Tune Ins Holdings Berhad - ChartNexusir.chartnexus.com/tuneinsurance/docs/presentation/q3... ·...

Tune Ins Holdings Berhad- Financial Results September 2014

Analyst Presentation

November 2014

2

Agenda

Key Highlights

1

Online Insurance Business

Tune Insurance Malaysia Berhad

(TIMB)

2

Q3 & 9MFY14 Results

3 4

3

Agenda

Key Highlights

1

Q3FY14 & 9MFY14 KEY FINANCIAL HIGHLIGHTSNew ventures off to a flying start

• Operating Revenue up 10.8%

• Profit After Tax RM RM 16.9m

• Profit After Tax for TIMB RM 4.7m

Q314

vs

Q313

• Operating Revenue up 15.1%

• Profit After Tax RM52.0mil

• Profit After Tax for TIMB RM 13.8mil

YTD14

vs

YTD13

TIH’s MENA Joint Venture profitable in it’s first full operating quarter. Strong pipeline of opportunities in

MENA for the joint venture.

Good profits and growth from Thai joint venture. 3 primary sources of business : expansion of existing

Osotspa business; AirAsia business and new ventures

Asian Travel business below plan mainly impacted by lower policies sold for domestic flights in Indonesia &

Thailand. Approach to selling travel insurance via airasia.com to be optimized to new AirAsia interface.

TIMB business recorded profit of RM13.8 mil in 9MFY14 with 3Q profits impacted by 2 fire claims, higher

than anticipated medical claims, MMIP as well as new business strain from continued growth

4

Q3FY14 & 9MFY14 KEY FINANCIAL HIGHLIGHTSDiversification strategy taking hold

5

• 1% drop in operating revenue in Q3FY14 Vs same quarter last year was primarily due to lower international passenger traffic in Thailand given the local political unrest, AirAsiacapacity reductions in Indonesia, and a slight drop in travel insurance take up rate due to change in AirAsia’s online booking engine

• Tune Protect tracking to plan with JV profit of RM0.26 mil in Q3FY14 on the back of 78k policies sold in the MENA & EU region

• Q4 typically the strongest quarter, additionally Thai traffic picking up following political uncertainty

ONLINE:

TRAVEL BUSINESS

• Growth in NEP of 8% in 9MFY14 in tandem with the growth in GWP of RM16% over the same period

• An MMIP cash call of RM9.5 mil provided a tax allowance of RM2.4mil in Q3FY14

• PAT of RM4.7 mil in Q3FY14 partially underpinned by the tax benefit from MMIP cash call

• Underwriting margin (before MMIP) of 5% in 9MFY14 in spite of the 2 large fire claims, new business strain and higher than budgeted medical claims from 2 accounts

• Capital adequacy ratio remained high at 252% as at Sept 14

MALAYSIA:

TIMB

• Integration completed for people, processes, operations & IT systems; Systems and processes are in place to support strong ongoing growth from inherited and new sources of business

• Net Asset of ~RM56 mil as at Sept 14

THAILAND:

TIPCLTIPCL Q3FY14 (RM’000) YTD Sept 14 (RM’000)

GWP 7,668 9,099

Revenue 4,914 7,984

PAT 4,039 4,730

(Acquisition price of RM41 mil for 49% stake)

* Inclusive of bad debt reversals post acquisition

6

SNAPSHOT OF FINANCIAL RESULTS

Q3 2014 Q2 2014 Q3 2013Q3 vs Q2 Variance

Q3 vs Q3 Variance

YTD Sept 14 YTD Sept 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 109,510 101,510 98,810 +8% +11% 324,972 282,263 +15%

Gross Written Premiums

108,672 99,843 95,631 +9% +14% 333,223 293,855 +13%

Net Earned Premiums 67,886 60,518 61,452 +12% +10% 192,590 175,305 +10%

Investment Income 1 5,947 5,818 4,793 +2% +24% 22,159 18,189 +22%

Net fees & commission

(11,947) (9,648) (10,083) +24% +18% (31,659) (25,340) +25%

Net Claims (31,706) (24,461) (21,495) +30% +48% (82,485) (70,693) +17%

Management andother Expenses

(16,620) (16,822) (14,593) -1% +14% (49,494) (42,543) +16%

Finance costs - - - - - - (1,903) -100%

Share of results of JV 125 (30) - >100% >100% 95 - >100%

Share of results of associates

1,979 339 - >100% >100% 2,318 - >100%

PBT (before MMIP) 18,706 18,114 22,026 +3% -15% 61,963 60,240 +3%

PBT 15,664 15,714 20,074 0% -22% 53,524 53,015 +1%

PAT (before MMIP) 17,626 17,031 19,575 +3% -10% 58,052 54,687 +6%

PAT 16,924 14,631 17,623 +16% -4% 51,953 50,169 +4%

ROE (annualised) 16% 15% 19% +7% -16% 17% 18% -6%

ROA (annualised) 6% 6% 7% - -14% 6% 7% -14%

1 Investment income = investment income + realised gains & losses + other operating income + fair value gains

Appointment of New TIH CEO – Mr. Junior N. Cho* to lead TIH

Experiences

20 years experience in Financial Services and Consulting Industries

Strategic leader with exceptional managerial and team building skills

Worked with a number of blue-chip institutions in Asia and USA, including Accenture, Metlife, Cigna, and

AirAsia Philippines

Currently serves on the Asia Pacific Board for the Chief Marketing Officer (CMO) Council, which is a

network for all CMOs across industries

TIH’s growth strategy moving forward

Strong platform for Tune to embark on its next phase of growth.

Tune's expansionary growth will largely be driven by its overseas ventures, AirAsia

Group's expansions and continued improvements in TIMB

Focus on Digital – new phase of focus building up capabilities in B2B and B2C

businesses

7

* Subject to relevant regulatory approvals

Technology - Our Key EnablerInnovative digital Insurance platform provider

2012

• Zeus System for travel Business for AirAsia

• Traditional way of operating – more manual & paper based

• Enhanced Zeus system which enable us to roll out to middle east & EU regions (currentlyoperate in >20 markets in both regions)

• Electronic Customer Experience Portal (ECEP) for travel (E-claim portal in Malaysia, Thailand, Air Arabia & Cozmo)

• E-Agency Portal - foreign worker & marine insurance for agents

• E-Policy for- Motor- Travel PA- Motorist PA- Foreign Worker

• E-Payment Facility

• Mobile App for Investor

• Upgraded and enhanced the policy administration system – to support new products, automation & process improvement

• Business Intelligent (BI)

• Launched of Tune Direct - B2C platform

• Enhanced Zeus system to be rolled up by 2015for AirAsia & other MENA & EU regions

• Mobile app for AirAsiatravelers

• Integration with GDS (group distribution system) – booking system use by travel agents for existing markets & for all airlines

• Migration of policy administration system for Thailand expected to be complete in Q1FY15

Now

8

2015

What is ahead… roadmap to RM 6 Billion Market Capitalization

9

Our key strategies remain unchanged, ongoing growth with a good pipeline of opportunities:

AirAsia business expected to rebound – Quarter 4 expected to be our strongest quarter of 2014

MENA - started well with a profit in first full operating quarter and a platform in place to support rapid expansion

Thailand – continued strong growth in 2015 & years ahead with 3 primary sources of business : expansion of existing Osotspa business; AirAsia business and new ventures

TIMB - positioned well for detariffication especially in motor & fire with Technology as our key enabler

Indonesia acquisition underway

Focus on Digital – new phase of focus building up capabilities in B2B and B2C businesses

Continue to attract top talent including new CEO and Head of Digital

10

Agenda

2

Q3 & 9MFY14 Results

11

Revenue: Growth in GWP primarily driven by Fire, Motor, Accident & Health business,

growth in NEP driven by Medical business which is fully retained

Net Earned Premiums1 (RM’ mil)

294 333

96 109

13.8 14.5

4 5

Operating Revenue (RM’ mil)

282 325

99 110

YTD Sept 13 YTD Sept 14 Q3FY13 Q3FY14

Investment Income (RM’ mil)


Gross Written Premium (RM’ mil)


175 193

61 68


1 Net earned premium = gross earned premium received - premiums ceded to external reinsurers

+ 15.1%

+ 10.8% + 13.6%

+ 13.3%

+ 9.9%

+ 10.5%

+ 5.2%

+ 7.8%

12

Key Operating Ratios (before MMIP): Higher combined ratio due to surge in net claims from 2 fire claims and medical claim in the quarter

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 (%)

25.0% 24.6% 26.3% 25.2% 26.4% 27.2%

32.3% 34.3%37.0%

28.0%

38.2% 36.5%

11.0%14.3%

16.4%

16.5%

17.6% 15.9%

68.3% 73.2% 79.7% 69.7% 82.2% 79.6%

Year 2013 YTD Sept 13 YTD Sept 14 Q3FY13 Q3FY14 Q2FY14

13

Profit After Tax: Q on Q growth with contribution from new ventures and MMIP tax relief

QoQ growth (3Q14 vs 2Q14) underpinned by:

- Good contribution from Thai associate of RM2 mil and share of JV of RM0.13 mil

- income tax benefit of RM1 mil in 3Q14 for tax deduction for MMIP cash call of RM2.3 mil.

RM’mil

PAT

PAT (before MMIP)

Year 2012 2013 YTD Sept 13 YTD Sept 14 Q3FY13 Q3FY14 Q2FY14

48

72

50 52

18 17 15

5558

20 18 17

2012

2013

2014

Before MMIP

PAT YTD Sept FY14(RM’mil)

Q3FY14(RM’mil)

Online 40.7 12.3

TIMB(After MMIP)

13.8 4.7

Share of associates(Thailand)

2.3 2

Share of JV 0.09 0.13

14

Profit Before Tax: Flat Q on Q with contribution from associates offset by fire and medical

claims

RM’mil

PBT

PBT (before MMIP)

58

76

53 54

20 16 16

60 62

2219 18

2012

2013

2014

Before MMIP

Year 2012 2013 YTD Sept 13 YTD Sept 14 Q3FY13 Q3FY14 Q2FY14

PBT YTD Sept FY14(RM’mil)

Q3FY14(RM’mil)

Online 40.8 12.3

TIMB(After MMIP)

15.2 3.3

Share of associates(Thailand)

2.3 2.0

Share of JV 0.09 0.13

Flat QoQ (3Q14 vs 2Q14) underpinned by:

- Growth in online from Malaysia & middle east markets despite lower contribution from other core markets;

- Overseas ventures with contribution from Thailand of RM2 mil & Middle East of RM0.13 mil;

- Strong growth in NEP in TIMB mitigated by higher combined ratio as a result of higher claims in fire & medicalbusiness

15

Agenda

Online Insurance Business

3

Gross Sales before Reinsurance (RM ‘mil)

16

Online Business - Key HighlightsYTD growth in sales & PAT in challenging operating environment

Gross Sales before Reinsurance

• Gross sales before reinsurance increased 4.5% vs YTD Sept 13 despite lower growth in Q3FY14 of -7.5%impacted by slower-than-expected recovery in international travel to Thailand & AirAsia’s capacity adjustmentsin Indonesia

• AirAsia have agreed to rectify the online booking engine & expect to see improvement in take up rate in Q1FY15

PAT

• YoY increase in PAT in line with the growth in gross sales before reinsurance

36.1 33.4

99.2 103.7

Q3 2013 Q3 2014 YTD Sept 13 YTD Sept 14

+ 4.5%

-7.5%

Profit After Tax (RM’mil)*

13.5 12.3

37.040.7


- 8.9%

+ 10.0%Profit After Tax (RM ‘mil)

* PAT exclude JV Profit from Tune Protect

17

Number of Policies Earned – Asia & Middle East Revenue is recognised when a customer commences their journey (date of departure per customer booking)

Malaysia 49% (47%)

Thailand 18% (19%)

Indonesia 13% (16%)

Singapore 5% (5%)

China8% (7%)

Others7% (6%)

1.81 million Policies Earned in Q3 2014

(vs. 2.04 million in Q3 2013)

6.04 million Policies Earned YTD Sep 14

(vs. 5.54 million YTD Sep 13)

2013

2014

Key (font colour):

Malaysia 53%

(46%)

Thailand 16%

(17%)

Indonesia 12%

(17%)

Singapore 4% (5%)

China9% (8%)

Others 6% (7%)

Asia

Middle East

U.A.E59%

India14%

Morocco 11%

Egypt5%

Europe5%

Others6%

52.9 k Policies Earned in Q3 2014

67.9 k Policies Earned YTD Sep 14

U.A.E 56%

India14%

Morocco 12%

Egypt6%

Europe 5%

Others 7%

18

Number of Policies IssuedContinued growth in major markets particularly Malaysia, Philippines and Middle East

Malaysia53% (45%)

Thailand18% (19%)

Indonesia 11% (14%)

Singapore5% (5%)

China7% (9%)

Others6% (8%)

Malaysia51% (46%)

Thailand18% (19%)

Indonesia12% (15%)

Singapore5% (5%)

China7% (8%)

Others7% (7%)

1.76 million Policies Issued in Q3 2014

(vs. 2.11 million in Q3 2013)

5.75 million Policies Issued YTD Sep 14

(vs. 5.76 million YTD Sep 13)

2013

2014

Key (font colour):

Asia

Middle East

U.A.E55%

India14%

Morocco12%

Egypt7%

Europe5%

Others7%

U.A.E59%

India14%

Morocco11%

Egypt5%

Europe5%

Others6%

54.3 k Policies Issued in Q3 2014

78.1 kPolicies Issued YTD Sep 14

19

Agenda

Tune Insurance Malaysia Berhad

(TIMB)

4

20

Gross Written Premium and Net Written PremiumMedical, travel and fire insurance continued to be the drivers

Gross Written Premium (“GWP”)

GWP increased YoY mainly driven by increase in medical, fire, motor, PA & TPA class of businesses.

GWP increased QoQ (Q314 vs Q313) mainly due to TIMB’s motor, fire and marine 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% ofGWP (YTD Sept13: 41%) as a result of management’s continued effort to maintain its strategic focus on higher retention profitablebusinesses i.e. PA, Franchise, Foreign Workers and Marine Cargo.

Gross Written Premium (RM ‘mil)

80.5 95.3

252.3

292.3


+ 18.4%

+ 15.9%

Net Written Premium (RM ‘mil)

34.842.8

102.4

129.8


+ 23.0%

+26.8%

Portfolio well balanced

Portfolio MixPortfolio well balanced as drive for quality agents selling the right mix of products continues

21

YTD Sept 2014

Portfolio well balanced. Motor (excluding MMIP) now profitable positioning the company well for multi channel distributionincluding B2C where typically motor is the dominant revenue generator

Fire, 15% Motor, 28%

Marine, 17%

PA & Medical,

27%

Misc, 13%

No of agents

Fire, 15%Motor,

31%

Marine, 18%

PA & Medical,

23%

Misc, 13%

YTD Sept 2013

48%32% 28%

52%68% 72%

FY12 FY13 YTD Sept 14

Motor

Non-Motor

No of Agents

Total as atDec 2013

YTD Sept 2014 Total as atSept 2014Recruited Terminated Suspended

(A) (B) (C) (D) (E=A+B-C-D)

1,137 170 114 29 1,164

No of Agents

Total as atJun 2014

Qtr 3 2014 Total as atSept 2014Recruited Terminated Suspended

(A) (B) (C) (D) (E=A+B-C-D)

1,130 62 24 4 1,164

22

Profit After TaxPAT QoQ impacted by 2 large fire claims & medical claim despite continued growth in premium

YoY and QoQ underwriting profit (before MMIP) decreased due to higher combined ratio, in particularly net claims

YoY decrease in profit after tax (before MMIP) is mainly due to higher net claims

* Underwriting margin = underwriting profit before MMIP and allowance for doubtful debts/net earned premium

Profit After Tax (before MMIP) (RM ‘mil)

7.05.4

23.8

19.9


-22.9%

-16.4%

Profit After Tax (after MMIP) (RM ‘ mil)

5.0 4.7

19.3

13.8


-6.0%

- 28.5%

Portfolio Mix (30 Sept 2014)

23

Investment & Other IncomeTax sheltered investments lead to after tax gains in investment income

Deposits with FI, 14.5%

Wholesale funds, 71.3%

Equity securities,

4.1%

Loans, 0.1%

Debt securities,

10.1%

Investment & Other 1 Income (RM ‘mil)

3.8 4.8

15.8 17.9


+26.3%

+13.3%

* Investment yield for 3 months

1 Other includes realised gains & losses and other operating income

# Investment income (exclude rental income)/investment

Investment Yield #

0.9% 1.1%

3.6% 4.1%


Increase mainly driven by the investment income fromwholesale funds

Investment strategy remains low risk with a focus on capitalpreservation to support up streaming of dividends**

24

This presentation has been prepared by Tune Ins Holdings Bhd (“Company”) in connection with the InterimFinancial Statements (unaudited) for the financial period ended 30 September 2014 and announced by theCompany on the Main Market of Bursa Malaysia Securities Berhad on 17 November 2014.

Information contained in this presentation is intended solely for your reference. Such information is subject tochange 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. No assurancecan be given that future events will occur, that projections will be achieved, or that the Company’s assumptionsare correct. Actual results may differ materially from those projected.

Disclaimer

Tune Ins Holdings Berhad - ChartNexusir.chartnexus.com/tuneinsurance/docs/presentation/q3... ·...

Documents

Transcript of Tune Ins Holdings Berhad - ChartNexusir.chartnexus.com/tuneinsurance/docs/presentation/q3... ·...