key Highlights o 4Q2016 Financial Highlights o FY2016 Financial Highlights o Key Strategies o Outlook & Y2017 Digital Focused 2 4Q2016 & FY2016 FINANCIAL PERFOANCE o Group o Travel Reinsurance (Tune Protect Re - TPR) o General Insurance (Tune Protect Malaysia TPM) o Overseas Ventures 3 APPENDICES o Other Financial Indicators
3 FY2016 Key Highlights Tune Protect Group Group Global Travel Operating Revenue ( OR ) +7.6% Gross Written Premium ( GWP ) +5.7% Net Earned Premium ( NEP ) +9.6% Profit After Tax ( PAT ) +18.8% Combined Ratio -1.7pts Tune Protect Re ( TPR ) Lower GWP and PAT impacted by change to opt-in pre-select in Malaysia Non-AirAsia contribution 14% (+4% ) Tune Protect UAE ( TPUAE ) Air Arabia, Cozmo & B2B channel sales increased by +44% Tune Protect Malaysia ( TPM ) General Insurance PAT +73.9%, GWP +5.6% (excluding Malaysia Motor Insurance Pool ( MMIP ), PAT growth of 18.5%) Lower Combined Ratio 87.8% (vs 97.6% in 2015) Higher retention ratio +2.9%, aided by Motor class Tune Protect Thailand ( TPT ) PAT +>100%, turnaround from prudent expense management and closure of non-profitable business
4 4Q2016 Financial Highlights +3.5% OPERATING REVENUE 135.5 mil -1.5% NET EARNED PREMIUM 84.7 mil Mainly attributed to higher Gross Earned Premium ( GEP ) in Motor, Engineering and Medical (foreign workers) classes of business Mainly underpinned by growth in Motor and Medical (foreign workers) classes of business, but offset by decrease in NEP of Malaysia market -31.2% PROFIT AFTER TAX 17.3 mil +20.6pts COMBINED RATIO 95.0 % Mainly due to lower share of MMIP profit, lower other income, and increase in marketing expenses. However, moderated by increase in share of profits from overseas ventures Mainly caused by increase in net claims ratio from both Travel and General Insurance business, coupled with higher marketing cost related to Travel business
5 FY2016 Financial Highlights +7.6% OPERATING REVENUE 516.6 mil +9.6% NET EARNED PREMIUM 333.0 mil Mainly due to higher GEP in Motor, Fire, and Travel classes of business coupled with higher share of MMIP s investment income (increase by 1.5 mil) and higher returns from unit trust funds Mainly due to growth in Motor, Fire, Medical (foreign workers), and Worker Compensation classes of business +18.8% PROFIT AFTER TAX 86.6 mil -1.7pts COMBINED RATIO 83.2 % Mainly due to increase in share of MMIP profit and from overseas ventures, coupled with the improvement in Underwriting Profits. However, offset by higher Management Expenses ( ME ) Mainly due to improvement in TPM s net claims, partially contributed by MMIP s release of claim liabilities of 5.6 mil
Five Key Strategies Key Achievements in 4Q2016 and FY2016 1 2 3 4 5 CONTINUE TO GROW WITH AIRASIA GLOBAL PLAYER IN TRAVEL INSURANCE STRENGTHEN DIGITAL BUSINESS FUNDAMENTALS WRITE PROFITABLE GENERAL INSURANCE LINES STRATEGIC ACQUISITION Online Inbound Travel to Indonesia launched Dynamic pricing pilot with 2 sectors; YTD 14 sectors in 5 countries YTD Business to Consumer ( B2C ) platform # launched for 12 markets FY2016 Air Arabia, Cozmo & Business to Business ( B2B ) sales increased by +44% Policies sold via Direct to Consumer website ( D2C ) grew by 500% with GWP recorded 463k in FY2016, attributed mainly from Travel product New product name introduced, following a facelift for D2C, which includes incorporating Bubble element into visuals. Collaborated with Currenseek travel insurance bundled with currency exchange Malaysia Retention ratio improved to 50.5% in FY2016 (+2.9% ) >100% improvement in profitability of Medical products due to non renewal of loss making accounts Thailand Focus on Travel, Personal Accident & Property lines of business, and ceased unfavourable accounts Pursue viable acquisition target and Takaful opportunities Note: # B2C Platform: An online page which directs AirAsia customers to Tune Protect s travel booking page 6
7 Outlook Global Travel TRAVEL REINSURANCE Impact of switch to opt-in function for Malaysia to normalize The impact to be soften with TUR improvement initiatives ie: product bundling with seats, dynamic pricing to all markets, digital remarketing and growth in offline MIDDLE EAST Growth in B2B channel and new market entry Hopeful on new Travel partnerships General Insurance MALAYSIA Detariffication of Motor pricing may see movements in premiums ±10%. Telematics data gathering to provide insights to driving behavior and support pricing consideration Growth in Motor business as franchise relationship and share of business increases Whilst competition stiffens, expect to continue to outpace industry s underwriting margin average THAILAND Economic confidence is expected to return as mourning period ends. Expect rise in Travel business as tourists arrivals increase Turnaround in Thailand expected to continue. Y2017 focus is on business growth especially from Offline travel sales, Corporate deals and direct Online readiness
8 2017 Digital Focused Tune Protect as The DIGITAL Insurer PRODUCT INNOVATION CUSTOMER EXPERIENCE CHANNEL INNOVATION USAGE-BASED Protection coverage activation only when in use ON-DEMAND Protection coverage activation only when needed POLICY & CLAIMS Simplified policies & fast track claims CUSTOMER Journey Mapping towards service excellence WEBSITE & E-COMMERCE Platform enhancements and consistency across countries TELEMATICS Apps which track and reward good driving behavior DYNAMIC Pricing on Travel products PROCESS INNOVATION to reduce turnaround time & expedite service delivery MOBILE LIFESTYLE Apps that focus on delivering great travel experience
9 1 EXECUTIVE SUMMARY o Key Highlights o 4Q2016 Financial Highlights o FY2016 Financial Highlights o Key Strategies o Outlook & Y2017 Digital Focused 2 4Q2016 & FY2016 FINANCIAL PERFOANCE o Group o Travel Reinsurance (Tune Protect Re - TPR) o General Insurance (Tune Protect Malaysia TPM) o Overseas Ventures 3 APPENDICES o Other Financial Indicators
Tune Protect Group - Financial Snapshot Tune Protect Group (Consolidated) Q4 2016 Q4 2015 Q4 vs Q4 (%) FY 2016 FY 2015 FY vs FY (%) (in 000) A B A vs. B C D C vs. D INCOME STATEMENT Gross Written Premiums 124,904 116,337 7.4% 500,994 473,981 5.7% Operating Revenue 135,466 130,922 3.5% 516,621 480,193 7.6% Gross earned premiums 127,226 122,675 3.7% 486,345 453,448 7.3% Investment income 8,240 8,247-0.1% 30,276 26,745 13.2% Investment income (excluding MMIP) 6,462 6,295 2.7% 25,075 23,068 8.7% Refer page 18 Refer page 21 Net Earned Premiums 84,746 86,023-1.5% 333,018 303,840 9.6% Net Fees & Commission (14,331) (15,977) -10.3% (56,763) (53,534) 6.0% Net Claims (37,121) (30,778) 20.6% (113,210) (122,288) -7.4% Management expenses (29,064) (17,180) 69.2% (107,090) (82,235) 30.2% Underwriting profits 4,230 22,088-80.8% 55,955 45,783 22.2% Share of results of JV 790 112 > 100% 1,219 527 > 100% Share of results of associates 432 (2,363) > 100% 2,808 (2,835) > 100% Profit After Tax 17,326 25,179-31.2% 86,585 72,883 18.8% Basic EPS (sen) 2.20 3.12-29.5% 10.64 9.17 16.0% KEY RATIOS Net commission ratio (%) 16.9% 18.6% -1.7% 17.0% 17.6% -0.6% Net claim incurred ratio (%) 43.8% 35.8% 8.0% 34.0% 40.2% -6.2% Management expenses ratio (%) 34.3% 20.0% 14.3% 32.2% 27.1% 5.1% Combined ratio (%) 95.0% 74.4% 20.6% 83.2% 84.9% -1.7% Refer page 20 Refer page 19 OTHER RATIOS ROE (annualised)* 13.3% 20.8% -7.5% 16.1% 15.3% 0.8% ROA (annualised) 5.2% 7.8% -2.6% 6.3% 5.7% 0.6% * Calculation is based on profit attributable to owners of the parent (annualized) over equity attributable to owners of the parent 10
11 Tune Protect Re (TPR) GROSS WRITTEN PREMIUM GWP includes AirAsia, Cebu Pacific, Air Arabia & Cozmo 27.2 mil NET EARNED PREMIUM 28.9 mil -23.2% Malaysia market reduced by 6.6 mil impacted by switch to Opt-In function -16.1% Lower GWP & release in Unearned Premium Reserve ( UPR ) 2.6 mil. Drop in NEP in tandem with slower GWP achieved 124.0 mil 124.2 mil -4.1% PROFIT AFTER TAX -26.7% -9.1 % Malaysia market (-9.3 mil) impacted by airline partner system migration and switch to Opt-in function. Coupled with lower GWP from Thailand and Indonesia due to higher Offline market share 14.9 mil Mainly due to higher ME, release of marketing fund provision of 3.6 mil in 4Q2015. However offset by forex gain of 3.3 mil in 4Q2016 59.9 mil Mainly due to higher claims liabilities and forex gain of 3.1 mil +0.2% UNDERWRITING PROFIT -47.7% -11.4% Slight increase with release of UPR of 5.6 mil 10.8 mil Mainly due to lower NEP growth and higher ME, coupled with release in marketing fund provision in 4Q2015 54.3 mil Mainly due to flat growth in NEP but offset by higher ME
12 Tune Protect Re (TPR) TOTAL POLICIES ISSUED China 5% (5%) 12% (8%) Malaysia 50% (54%) China 6% (5%) 9% (7%) Malaysia 52% (54%) Singapore 4% (4%) Indonesia 7% (8%) ASIA* Singapore 4% (4%) Indonesia 8% (9%) ASIA* Thailand 22% (21%) Thailand 21% (21%) 4Q2016 Composition 4Q2015 Composition FY2016 Composition FY2015 Composition 1.37 million in 4Q FY2016 (vs. 2.05 million in 4Q FY2015) 6.56 million in FY2016 (vs. 8.08 million in FY2015) * sold via AirAsia & Cebu Pacific
13 Tune Protect Re (TPR) TOTAL POLICIES EARNED China 5% (5%) Singapore 4% (5%) 10% (7%) Malaysia 52% (54%) China 6% (6%) Singapore 4% (4%) 9% (7%) Malaysia 52% (54%) Indonesia 7% (8%) ASIA* Indonesia 8% (9%) ASIA* Thailand 22% (21%) Thailand 21% (20%) 4Q2016 Composition FY2016 Composition 4Q2015 Composition FY2015 Composition 1.49 million in 4Q FY2016 (vs. 2.08 million in 4Q FY2015) 6.82 million in FY2016 (vs. 7.96 million in FY2015) * sold via AirAsia & Cebu Pacific
14 Tune Protect Malaysia (TPM) GROSS WRITTEN PREMIUM NET EARNED PREMIUM 110.1 mil 55.8 mil +10.2% Mainly due to Motor class (+10.4 mil), and if excludes MMIP, GWP increased by 11.9 mil +8.3% 4.2 mil increased mainly from Motor and Medical (foreign workers) classes. If excludes MMIP, NEP increased by 6.4 mil 437.2 mil 208.8 mil +5.6% Mainly due to Motor class (+28.2 mil), and if excludes MMIP, GWP increased by 31.9 mil +16.1% Mainly contributed by Motor (+20.8 mil, and if excludes MMIP, Motor increased of 29.4 mil), Medical (foreign workers) (+5.4 mil), and Fire (+2.0 mil) classes of business PROFIT AFTER TAX 5.5 mil UNDERWRITING PROFIT (0.02) mil -44.7% Mainly due lower share of MMIP profit and lower other income -<100% Mainly due to increase in both net claims and ME ratio 40.1 mil 25.6 mil +73.9% Mainly contributed by increase in share of MMIP profit and improvement in Underwriting Profits. If excludes MMIP, PAT increased by 18.5% +>100% Mainly contributed by increase in NEP and improvement in net claims ratio.
15 Tune Protect Malaysia (TPM) PORTFOLIO MIX Motor 39.4% (33.0%) Motor 34.6% (29.7%) Fire 10.6% (11.3%) GWP Marine 19.3% (15.4%) Fire 15.1% (14.2%) GWP Marine 14.3% (13.9%) Misc 9.7% (10.0%) TPA, PA & Medical 21.0% (30.3%) Misc 11.2% (11.4%) TPA, PA & Medical 24.8% (30.8%) 4Q2016 Composition 4Q2015 Composition FY2016 Composition FY2015 Composition
16 Overseas Ventures Tune Protect UAE (TPUAE) GROSS WRITTEN PREMIUM (100%) PROFIT AFTER TAX (49%) 3.2 mil 0.8 mil +39.1% Mainly driven by the business growth from Air Arabia 0.6 mil, and B2B 430K +>100% Mainly driven by the business growth, improvement in ME, and lower commission expenses 13.0 mil 1.2 mil +49.4% Mainly driven by business growth from Air Arabia 2.2 mil, and B2B 1.68 mil +>100% Mainly driven by the business growth, but partially offset by higher UPR Tune Protect Thailand (TPT) GROSS WRITTEN PREMIUM (100%) PROFIT AFTER TAX (49%) 16.0 mil 0.4 mil -41.4% Mainly due to the termination of Motor Compulsory & Rice classes of business which were of higher risk +>100% Mainly contributed by improvement in ME and lower allowance for bad debt 50.0 mil 2.8 mil -30.3% Mainly due to the termination of Motor Compulsory & Rice classes of business +>100% Mainly contributed by improvement in ME, lower allowance for bad debt and net commission but offset by higher net claims.
17 1 EXECUTIVE SUMMARY o Key Highlights o 4Q2016 Financial Highlights o FY2016 Financial Highlights o Key Strategies o Outlook & Y2017 Digital Focused 2 4Q2016 & FY2016 FINANCIAL PERFOANCE o Group o Travel Reinsurance (Tune Protect Re - TPR) o General Insurance (Tune Protect Malaysia TPM) o Overseas Ventures 3 APPENDICES o Other Financial Indicators
18 Tune Protect Group - Operating Revenue OPERATING REVENUE mil +7.6% GROSS WRITTEN PREMIUM mil +5.7% 480.2 516.6 +3.5% 474.0 501.0 +7.4% 130.9 135.5 116.3 124.9 FY2015 FY2016 4Q2015 4Q2016 FY2015 FY2016 4Q2015 4Q2016 GROSS EARNED PREMIUM mil +7.3% +3.7% INVESTMENT INCOME* mil +8.7% TPM 453.4 486.3 122.7 75.7% 76.9% 127.2 23.1 25.1 +2.7% TPR 24.3% 23.1% 75.3% 79.1% 24.7% 20.9% FY2015 FY2016 4Q2015 4Q2016 6.3 6.5 FY2015 FY2016 4Q2015 4Q2016 * Excluding share of MMIP investment income
19 Tune Protect Group Combined Ratio Combined ratio 2 (%) 84.9% 83.2% 74.8% 71.2% 91.3% 95.0% 74.4% Commission (%) Net claim (%) 17.6% 17.0% 40.2% 34.0% 14.4% 18.5% 34.9% 19.4% 18.4% 16.9% 37.6% 43.8% 18.6% 35.8% ME 1 (%) 27.1% 32.2% 25.5% 33.3% 35.3% 34.3% 20.0% FY2015 FY2016 1Q2016 2Q2016 3Q2016 4Q2016 4Q2015 1 Management Expense divided by Net Earned Premiums 2 Sum of Net Claims, Management Expenses & Net Fees and Commissions divided by Net Earned Premiums FY2016 vs FY2015 Refer to page 5 for explanation Combined Ratio 4Q2016 vs 4Q2015 Refer to page 4 for explanation 4Q2016 vs 3Q2016 Mainly due to higher net claim % recorded in TPM, partially due to higher share of MMIP s net claims, offset by improvement in TPM s ME
20 Tune Protect Group Profit After Tax PAT mil 72.9 86.6 24.3 29.6 15.3 17.3 25.2 FY2015 FY2016 1Q2016 2Q2016 3Q2016 4Q2016 4Q2015 Profit After Tax FY2016 vs FY2015 Refer to page 5 for explanation 4Q2016 vs 4Q2015 Refer to page 4 for explanation 4Q2016 vs 3Q2016 Mainly due to higher realised and unrealised foreign exchange gains and lower management expenses in Q4
21 Tune Protect Group - Investment Portfolio PORTFOLIO MIX (FY 2016) INVESTMENT INCOME** Deposits with FI 1 71.3% mil +8.7% 23.1 25.1 +2.7% Debt securities 17.9% Loans 0.1% Tune Protect Group 693.6 mil % 6.3 6.5 FY2015 FY2016 4Q2015 4Q2016 ** Excluding share of MMIP investment income INVESTMENT YIELD # Unit and property trust funds 10.7% 1 Comprises of wholesale funds from the subsidiaries 3.9% 3.6% * 1.1% * 0.9% * FY2015 FY2016 4Q2015 4Q2016 * Investment yield for 3 months # Investment income (include rental income & exclude share of MMIP investment income) /(total investment+ total investment property) *
22 Travel Tune Protect Business Re (TPR) ASIA * ASIA * Indonesia 7% (8%) China 5% (5%) Singapore 4% (5%) 10% (7%) POLICIES EARNED Malaysia 52% (54%) Singapore 4% (4%) China 6% (6%) 9% (7%) Malaysia 52% (54%) China 5% (5%) Singapore 4% (4%) 12% (8%) POLICIES ISSUED Malaysia 50% (54%) China 6% (5%) Singapore 4% (4%) 9% (7%) Indonesia Indonesia Indonesia Q4 8% (9%) FY 7% (8%) Q4 8% (9%) FY Malaysia 52% (54%) Thailand 22% (21%) Thailand 21% (20%) Thailand 22% (21%) Thailand 21% (21%) 1.49 million in Q4 2016 (vs. 2.08 million in Q4 2015) 6.82 million in FY 2016 (vs. 7.96 million in FY 2015) 1.37 million in Q4 2016 (vs. 2.05 million in Q4 2015) 6.56 million in FY 2016 (vs. 8.08 million in FY 2015) MENA & EU^ MENA & EU^ 27.8% (16%) U.A.E 47.7% (51%) 32% (15%) U.A.E 43% (50%) 30% (19%) U.A.E 46% (48%) 32% (15%) U.A.E 43% (50%) Europe 4% (4%) Egypt 0.3% (4%) Morocco 10% (11%) 2015 2016 ^ sold via AirArabia & Cozmo * sold via AirAsia & Cebu Pacific Q4 FY Q4 FY India 10.2% (14%) 55.8 k in Q4 2016 (vs. 51.9 k in Q4 2015) Europe 4% (5%) Egypt 2% (6%) Morocco 9% (10%) 244.3 k in FY 2016 (vs. 212.4 k in FY 2015) India 10% (14%) Europe 4% (5%) Egypt 0% (4%) Morocco 10% (11%) India 10% (13%) 55.0 k in Q4 2016 (vs. 52.8 k in Q4 2015) Europe 4% (5%) Egypt 2% (6%) Morocco 9% (10%) 243.1 k in FY 2016 (vs. 213. 9 k in FY 2015) India 10% (14%)
Disclaimer 23 This presentation has been prepared by Tune Protect Group Berhad ( Company ) in connection with the Interim Financial Statements (unaudited) for the financial period ended 31 December 2016 and announced by the Company on the Main Market of Bursa Malaysia Securities Berhad on 23 February 2017. 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.