Part 1: Company Details
Section 1.1: Investment Highlights
- The first and largest life insurer in Thailand owned and established by Thai nationals based on gross written premiums (Source : The Thai Life Assurance Association)
- Remarkable agency network across the nation
- Fast-growing partnerships and other distribution channels helping to connect with customers across the nation
- Comprehensive insurance products and innovations / new products offered regularly
- Robust profitability and shareholder value creation
- A best-in-class management team with extensive experience in Thailand’s life insurance market with the support from TLI’s strategic shareholder, Meiji Yasuda Life Insurance Company, one of the major life insurance companies in Japan.
Pricing and product mix adjustment strategies respond to demand and economic conditions. For example, in a low interest rate environment, the Company offers products that may be less sensitive to changes in interest rates. TLI will also focus on offering high-growth products and high-value products such as investment-linked insurance product, participating product and health rider.
- Flexibility in adjusting product strategy with a reasonable compensation structure
- Acting as a consultant to give advice to customers closely, especially in upcountry areas
- Building and maintaining a long-term customer relationship
- Ability to offer complex products, which provide long-term coverage with a high profit margin.
Online marketing platform
- In addition to Company’s digital platform, TLI has been in discussions with online marketplace service providers to enable customers to purchase the Company's products on third-party platforms. The products that are estimated to be offered on the online marketplaces will be simple with affordable price.
- Health riders and cancer riders
- Customized products according to customer needs, e.g., health rider, critical illness riders and products for tax deduction benefit
- TLI is one of the few life insurers in Thailand that do not have commercial banks as major shareholders, allowing TLI to be flexible to collaborate with financial institutions to distribute its products.
- TLI has signed the exclusive distribution agreement with partners including Bank of Ayudhya Public Company Limited, CIMB Thai Bank Public Company Limited and Government Housing Bank.
- MY is one of the major life insurance companies in Japan.
- MY has become a strategic partner with TLI since 2013.
- MY allows TLI to receive new opportunities through the establishment of relationships with Japanese companies in Thailand.
- TLI leverages MY's experience in digital transformation.
- MY is ready to support an international business expansion plan that the Company may have in Myanmar, Cambodia or the Lao People's Democratic Republic.
MY will continue to provide strategic contributions to TLI. In addition, MY aims to subscribe to TLI's IPO shares at the same price as investors this time in order to maintain its stake at 15% of TLI's issued and paid-up share capital after the IPO.
Chaiyawan Family will continue to be a major shareholder of TLI as they believe in TLI's stability and potential, as well as opportunities for sustainable growth in the future.
TFRS 17 will not significantly affect the company and shareholder due to the preparation in the reserve management and product launch strategy.
Section 1.2: Digital Transformation
- Develop new distribution channels through digital platforms, including the sales features on the Company's website and mobile application of bank partners.
- Improve sales tools to increase sales efficiency and effectiveness for insurance agents and partners, such as:
a. For agents: Developing series of ‘MDA Plus’ application, which consist of 4 applications that provide sales support, after sales service, recruitment, and agent team management. This allows agents to close the sales online.
b. For bank partners: Developing ‘Digital for Life’ application for salesperson to present the Company's products on tablet device.
- The Company may not be able to comment on strategies, including digital transformation of other life insurance companies.
- However, we believe that TLI’s digital transformation has a good beginning. Such mobilization allows TLI to leverage the information technology in business, such as:
- Improving customer experience and promoting customer engagement
- Increasing the efficiency of distribution channels
- Enhancing the potential of managing agents and assisting them through the sales process
- Improving operational efficiency and reducing operating costs.
- Gaining a better understanding of customer behavior, developing products and ability of underwriting
Section 1.3: Business Strategies
- After more than 80 years in business, TLI has successfully developed "Thai Life Insurance" to become a well-known brand and one of the leading insurers in Thailand.
- The decision to list the Company’s shares on the Stock Exchange of Thailand is in line with the vision and goal to be a sustainable life insurance company and our commitment to become a life solutions provider in order to create the stability and sustainability for the organization. The Company believes that we are ready, and it is the perfect time now.
To strengthen its business and enhance its growth potential for the future, the Company plans to spend the proceeds from this fundraising for:
- Investing in digital transformation and related marketing of approximately 2,000 million baht.
- Strengthening distribution channels through partners for approximately 5,400 million baht.
- Strengthening the capital and for working capital and other purposes of approximately 6,200 million baht
However, the Company's future plan and actual expenses may differ from the above-mentioned estimates.
- TLI is constantly aware of changes. For example, determining product strategies to respond to changing needs, developing a variety of insurance plans for seniors, as well as launching “Extra Senior” insurance product for the seniors, in which the insured does not need to have medical check-up and will receive a lump sum when the insured reaches 75 years. In addition, TLI primarily uses telesales to sell its products for seniors as it can better reach its senior customers.
- Thanks to accumulated knowledge, expertise and experience of the major shareholder (MY) from operating in the aging society like Japan, TLI believe that population change is a great opportunity for Thai insurance industry.
- We view that selling products through multiple distribution channels is beneficial and selling through one channel does not affect product sales on other channels.
- Each type of product has a distribution channel suitable for that type of product. For example, complex but high-margin products are primarily sold through agents. Simple and affordable products can be sold through online channels as planned by TLI.
- In addition, selling products through online channels will help expand a customer base, such as a new generation of customers and customers who are familiar with technology, etc.
The Company's product offering strategy is based on our vision and mission, which is sustainability. Our strategy focuses on launching products that are less sensitive to interest rate, e.g., participating product, investment-linked product, health rider, etc. We aim for the product ratio of new businesses over the next 5 years to be as follows: 50% of participating and investment-linked product, 25% of health rider and 25% of other products. This strategy aims to achieve sustainable VONB margin and VONB growth amid interest rate volatility.
Profitability is more sustainable since most of the profits come from non-guaranteed section. Par Product is less sensitive to interest rate, which is suitable for selling during the time of high volatility of interest rates.
New participating product has been well received by various markets and channels, especially during the first half of the year as the stock market was highly volatile. Therefore, people are more interested in purchasing this type of product. This shows the importance of having a wide product range to meet the different customer needs. We believe our product launch strategy is to stabilize and sustain the VONB margin in the long term and create VONB growth amid the volatility of interest rates.
Section 1.4: Life Insurance Business Valuation
- The valuation of life insurance business does not use the same method as other types of business, such as price to earnings (P/E) and price to book value (P/BV) since the annual profits of the life insurance business may not reflect the actual performance and value of the Company as life insurance business is a long-term business.
- The valuation of life insurance business is determined by price to embedded value (P/EV). Embedded value is considered book value in other businesses but can reflect the long-term business value. It can reflect the value of the benefits to shareholders from the insurer’s policy that is still in-force, including the value from new businesses that are expected to emerge mainly in the future.
Embedded value consists of two parts:
- Value of in-force business (cash or renewal premium that the company will receive in the future excluding the newly sold premium calculated as the present value) plus
- Adjusted net worth (the difference between the market value of the company's assets minus its total liabilities)
Embedded value (“EV”) is currently the most common valuation measure used by the insurance industry.
Section 1.5: Impact of COVID-19
- As TLI does not provide casualty insurance with COVID-19 lump-sum payments, the Company’s financial performance was not significantly affected by the recent pandemic crisis.
- However, the Company has paid benefits and expenses for claims under insurance contracts related to COVID-19. This is a normal expense incurred from the Company’s products.
Section 1.6: Others
Bond portfolio tend to receive higher returns in response to rising interest rates while stock returns and interest rates typically move in opposite directions. During the period when interest rates are rising quickly, stocks tend to have poor returns.
It is allowed to invest in foreign bonds with a rating of investment grade.
According to accounting policy, we will not use mark-to-market method for held-to-maturity financial assets.
The Company typically discloses VONB every half year and EV at the end of every year.
Our company has focused on stable, sustainable, and consistent yields. We would like to avoid fluctuating return in volatile interest rate environment. We also do not want to speculate on the direction of interest rates.
The Company is open to acquisitions if an opportunity arises. The acquisition activities shall be approved by the Office of Insurance Commission.
The Company has a dividend policy at the rate of not less than 30% of its net profit after tax in each accounting year.
The Company must obtain approval from the Office of Insurance Commission (OIC) before the dividend payment is made to shareholders.
Click the link below to learn more : https://investor.thailife.com/en/financial-info/dividend-policy-and-payout
1.7: Life Insurance Glossary
A commonly used industry measure of insurance product sales of insurance companies that is calculated as 100% of annualized first year premiums plus 10% of single premiums for all new policies written during the period.
A life insurance product designed to convert premiums that customers pay into a steady stream of income mainly for retirement
Carrying value of investments we manage and includes loans and net current assets pertaining to unit-linked products
- Whole life,
- Term life, and
- Annuity insurance
An occurrence that is the basis for submission and/or payment of a benefit under an insurance policy. Depending on the terms of the insurance policy, a claim may limited or excluded from coverage
A fee paid to an agent or a broker by an insurance company for services rendered in connection with the sale or maintenance of an insurance product
Rate of average annual growth or return as measured from its beginning to its ending balance calculated on a compound basis
A life insurance product that combines savings and insurance protection features. They have fixed policy terms, usually ranging from a minimum of three years up to much longer terms such as 30 years and beyond. In return for the premium paid, endowment products provide a combination of death benefits, survival benefits during the life of the contract, and maturity benefits.
The consolidated value of shareholders’ interests in the existing business of an insurance company. In other words, it is an actuarially determined estimate of the economic value of a life insurance business based on a particular set of assumptions as to future experience, excluding any economic value attributable to future new business
Premiums received in the first year of a recurring premium policy. As such, they provide an indication of the volume of new policies sold.
Gross written premiums consist of:
- 100% of renewal premiums;
- 100% of first year premiums;
- 100% of single premiums; and
- 100% of inward premiums from retrocession.
Our gross written premiums exclude the investment portion of unit-linked products.
An insurance policy or contract reflected on records that has not expired, matured or otherwise been surrendered or terminated
Investment-linked or investment-linked products
Benefits payments and insurance claims expenses divided by gross written premium
Incidence rates and period of ailment, varying by such parameters as age, gender and period since disability, used in pricing and computing liabilities for accident and health insurance
Rates of death, varying by such parameters as age, gender, and health, used in pricing and computing liabilities for life and annuity products, which contain mortality risks
Insurance products under which policyholders may receive, at the discretion of the insurer, additional benefits based on factors such as investment performance
Gross written premium as a percentage of GDP
Consideration received with respect to life insurance policies issued or reissued by an insurance company
The practice whereby a reinsurer, in consideration of a premium paid to it, agrees to indemnify another party for part or all of the liabilities assumed by the reinsured party under an insurance contract, which the reinsured party has issued
Premiums receivable in subsequent years of a multi-year insurance policy
The practice whereby we, as a party who transfers all or part of the risks that we underwrite to a reinsurer, agrees to reinsure part of the risks that such reinsurer bears for other insurance companies, in exchange for a premium. In such case, the reinsurer is a retrocedant.
Additional insurance benefits that can be attached to the underlying base policies. In return for paying additional premiums, the policyholder obtains additional insurance coverage, either increasing the coverage already existing under the base policy, or adding benefits that are not covered by the base plan
Premiums received from single premium policies, which are policies that require only a single lump sum payment from policyholders
The termination of a life insurance policy at the request of the policyholder after which the policyholder receives the cash surrender value, if any, of the contract
Term life products offer protection against mortality and morbidity risks over a certain period of time. In return for the premiums paid, the beneficiary will receive payment of the sum assured from the insurer should the insured die or suffer another insurable event during the term of the policy. Once the policy term ends, the coverage stops and there is no maturity benefit paid out.
OIC is a government agency acting in supervision and development of insurance business to be effective and to ensure people’s rights from insurance contracts. OIC also is fully aware of Good Corporate Governance and globally accepted protocol.
For more information, please click https://www.oic.or.th/th/consumer
The sum of first year premiums, renewal premiums and single premiums. Total premium revenues do not include inward premiums from retrocession.
The Thai Life Assurance Association is the center of life insurance industry and related stakeholders to cooperate for development and prosperity of life insurance business.
For more information, please click https://www.tlaa.org/
Unit-linked policies have an associated account made up of units in underlying investment funds, which are built up through the payment of premiums to the account, but reduced through the deduction of policy charges. The account values go up and down as the prices of the units move in line with the underlying assets of each investment fund chosen by the insured and, as such, the policy benefits are linked directly to the underlying investment returns. The policy benefits typically include additional insurance coverage, either paid for via deductions of units based on cost of insurance or offered as attached non-linked riders.
This product is structured in a similar manner to unit-linked, with the policy having an account value, which is built up through the payment of premiums and reduced through the deduction of policy and coverage charges. The main difference compared to unit-linked products is that the account value does not have a direct link to underlying asset performance. Instead, we credit the account with returns determined by us (crediting rate), after taking into account underlying investment performance and competitive factor
Represents an actuarially determined estimate of the value to shareholders arising from new insurance business issued in the relevant reporting period, and is calculated as the present value, measured at point of sale, of future net-of-tax profits on a local statutory basis less the corresponding cost of capital
VONB expressed as a percentage of APE in respect of new businesses in the reporting period
Whole life assurance products are similar to endowments, except that their coverage is up to age 90 or 99 and they offer a maturity benefit at the end of the policy term (in this respect, they are more like long-term endowment products). As with endowments, whole life products also offer survival benefits such as non-guaranteed dividends and bonuses.
a percentage calculated as annualized premiums received from life insurance policies under which second year premiums are paid divided by annualized first year premiums from policies issued in the previous year. The ratio is calculated based on policies remaining in force issued within the prior 13 months period.