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Tune Ins Holdings Berhad (948454-K) -...
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Tune Ins Holdings Berhad Financial Results December 2014 Analyst Presentation February 2015 1
Transcript of Tune Ins Holdings Berhad (948454-K) -...
Tune Ins Holdings BerhadFinancial Results December 2014
Analyst PresentationFebruary 2015
1
• Key Highlights
• 4Q2014 Results
• Full Year 2014 Results
• Segmental Performance
• Market Dynamics & Outlook
• Concluding Remarks
• Appendices
• Financial details
• CL
Agenda
2
• Strong OR driven by growth in Gross Earned Premium (GEP) from fire,travel & marine class of businesses.
• Highest quarterly PAT at RM 24.1m, driven by growth in Global Travel PATand strong underwriting margin of 8% from TIMB.
• MENA and Thailand, despite 6 months of operations, continue to postmeaningful contributions to Group earnings at 5.7%.
• AirAsia SAO (sales add-on page) online booking engine rectified onDecember 4th, 2014 – expect to see improvement in take up rate inH1FY15.
Operating Revenue (OR)
118.5m 12%
Net Earned Premium (NEP)
75.5m 15%
Profit After Tax (PAT)
24.1m 8%
Profit Contribution from Overseas Ventures
5.7%
4Q2014 Results
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• Awarded “Best of the Best” by Forbes Asia“Best Under a Billion” based on ourshareholders’ return, sustained sales and netincome growth over a 1 and 3 year period.
Full Year 2014 Results – Key KPIs
Operating Revenue (OR)
443.5m 14.3%
Net Earned Premiums (NEP)
268.1m 11.2%
Profit After Tax (PAT)
76.1m 4.9%
Total Shareholder Equity
441.1m 10.9%
Free Cash Flow*
102.4m
Earnings Per Share (EPS)
9.66 sen 4.0%
Combined Ratio
82.6% 5.0%
Profit Contribution from Overseas Ventures
5.0%
4* CF from operating (-) CF from investing (-) CF from financing
Full Year 2014 Results - Snapshot
Q4 2014 Q3 2014 Q4 2013Q4 vs Q3 Variance
Q4 vs Q4 Variance
FY 14 FY 13Y-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 118,543 109,510 105,867 +8% +12% 443,515 388,130 +14%
Gross Written Premiums
100,214 108,672 103,575 -8% -3% 433,437 397,430 +9%
Net Earned Premiums 75,524 67,886 65,807 +11% +15% 268,115 241,112 +11%
Investment Income 1 7,441 5,947 7,521 +25% -1% 29,600 25,710 +15%
Net fees & commission
(12,982) (11,947) (10,654) +9% +22% (44,641) (35,994) +24%
Net Claims (27,065) (31,706) (23,339) -15% +16% (109,550) (94,032) +17%
Management andother Expenses
(18,005) (16,620) (16,099) +8% +12% (67,503) (58,642) +15%
Finance costs - - - - - - (1,902) -100%
Share of results of JV 8 125 - -94% >100% 103 - >100%
Share of results of associates
1,368 1,979 - -31% >100% 3,686 - >100%
PBT (before MMIP) 27,071 18,706 24,518 +45% +10% 89,034 84,758 +5%
PBT 26,289 15,664 23,236 +68% +13% 79,810 76,252 +5%
PAT (before MMIP) 24,918 17,626 21,856 +41% +14% 82,970 76,543 +8%
PAT 24,136 16,924 22,364 +43% +8% 76,086 72,534 +5%
ROE (annualised) 22% 16% 22% +38% 0% 17% 18% -6%
ROA (annualised) 9% 6% 9% +50% 0% 7% 7% 0%
EPS (sen) 3.04 2.15 2.87 +41% +6% 9.66 9.29 +4%1 Investment income = investment income + realised gains & losses + other operating income + fair value gains
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Key Strategies Key Operational Highlights
Global Travel Business Enhanced product benefits for AirAsia ex-Malaysia and increased additional routes for AirAsia
Launched TAAX & IAAX; Readying for AA India Launched e-CEP portal for online claims management for Malaysia & Thailand Launched new market – Brunei Cebu launched new markets - Cambodia, Indonesia, Brunei & Vietnam Launched AirAsia ex-Malaysia warrant product for government servants in Jan 15 Launched inbound arrival into Malaysia – Korea + Nepal + Sri Lanka in Feb 15 Launched 4 AA ex- Malaysia lifestyle travel protection products (add-on protection plan)
namely Tune Insure GolfPro + Tune Insure ShopSafe + Tune Insure WinterShield + Tune Insure AdventureEz in Jan 15
Middle East JV (MENA) Business Launched Cozmo in April and Air Arabia in May 2014 covering 18 countries in MENA & EU regions
Launched new product namely VFS (Visit Families & Friends) for selected travel plan in July 14
Launched Air Arabia appointed agents channel in Dec 14 Launched new market – Armenia in Feb 15
Digital Business Launched 4 products namely Tune Guard, Tune Drive Care, Tune EZ Term & Tune Trip Testing & improvement - EDM blasts selectively to database with different tag line messages
TIMB Business Launched Tune Insurance Hotel Guest Cover for Tune Hotel guests in Malaysia Launched Human Resource’s Risk Mgmt Solution Product for 600,000 SMEs In Malaysia Insurance for Foreign Worker – tied-up with United Nation Refugee Set up new branches in Alor Setar, Batu Pahat & Sandakan Tied up with new franchise (Hyundai)
Enhance Revenue Streams via Strategic Acquisitions
Set up Tune Protect Commercial Brokerage LLC (Tune Protect) in Dubai Acquired 49% interest in OSI (renamed to TIPCL) and Permpoonsub Broker Co Ltd
Delivering on our Key Strategies
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Global Travel Business
Gross Sales Before Reinsurance
4Q : 34.0m 13.5%
FY14 : 134.9m 2.6%
Profit After Tax
4Q : 17.7m 7.6%
FY14 : 58.4m 9.3%
Total Policies Earned
FY14 : 7.95m 1.7%
Country2013
Composition2014
Composition
Malaysia 47% 51%
Thailand 19% 18%
Indonesia 16% 12%
Others 18% 19%
Key Highlights
• Gross sales in FY14 decreased by 2.6% vs FY13 mainly due to AA online
booking engine issues, airplane incidents & geopolitical situation in Asean
• AirAsia online booking engine issues have been resolved in early December 14
and as a result, have seen improvement in take-up rate.
• Policies Earned grew by 1.7% with higher contribution from Malaysia,
especially in growth in domestic market.
• Improvement in PAT attributed to stronger underwriting margins in 4Q14 with
lower management expenses.
Key Focus Area for 2015
• Increase take-up rate, north of 25% through more active marketing campaigns
and continued enhancement of SAO page layout
• Drive insurance sales penetration via offline travel agent channels
• Expand into new market and long haul destinations for AirAsia and Cebu
Pacific
• Add new airline / non-airline travel partnerships
Net Earned Premiums
4Q : 28.9 m 1.2%
FY14 : 107.0 m 8.8%
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Malaysia (TIMB)
Gross Written Premiums
4Q : 85.8m 2.5%
FY14 : 378.1m 11.1%
Net Earned Premiums
4Q : 46.7m 25.1%
FY14 : 161.1m 12.8%
Profit After Tax
Key Highlights
• Growth in GWP of 11% in tandem with growth in NEP of 13% over the same
period, mainly attributed to continuous growth in non-motor portfolio
• NWP increase in line with GWP growth and increased in sustained retention
ratio of 45.2% (+3.9% over last year), focusing on higher retention of profitable
businesses (i.e., PA, franchise, foreign workers, and marine cargo)
• Highest underwriting (U/W) margin of 14% (pre-MMIP) and 8% (post-MMIP)
recorded in 4Q14, underpinned by improved claim ratio especially from motor
segment despite flood claims recorded in same quarter
• FY14 PAT (after MMIP) vs FY13 decrease mainly due to higher net claims (fire
& medical in Q3 & flood in Q4) and higher ME (employees benefit & union
settlement (one-off))
• New Malaysia Motor Pool is anticipated to be established in 2015 to include
Takaful Operators which is expected to lower MMIP share of losses on a going
forward basis4Q : 7.5m 20.3%
FY14 : 27.4m 9.0%
Before MMIP:
4Q : 6.7m 0.3%
FY14 : 20.5m 21.4%
After MMIP:
Key Focus Area for 2015
• Profitable segments of business by focusing on :
• higher retention rate business - reduce motor quota share arrangement
with other reinsurer
• Additional new franchise dealers
• Increasing agency force by 400 new agents
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Malaysia (TIMB)
Portfolio Mix
FY 2014
Fire, 15%Motor,
30%
Marine, 16%
PA & Medical,
27%
Misc, 12%
Number of Agents
Fire, 13% Motor,
32%
Marine, 19%
PA & Medical,
24%
Misc, 12%
FY 2013
48%32% 30%
52%68% 70%
FY12 FY13 FY14
Motor
Non-Motor
No of Agents
Total as atDec 2013
YTD December 2014Total as atDec 2014Recruited/
Uplifted Terminated Suspended
(A) (B) (C) (D) (E=A+B-C-D)
1,137 238 179 28 1,168
Underwriting Margin (Including MMIP)
-0.3%
-4.2% -4.3%
8.0%
Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14
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Malaysia (TIMB)
Portfolio Mix (31 Dec 2014)
Deposits with FI, 17.8%Wholesale
funds, 73.3%
Equity securities,
3.0%
Loans, 0.1%
Debt securities,
5.8%
Investment & Other 1 Income (RM ‘mil)
+2.7%
+7.3%
* Investment yield for 3 months
1 Other includes realised gains & losses and other operating income
# Investment income (exclude rental income)/investment
Investment Yield #
1.1% 0.8%
4.8%3.7%
Q4 2013 Q4 2014 FY 2013 FY 2014
Increase mainly driven by the investment income from wholesalefunds
Investment strategy remains low risk with a focus on capitalpreservation to support up streaming of dividends**
7.5 7.7
21.8 23.4
Q4 2013 Q4 2014 FY 2013 FY 2014
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Overseas Ventures
Total Policies Issued
4Q : 45.9kYTD FY14^ : 125.8k
Profit After Tax
4Q : 0.02mYTD FY14^ : 0.21m
Key Highlights Middle East
GWP
4Q : 10.2mYTD FY14* : 19.9m
Profit After Tax
4Q : 2.8mYTD FY14* : 7.8m
Thailand
• Total 125.8k policies issued from end of Apr to Dec 2014 with strongest contribution from Q3as it is typically the peak traveling period for middle eastern countries.
• Lower QoQ results mainly due to (1) IT related cost incurred since Apr ‘14 but only reported in4Q14 and (2) Adjusted commission amount from Jul to Oct ‘14 which captured in 4Q14.
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Air Arabia :• Increase TUR via call center sales & appointed agents & Penetration for Offline • Expand coverage into new markets/destinations – target 5-6 additional markets Cozmo:• Increase product proposition & TUR rateNew Partnerships :• Add new airline / non-airline partnerships• Add B2B (offline agencies) & distribution partners
• YTD FY14* results partially driven by gains from investment & bad debt recoveries
• Lower QoQ results due to higher marketing expenses & slight gains from investment in 3Q14
• AirAsia travel in it’s first full operating quarter with contribution of >1/3 to top line results
• Boonterm project – launched personal accident insurance via Boonterm machine
Key Focus Area for 2015
Key Highlights
• Expand into other Osotspa businesses
• Grow Alternative Channels (i.e., BoonTerm) & Launch New Products
• Grow AirAsia Travel Insurance by focusing on increased TUR via various sale distribution (smartphone, travel agent etc)
• New Partnerships
Key Focus Area for 2015
* Since acquisition in May 2014
^ Since April 14
Opportunities: • Improving world economy bringing up travel and tourism sector• Malaysia government’s effort on boosting tourism in budget 2015• Waived visa fees for inbound tourist from China • Picking up outbound tourist due to low fuel price which leads to drop in airfares• Tourism Council of Thailand announced a proactive plan to be implemented in 2015 - to boost Thailand's
tourism industry after an overall decrease in the number of tourists last year
Challenges:• Impact from 2014 incidents affecting inbound tourist to Malaysia - expected to recover in short term
supported by the drop in airfares• Delays in establishments of flying routes from AA Japan & AA India - measures are undergoing to restore and
fly more passengers in the mentioned areas.
Global Travel Business
General Insurance Business (Malaysia)
Opportunities: • Steady growth in general insurance industry, expecting growth of 6.4% according to PIAM; weaker ringgit will
spur more private consumption• Strong growth potential for non-motor lines products supported by strong domestic consumption with
increasing consumer awareness
Challenges:• Trend shows rising vehicle thefts within the country may lead to higher claims incurred• Consumer spending expect to normalise once the GST comes into force 12
Outlook – Market Dynamics
Strongest 4Q14 and FY14 PAT growth despite challenging year where Global Travel
and Non-Travel businesses continue to post strong growth.
Consistent with our ASEAN expansion strategy, we are on schedule for Indonesia
and are on target for mid-2015.
Building the long term pillars of growth – we are on schedule to expand our digital
platform/offerings & new partnerships by 3Q15.
For FY2015, business growth momentum continues and expected to deliver
consistent profitability growth across lines of businesses.
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Concluding Remarks
• Key Highlights
• 4Q2014 Results
• Full Year 2014 Results
• Segmental Performance
• Market Dynamics & Outlook
• Concluding Remarks
• Appendices
• Financial details
• CL
Agenda
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Net Earned Premiums1 (RM’ mil)
397 433
104 100
21 20
7 6
Operating Revenue (RM’ mil)
388 444
106 119
FY 13 FY 14 Q4FY13 Q4FY14
Investment Income (RM’ mil)
FY 13 FY 14 Q4FY13 Q4FY14
Gross Written Premium (RM’ mil)
FY 13 FY 14 Q4FY13 Q4FY14
41% 40% 44% 38%
59% 60% 56% 62%
FY 13 FY 14 Q4FY13 Q4FY14
1 Net earned premium = gross earned premium received - premiums ceded to external reinsurers
+ 14.4%
+ 12.3 % - 3.8%
+ 9.1%
+ 11.2% + 15.2%
- 5.0%
- 15.0%
241 268 66 76
Online
TIMB
TIH: Growth in GWP & NEP driven by Medical & Fire class of businesses
2013 2014
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TIH (Key Operating Ratios): Lower combined ratio QoQ with the improvement of commission, net claim & ME ratio
1 Management Expense divided by Net Earned Premiums2 Sum of Net Claims, Management Expenses & Net Fees and Commissions divided by Net Earned Premiums
ME1 (%)
Combine ratio2 (%)
Net claim (%)
Commission (%)
23.7% 25.1% 23.4% 23.9% 24.4% 27.2% 25.4%
39.0%40.9%
35.5% 35.8%
46.7% 40.4% 41.0%
14.9%16.6%
16.2% 17.2%
17.6%15.9% 15.7%
77.6% 82.6% 75.1% 76.9% 88.8% 83 .5% 82.1%
Year 2013 2014 Q4FY13 Q4FY14 Q3FY14 Q2FY14 Q1FY14
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TIH (Profit After Tax): YoY growth with contribution from new associate and growth in travel
QoQ growth (4Q14 vs 3Q14) underpinned by:
- Increase of RM2.0 mil in TIMB PAT, contributed by growth of 10% in NEP and higher underwriting margin in currentquarter, offset by higher income tax expense in current quarter;
- Growth of RM5.4 mil in Online PAT as a result of the increase in NEP for higher number of policies earned andimprovement in combined ratio in current quarter.
YoY growth due to:
- Contribution from Thai associate of RM3.7 mil and joint venture of RM0.1 mil;
- Growth of RM4.9 mil in Online PAT mainly for higher number of policies earned;
- Offset by decrease of RM5.6 mil in TIMB PAT mainly due to higher MMIP amount of RM3.0 mil despite growth of 13%in NEP
RM’mil
PAT
PAT (before MMIP) 72 76
22
24
17 15 20
76
21
25
18 1723
1
83
20132014
Before MMIP
PAT FY14(RM’mil)
Q4FY14(RM’mil)
Online 58.4 17.7
TIMB(After MMIP)
20.5 6.7
Share of associates(Thailand)
3.7 1.4
Share of JV 0.1 0.008
Year 2013 2014 Q4FY13 Q4FY14 Q3FY14 Q2FY14 Q1FY14
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TIH (Profit Before Tax): YoY growth contributed by new associate and growth in travel
RM’mil
PBT
PBT (before MMIP)
76 80
23 26 16 16 22
8589
24 27
19 1825
PBT FY14(RM’mil)
Q4FY14(RM’mil)
Online 58 18
TIMB(After MMIP)
24 9
Share of associates(Thailand)
4 1
Share of JV 0.1 0.008
QoQ increase (4Q14 vs 3Q14) contributed by:
- Increase of RM5.4 mil in Online PBT mainly due to growth in NEP for higher number of policies and improvement incombined ratio;
- Growth of RM5.6 mil in TIMB PBT for higher NEP and improvement in underwriting margin
YoY increase due to:
- Contribution from Thai associate of RM3.7 mil and joint venture of RM0.1 mil;
- Increase of RM4.6 mil in Online PBT mainly for higher number of policies earned;
- Offset by decrease of RM5.3 mil in TIMB PBT
Year 2013 2014 Q4FY13 Q4FY14 Q3FY14 Q2FY14 Q1FY14
20132014
Before MMIP
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Travel Business (Asia & Middle East) : Number of Policies Earned Revenue is recognised when a customer commences their journey (date of departure per customer booking)
Malaysia 51% (47%)
Thailand 18% (19%)
Indonesia 12% (16%)
Singapore 5% (5%)
China7% (7%)
Others7% (6%)
1.91 million Policies Earned in Q4 2014
(vs. 2.29 million in Q4 2013)
7.95 million Policies Earned FY 14
(vs. 7.82 million FY 13)
2013
2014
Key (font colour):
Malaysia 55%
(48%)
Thailand 17%
(20%)
Indonesia 11%
(15%)
Singapore 5% (5%)
China6% (6%)
Others 6% (6%)
Asia
Middle East
U.A.E59%
India14%
Morocco 11%
Egypt4%
Europe4%
Others8%
48.6 k Policies Earned in Q4 2014
117.7 k Policies Earned YTD 14^
U.A.E 58%
India14%
Morocco 11%
Egypt3%
Europe 3%
Others 11%
^ Since April 14
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Travel Business (Asia & Middle East) : Number of Policies Issued Continued growth in major markets particularly Malaysia, Philippines and Middle East
Malaysia54% (47%)
Thailand17% (19%)
Indonesia 11% (15%)
Singapore5% (5%)
China6% (7%)
Others7% (7%)
Malaysia51% (46%)
Thailand18% (19%)
Indonesia12% (15%)
Singapore5% (5%)
China7% (8%)
Others7% (7%)
1.78 million Policies Issued in Q4 2014
(vs. 2.29million in Q4 2013)
7.53 million Policies Issued FY 14
(vs. 8.05 million FY 13)
2013
2014
Key (font colour):
Asia
Middle East
U.A.E57%
India14%
Morocco10%
Egypt3%
Europe4%
Others12%
U.A.E59%
India14%
Morocco11%
Egypt4%
Europe4%
Others8%
45.9 k Policies Issued in Q4 2014
125.8 kPolicies Issued YTD 14^^ Since April 14
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This presentation has been prepared by Tune Ins Holdings Bhd (“Company”) in connection with the InterimFinancial Statements (unaudited) for the financial period ended 31 December 2014 and announced by theCompany on the Main Market of Bursa Malaysia Securities Berhad on 25 February 2015.
Information contained in this presentation is intended solely for your reference. Such information is subjectto change without notice, its accuracy is not guaranteed and it may not contain all material informationconcerning the Company. Neither we nor our advisors make any representation regarding, and assumes noresponsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any informationcontained herein.
In addition, the information may contain projections and forward-looking statements that reflect theCompany’s current views with respect to future events and financial performance. These views are based oncurrent assumptions which are subject to various risks factors and which may change over time. Noassurance can be given that future events will occur, that projections will be achieved, or that the Company’sassumptions are correct. Actual results may differ materially from those projected.
Disclaimer
