November 2016
2 AGENDA 1 EXECUTIVE SUMMARY o Key highlights o 3Q2016 Financial Highlights o 9M2016 Financial Highlights o Key Strategies o Outlook 2 3Q2016 & 9M2016 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 Key Highlights Tune Protect Group Overall Travel Reinsurance General Insurance Q3FY16 results - PAT growth of 15.5% primarily contributed by (1) NEP growth of 2.5%, and (2) +>100% PAT growth in our Thai associate 9MFY16 results - PAT growth of 45% 45.2% mainly driven by (1) NEP growth of 14%, (2) our share of MMIP profits of 12.4 mil, and (3) +>100% PAT growth in our Thai associate ROE of 16.2 17.7% recorded in 9MFY16; debt-free balance sheet position remains Tune Protect Re - TPR Non-AirAsia partners contribution improved to 13% YTD of Travel Reinsurance GWP (up from 10% same period last year) Flat GWP growth recorded in Q3FY16 is mainly due to lower GWP recorded in Malaysia by 3.8 mil resulting from the impact of a change to opt-in booking policy for additional airline services as imposed by MAVCOM Number of initiatives implemented/to be implemented to mitigate the MAVCOM impact: (1) 1 Launched our B2C platform on Sept 8 by offering travel insurance beyond AA website, (2) 2 daily email blasts to all non-purchaser base prior to their departure, (3) 3 a prompter to remind customer to re-consider to purchase insurance before the completion of the ticket purchase, (4) 4 dynamic pricing, (5) 5 digital re-marketing Tune Protect Malaysia - TPM 9MFY16 PAT growth of >100% supported by NEP growth of 19% and improvement in net claims ratio as a result of release in claims liabilities due to our share of MMIP results Retention ratio improved to 49% % in 9MFY16 (up 3% ); Motor remains the main contributor (33%) to the total portfolio (GWP) Tune Protect Thailand - TPT 9MFY16 PAT growth of>100% mainly supported by improvement in ME due to lower headcount & control in marketing spent, and focus on core accounts / segments (travel remains the main contributor)
4 3Q2016 Financial Highlights PAT growth of 15.5% primarily contributed by (1) NEP growth of 2.5% (2) +>100% PAT growth in our Thai associate +2.7% OPERATING REVENUE 126.1 mil +2.5% NET EARNED PREMIUM 82.7 mil OR growth of 2.7% mainly attributed by higher GEP by 3.8mil mainly from motor & medical (foreign worker) classes of business NEP growth of 2.5% mainly underpinned by growth in fire, motor coupled with higher release in UPR for travel +15.5% PROFIT AFTER TAX 15.3 mil -4.0pp COMBINED RATIO 91.4 % PAT growth of 15.5% primarily supported by growth in NEP coupled with the increase in share of profit by 1.8 mil from Thai associate but moderated by lower PAT recorded in travel due to higher claims liabilities as a results of change in IBNR valuation and lower unrealised forex gain Improvement of 4.0 percentage point primarily contributed by improvement in TPM s net claim amount as a result of release in claims liabilities
5 9M2016 Financial Highlights PAT growth of 45.2% mainly driven by (1) NEP growth of 14% (2) our share of MMIP profits of 12.4 mil and (3) +>100% PAT growth in our Thai associate +9.1% OPERATING REVENUE 381.2 mil +14.0% NET EARNED PREMIUM 248.3 mil OR growth of 9.1% driven by higher GEP of 28.3 mil recorded especially in motor, fire & travel classes of business coupled with higher investment income by 3.5 mil NEP growth of 14% underpinned by growth in motor, fire, medical (foreign workers) & travel classes of business +45.2% PROFIT AFTER TAX 69.3 mil -9.9pp COMBINED RATIO 79.2 % PAT growth of 45.2% primarily driven by growth in NEP coupled with the increase in share of profit by 2.8 mil from Thai associate and our share of MMIP profits of 12.4 mil Improvement of 9.9 percentage point in combined ratio mainly contributed by the improvement in TPM s net claim amount due to release in claims liabilities
ACTIVITIES PERFOANCE TO DATE 6 Five Key Strategies Continue to deliver on our strategies 1 2 3 4 Global player in travel Strengthen digital business insurance fundamentals Continue to grow with AirAsia AirAsia YTD sales decreased by 5% mainly attributed to lower sales in Malaysia due to implementation of opt-in option (MAVCOM requirement) New Market launched: New Zealand in Aug 2016 New Inbound Market: Mauritius in July 2016. (YTD we have 7 Inbound markets in totality) Launched Online and Offline channel for India in Sept (new AOC) Cebu Pacific Air YTD sales growth of 7% Air Arabia, Cozmo, & B2B YTD sales growth of 47% Air Arabia, Cozmo, & B2B: New B2B Market: India in Aug 2016 New B2B partnership in July with an online travel agency to offer travel insurance for travelers in Qatar Achieved 19.1% market share in Sept 2016 for travel insurance search via online search engine (vs 6% since launch of Direct-to- Consumer website in Sept 2015) More than 10-fold increase in policies sold via direct-to-consumer website (mainly Tune TrIP product) Offer Tune Pro PA via our Directto-Consumer website in Aug 2016 Launched Bubble campaign in Sept to strengthen brand awareness for Tune Protect via multiple touch points: Radio, cinema, bus advertisements and digital video via social media Tie ups with portable Wi-Fi router company (free insurance with portable Wi-Fi rental to APAC countries) Write Profitable General Insurance Lines Tune Protect Malaysia Improved retention ratio to 49% in 9MFY16 (up 3% ) Turnaround for Medical & PA portfolio in view of prudent underwriting Tune Protect Thailand Focus on Travel, PA & Property lines of business, and removed unfavourable businesses (Motor Compulsory & Rice scheme) 5 Strategic Acquisition Continue to pursue viable acquisition target
Outlook Travel General Insurance Digital & Partnerships Industry Travel demand will continue, and this will be supported by increase in destinations & low airfares offers Malaysia - Introduction of Consumer Protection Code by MAVCOM (announced in July 2016) is expected to impact the growth in ancillary income for airlines, despite passenger travel growth remaining strong as driven by both local & foreign (especially China) tourists Tune Protect Re TPR Continue to focus on Digital B2C (enable other countries by phases); digital campaigns & digital remarketing Grow offline continue to conduct site visit & product briefings, ground fair & participation Product innovation & enhancement new products via B2C, product bundling & dynamic pricing etc MALAYSIA Industry Challenging environment affected by weaker customer demand coupled with the detariffication is expected to increase competition Tune Protect Malaysia - TPM Topline to continue to outpace the industry average mainly driven by franchise business despite anticipated slowdown in economic activities THAILAND Industry Modest growth is expected due to quieter (mourning) period and weaker economy; however, expecting a rebound in Y2017 Tune Protect Thailand - TPT Opportunity on Offline market as well as product variation on lifestyle products and inbound travel insurance Partnerships Partnerships/ exploring partnerships with - Airlines companies, travel related providers and e-commerce players Digital & Direct Target to launch additional products (Motor & Home Content) via Direct-to-Consumer website and exploring o opportunities with Insurtech firms 7
8 AGENDA 1 EXECUTIVE SUMMARY o Key highlights o 3Q2016 Financial Highlights o 9M2016 Financial Highlights o Key Strategies o Outlook 2 3Q2016 & 9M2016 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
9 Tune Protect Group - Financial Snapshot Tune Protect Group (Consolidated) Q3 2016 Q3 2015 Q3 vs Q3 (%) 9M 2016 9M 2015 9M vs 9M (%) (in 000) A B A vs. B C D C vs. D INCOME STATEMENT Gross Written Premiums 111,389 109,125 2.1% 376,090 357,644 5.2% Operating Revenue 126,076 122,771 2.7% 381,155 349,271 9.1% Gross Earned Premiums 119,425 115,615 3.3% 359,119 330,773 8.6% Investment Income 6,651 7,156-7.1% 22,036 18,498 19.1% Investment Income (excluding MMIP) 5,997 5,431 10.4% 18,613 16,773 11.0% Refer page 17 Refer page 20 Net Earned Premiums 82,749 80,743 2.5% 248,272 217,817 14.0% Net Fees & Commission (15,204) (13,621) 11.6% (42,432) (36,784) 15.4% Net Claims (31,142) (38,952) -20.1% (76,089) (91,509) -16.9% Management Expenses (29,246) (24,471) 19.5% (78,026) (65,828) 18.5% Underwriting Profit 7,157 3,699 93.5% 51,725 23,696 118.3% Share of results of JV 190 181 5.0% 429 415 3.4% Share of results of associates 241 (1,545) >100% 2,376 (472) >100% Profit After Tax 15,339 13,275 15.5% 69,259 47,704 45.2% Basic EPS (sen) 1.91 1.71 11.7% 8.44 6.05 39.5% Refer page 19 KEY RATIOS Operating Ratios Net commission ratio (%) 18.4% 16.9% 1.5% 17.1% 16.9% 0.2% Net claim incurred ratio (%) 37.6% 48.2% -10.6% 30.6% 42.0% -11.4% Management expenses ratio (%) 35.3% 30.3% 5.0% 31.4% 30.2% 1.2% Combined ratio (%) 91.4% 95.4% -4.0% 79.2% 89.1% -9.9% Refer page 18 Other Ratios ROE (annualised)* 17.7% 14.2% 3.5% ROA (annualised) 6.8% 5.0% 1.8% * Calculation is based on profit attributable to owners of the parent (annualized ) over equity attributable to owners of the parent
10 Tune Protect Re (TPR) 9M2016: PAT of 45.1 mil recorded mainly attributed to NEP growth of 6.5% moderated by loss in forex & higher claims liabilities due to change in IBNR valuation GROSS WRITTEN PREMIUM GWP includes AirAsia, Cebu Pacific, Air Arabia & Cozmo 28.8 mil NET EARNED PREMIUM 30.1 mil -1.6% +3.1% Flat GWP growth is mainly due to lower GWP recorded in Malaysia by 3.8 mil resulting from the impact of a change to opt-in booking policy for additional airline services as imposed by MAVCOM 96.9 mil 3.1% growth in GWP is mainly attributed by EMEIA and Thailand as a result of repricing to align with the benefits across markets +1.3% +6.5% Flat NEP growth recorded is in line with the GWP growth 95.3 mil 6.5% growth in NEP due to release in UPR as a result of slower growth in top line PROFIT AFTER TAX 13.9 mil UNDERWRITING PROFIT 12.0 mil -15.3% Lower PAT growth of 15.3% is mainly attributed to higher claims liabilities due to change in IBNR valuation and lower forex gain by 1.4 mil -9.9% Lower growth of 9.9% in underwriting profit is primarily attributed to flat NEP growth & higher claims liabilities of 1.3 mil 45.1 mil 43.6 mil -1.3% Flat PAT growth mainly underpinned by higher claim liabilities, higher commission paid in line with business expansion in EMEIA and forex loss of 0.2 mil +7.1% 7.1% growth in PAT underpinned by 6.5% growth in NEP moderated by higher claim liabilities of 1.5 mil
11 Tune Protect Re (TPR) TOTAL POLICIES ISSUED China 6% (5%) Singapore 4% (4%) Indonesia 8% (9%) 9% (8%) ASIA* Malaysia 52% (53%) China 6% (6%) Singapore 4% (4%) Indonesia 8% (9%) 8% (7%) ASIA* Malaysia 53% (54%) Thailand 21% (21%) Thailand 21% (20%) 3Q2016 Composition 9M2016 Composition 3Q2015 Composition 9M2015 Composition 1.46 million in 3Q FY2016 (vs. 1.95 million in 3Q FY2015) 5.19 million in 9M FY2016 (vs. 6.03 million in 9M FY2015) * sold via AirAsia & Cebu Pacific
12 Tune Protect Re (TPR) TOTAL POLICIES EARNED China 7% (6%) Singapore 4% (4%) Indonesia 9% (10%) 8% (7%) ASIA* Malaysia 53% (54%) China 6% (6%) Singapore 4% (4%) Indonesia 8% (9%) 8% (7%) ASIA* Malaysia 53% (54%) Thailand 19% (19%) Thailand 21% (20%) 3Q2016 Composition 9M2016 Composition 3Q2015 Composition 9M2015 Composition 1.62 million in 3Q FY2016 (vs. 2.01 million in 3Q FY2015) 5.33 million in 9M FY2016 (vs. 5.88 million in 9M FY2015) * sold via AirAsia & Cebu Pacific
13 Tune Protect Malaysia (TPM) 9M2016: PAT of 34.6 mil recorded primarily driven by 19.2% growth in NEP and our share of MMIP PAT of 12.4 mil GROSS WRITTEN PREMIUM NET EARNED PREMIUM 96.0 mil 52.6 mil -1.0% Flat growth in GWP mainly attributed to growth in motor offset by travel due to MAVCOM requirement +3.2% 3.2% growth in NEP mainly underpinned by the increase in fire & medical (foreign workers) classes of business 327.1 mil 153.0 mil +4.1% 4.1% growth in GWP mainly contributed by growth in motor & fire moderated by decrease in travel, marine & medical classes of business +19.2% 19.2% growth in NEP mainly supported by motor, fire & medical (foreign workers) classes of business PROFIT AFTER TAX 6.1 mil UNDERWRITING PROFIT (Including MMIP) 1.9 mil >100% 6.1 mil recorded mainly supported by growth in NEP and improvement in net claims >100% 1.9 mil contributed by higher NEP of 1.6 mil moderated by higher commission ratio & ME ratio in line with business expansion 34.6 mil 25.6 mil >100% 34.6 mil recorded mainly attributed by growth in NEP, higher investment income of 3.7 mil and improvement in net claims >100% 25.6 mil supported by higher NEP coupled with the improvement in net claims ratio mainly as a result of release in claims liabilities
14 Tune Protect Malaysia (TPM) PORTFOLIO MIX Motor 40.0% (35.6%) Motor 33.0% (28.7%) Fire 13.6% (12.3%) GWP Marine 10.9% (13.7%) Fire 16.6% (15.1%) GWP Marine 12.7% (13.4%) Misc 11.1% (10.2%) Misc 11.7% (11.8%) TPA, PA & Medical 24.4% (28.2%) TPA, PA & Medical 26.0% (31.0%) 3Q2016 Composition 3Q2015 Composition 9M2016 Composition 9M2015 Composition
15 Overseas Ventures 9M2016: +>100% PAT growth in Thai associate, performance in UAE JV remains on par Tune Protect UAE (TP UAE) GROSS WRITTEN PREMIUM (100%) PROFIT AFTER TAX (49%) 3.6 mil 0.2 mil +63.6% GWP growth of 63.6% driven by continuous business growth as generally Q3 is one of the strongest quarter due to holiday seasons in the middle east +24.8% PAT growth of 24.8% supported by strong GWP growth partially offset by higher UPR strain in line with business expansion 9.8 mil 0.4 mil +53.1% GWP growth of 53.1% underpinned by continuous business growth & B2B channel +3.5% PAT growth of 3.5% attributed to GWP growth partially moderated by higher ME due to 1 st time bonus paid in Q1FY16 Tune Protect Thailand (TPT) GROSS WRITTEN PREMIUM (100%) PROFIT AFTER TAX (49%) 11.1 mil 0.2 mil -49.7% Lower GWP growth mainly moderated by focusing on core segments by termination of non-profitable segments (e.g motor compulsory & Rice scheme) 34.0 mil >100% PAT growth of >100% mainly contributed by the improvement in ME due to lower marketing and advertising expenses & lower commission paid in line with the moderation in GWP 2.4 mil -23.5% Lower GWP growth mainly moderated by termination of non-profitable segments despite growth recorded in travel & PA >100% PAT growth of >100% mainly supported by improvement in ME due to lower marketing and advertising expenses
16 AGENDA 1 EXECUTIVE SUMMARY o Key highlights o 3Q2016 Financial Highlights o 9M2016 Financial Highlights o Key Strategies o Outlook 2 3Q2016 & 9M2016 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
17 Tune Protect Group - Operating Revenue OPERATING REVENUE mil +9.1% GROSS WRITTEN PREMIUM mil +5.2% 349.3 381.2 +2.7% 357.6 376.1 +2.1% 122.8 126.1 109.1 111.4 9M2015 9M2016 3Q2015 3Q2016 9M2015 9M2016 3Q2015 3Q2016 NET EARNED PREMIUM INVESTMENT INCOME* mil mil +14.0% +2.5% +11.0% 217.8 248.3 80.7 82.7 TPM 58.9% 61.6% 16.8 18.6 +10.4% TPR 41.1% 38.4% 63.2% 63.6% 36.8% 36.4% 9M2015 9M2016 3Q2015 3Q2016 9M2015 9M2016 3Q2015 3Q2016 * Excluding share of MMIP investment income 5.4 6.0
18 Tune Protect Group Combined Ratio Combined ratio 2 89.1% 79.2% 95.4% 91.4% 71.2% 74.9% 84.9% (%) Commission (%) Net claim (%) 16.9% 42.0% 17.1% 30.6% 16.9% 18.4% 48.2% 37.6% 18.5% 14.4% 19.4% 34.9% 17.6% 40.2% ME 1 (%) 30.2% 31.4% 30.3% 35.3% 33.3% 25.6% 27.1% 9M2015 9M2016 3Q2015 3Q2016 2Q2016 1Q2016 2015 1 Management Expense divided by Net Earned Premiums 2 Sum of Net Claims, Management Expenses & Net Fees and Commissions divided by Net Earned Premiums 9M2016 vs 9M2015 Refer to page 5 for explanation Combined Ratio 3Q2016 vs 3Q2015 Refer to page 4 for explanation 3Q2016 vs 2Q2016 QoQ increased in combined ratio mainly due to lower claim amount in previous quarter (2Q) recorded in TPM due to release in claims liabilities as a result of our share from MMIP
19 Tune Protect Group Profit After Tax PAT mil 69.3 72.9 47.7 13.3 15.3 29.6 24.3 9M2015 9M2016 3Q2015 3Q2016 2Q2016 1Q2016 FY2015 9M2016 vs 9M2015 Refer to page 5 for explanation Profit After Tax 3Q2016 vs 3Q2015 Refer to page 4 for explanation 3Q2016 vs 2Q2016 QoQ decreased in PAT is mainly due to our share of profit from MMIP of 12 mil recorded in Q2
20 Tune Protect Group - Investment Portfolio Portfolio Mix (30 Sept 2016) INVESTMENT INCOME** Deposits with FI 1 68.6% mil 16.8 +11.0% 18.6 +10.4% Debt securities 20.1% Tune Protect Group 621.1 mil ** Excluding share of MMIP investment income INVESMENT YIELD # 5.4 6.0 9M2015 9M2016 3Q2015 3Q2016 Loans 0.1% Unit and property trust funds 11.2% % 2.8% 3.0% * * 0.9% * * 1.0% 1 Comprises of wholesale funds from the subsidiaries 9M2015 9M2016 3Q2015 3Q2016 * Investment yield for 3 months # Investment income (include rental income & exclude share of MMIP investment income) /(total investment+ total investment property)
21 Travel Tune Protect Business Re (TPR) POLICIES EARNED POLICIES ISSUED ASIA * ASIA * Singapore 4% (4%) Indonesia 9% (10%) China 7% (6%) 8% (7%) Malaysia 53% (54%) Singapore 4% (4%) Indonesia 8% (9%) China 6% (6%) 8% (7%) Malaysia 53% (54%) Indonesia 8% (9%) China 6% (5%) Singapore 4% (4%) 9% (8%) Q3 9M Q3 Malaysia 52% (53%) Singapore 4% (4%) Indonesia 8% (9%) China 6% (6%) 8% (7%) 9M Malaysia 53% (54%) Thailand 19% (19%) Thailand 21% (20%) Thailand 21% (21%) Thailand 21% (20%) 1.62 million in Q3 2016 (vs. 2.01 million in Q3 2015) 5.33 million in 9M 2016 (vs. 5.88 million in 9M 2015) 1.46 million in Q3 2016 (vs. 1.95 million in Q3 2015) 5.19 million in 9M 2016 (vs. 6.03 million in 9M 2015) MENA & EU^ MENA & EU^ 34% (16%) U.A.E 42% (44%) 33% (14%) U.A.E 41% (50%) 33% (16%) U.A.E 43% (44%) 33% (14%) U.A.E 42% (50%) Europe 5% (6%) Egypt 3% (9%) Morocco 8% (12%) 2015 2016 ^ sold via AirArabia & Cozmo * sold via AirAsia & Cebu Pacific Q3 9M Q3 9M 81.7 k in Q3 2016 (vs. 64.1 k in Q3 2015) India 8% (13%) Europe 4% (5%) Egypt 3% (6%) Morocco 9% (10%) 188.6 k in 9M 2016 (vs. 160.5 k in 9M 2015) India 10% (15%) Europe 4% (6%) Egypt 3% (8%) Morocco 8% (13%) 70.2 k in Q3 2016 (vs. 54.8 k in Q3 2015) India 9% (13%) Europe 4% (5%) Egypt 3% (6%) Morocco 9% (10%) 188 k in 9M 2016 (vs. 161.1 k in 9M 2015) India 9% (15%)
Disclaimer 22 This presentation has been prepared by Tune Protect Group Berhad ( Company ) in connection with the Interim Financial Statements (unaudited) for the financial period ended 30 September 2016 and announced by the Company on the Main Market of Bursa Malaysia Securities Berhad on 25 November 2016. 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.