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February 2012

Private & Confidential. Thai Reinsurance Public Company Limited. Investor Presentation. February 2012. Disclaimer.

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February 2012

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  1. Private & Confidential Thai Reinsurance Public Company Limited Investor Presentation February 2012

  2. Disclaimer This presentation material has been prepared by Bualuang Securities Public Company Limited (“Bualuang”) and is being delivered on a strictly private and confidential basis to prospective investor(s) who have expressed interests in participating in the equity raising plan of Thai Reinsurance Public Company Limited (“THRE” or the “Company”) (the “Transaction”). The sole purpose of this presentation material is to assist prospective investor(s) in the decision making process in relation to the Transaction. This presentation material does not purport to be a complete review of THRE, its businesses and the industry or the legal and regulatory environment in which they carry on such businesses or any investment in the Transaction. Prospective investor(s) should rely on its own investigations for the purpose of evaluating any investment opportunity therein. None of THRE, Bualuang, nor any of their respective affiliates or representatives make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein or any other written or oral information communicated or made available to any recipient, and each of them expressly disclaims any and all liability based, in whole or in part, on such information, errors therein or omission therefrom. This presentation material includes certain projections and forward-looking statements with respect to the anticipated future performance of THRE. The actual results of THRE may vary from anticipated results and such variations may be material. No representations or warranties are made as to the accuracy or reasonableness of the forward-looking statements of the assumptions or projections on which they are based. In addition, certain statistics set out herein, if any, have been extracted from public sources, which have not been verified. This presentation material has not been and will not be registered or filed with any securities regulatory authorities in any jurisdiction.

  3. THRE Overview Overview of THRE Shareholders’ Structure • Established in 1978 as a consortium of all the insurance companies operating in Thailand at that time, THRE was listed on SET in 1993 • Its current ownership is diverse with no major shareholder, approximately 38% of THRE’s clients are also shareholders • THRE mainly involved in the reinsurance business with all of non-life and life insurance companies in Thailand, which accounted for 97% of its net premium written in 2010 • Authorized capital of THB 1,187.76 mm with paid up capital of THB 1,187.35 mm with par value of THB 1.00 per share Source: THRE as of 17 January 2012 • Reinsurance is: • “Insurance for primary insurance companies” and it serves two main objectives • The spreading of risk: to reduce underwriting exposure of primary insurers • Capital management: to free up capital for primary insurers to write more business THRE, as professional reinsurer, is the “wholesale” part of the insurance industry which is essential for the functioning of the overall insurance market

  4. THRE Overview (Cont’d) Net Written Premium/ Net Written Premium Growth • THRE net written premium grows at compound annual growth rate (CAGR) of 12.0% CAGR = 12.0% (THB mm) Portfolio Mixed of Net Premium : by Class • Improved mixed of business by less reliance on Fire (property and IAR) and increase in Miscellaneous (THB mm)

  5. THRE Overview (Cont’d) Net Profit & Net Profit Margin • Normalized net profit for 9M 2011 excludes the impact of flood that THRE partially booked (THB mm) Investment Weighting • THRE adopts the prudent and conservative investment policy • As at 2011E, investment asset reached THB 10,305 mm due to non conventional products 12.3% (THB mm) 23.1% 87.7% 38.1% 37.0% 37.9% 39.1% 32.2% 33.1% 35.5% 30.3% 17.9% 82.1% 69.7% 63.0% 60.9% 67.8% 66.9% 62.1% 64.5% 61.9% 76.9%

  6. Recent Flood in Thailand • Unlike Japan or Philippines, Thailand was never regarded as country being exposed to catastrophe or natural disasters such as earthquake, flood, and etc. • The recent flood from September to November 2011 was at an unprecedented scale and was the worst natural disaster in more than 50 years in Thailand • As a result, the damage is anticipated to reach approximately USD 45.7 bn (or THB 1,417 bn) /1 • Out of that total damage, it is anticipated that around 17.5% – 24.0% or USD 8 - 11 bn (or THB 248 - 341 bn)/2 is insured with insurance companies • THRE’s total exposure from industrial estates is approximately THB 25 bn and outside industrial estate is approximately THB 29 bn • Note /1 Source: World bank as of 13 December 2011 • Note /2 Source: Globalsurance as of 13 December 2011

  7. Impact of the Recent Flood to THRE Losses from flood will severely impact the profitability and equity base of THRE in 2011 and 2012. The negative equity base puts THRE in violation of solvency ratio requirements

  8. Reasons for the Equity Raising Various areas and several key industrial estates were flooded Upon completion of THB 6,975 mm equity injection • THRE’s expected 2012 equity will exceed level of equity prior to floods and in a level comfortably meets regulator’s requirement • THRE will have sufficient capital to expand its business in the future THRE is anticipated to book negative profit and face with insufficient equity base

  9. Transaction Rationale Strengthen balance sheet • Equity raising will strengthen capital structure of THRE • The equity raising will be used to compensate for such losses and to rebuild equity base • With the capital injection to strengthen balance sheet, THRE is expected to get re-rated from S&P on its financial strength rating to the level it was prior to floods Provide greater financial flexibility for future business operation • Following the equity raising, THRE will achieve financial flexibility and enhance its financial position for carry on its business in the future • Capture growth opportunities in the future as the situation is settled down • We anticipate that there will be great need for businesses to buy insurance to protect themselves from unexpected causes Favorable timing • Due to large claims from the floods, THRE will benefit from higher premium rates and increased demand for reinsurance • Given its small capital base compared to other reinsurers and its risk profile, it is time to strengthen capital base to international standards • Recovery story leaves ample room for upside

  10. Equity Raising Plan Overview Rights Offering (“RO”) Private Placement (“PP”) Securities Newly issued ordinary share Newly issued ordinary share Allocation Ratio 1.33 : 1 Rights Issue or equivalent of 0.75 old share : 1 new share(1,583 mm shares) 742 mm shares to Specific Investors THB 3.00/share THB 3.00/share THRE’s BOD meeting approved to sell the private placement portion to Fairfax Financial Holdings Limited Offering Price • Oversubscription is allowed, the allocation will be done proportionately to the existing shareholding • Any remaining shares from RO and oversubscription will be underwritten by BLS • In case of foreign investor, approval from Office of Insurance Commission (OIC) is required since the current foreign room of 25% is full. An application to lift 25% foreign shareholding limit is in process • Need to obtain approval from shareholders’ meeting Relevant Conditions • This equity raising plan will provide sufficient capital required to meet 2012 solvency ratio • Based on our initial sounding, there are well-accepted and strong supportive feedbacks from existing major shareholders of THRE for rights offering

  11. Proposed Equity Raising Plan Proposed Equity Raising Plan Current(as at 9M 2011) Equity Raising via RO and PP After Equity Raising (FY2012E) 2,226 4,749 742 1,583 3,893 3,512 2,691 1,187 Share outstanding (share mm) Total equity (THB mm) Rights Offering1.33 : 1 Rights Issue or equivalent of 0.75 old share to 1 new share (share mm) Amount (THB mm) Private Placement (share mm) Amount (THB mm) Share outstanding (share mm) Total equity (THB mm)

  12. Key Investment Highlights Attractive industry fundamental in a growing market Unique business model Proven track record of financial performance 1 Key Investment Highlights 7 2 Growth prospect on Life reinsurance Experience management team 3 6 5 4 Combined strengths of partners & shareholders Increased demand for insurance/ reinsurance businesses

  13. 1. Attractive industry fundamental in a growing market Unit: THB billion Source: OIC • Thailand’s insurance market grew by 13% on average annual premiums written from 2001 to 2010 with 15% and 10% average annual growth of life and non-life premiums, respectively

  14. 2. Proven track record of financial performance Revenue (THB mm) • THRE combined ratio averaged 88% from 2001 to 2010 inclusive • During 2010 and 9M 2011, there were extraordinary events such as flood in southern Thailand, political unrest, and this recent flood • Excluding such events, combined ratio is in-line with historical figures Combined, Loss and Expense Ratio 87.8% 85.7%

  15. 2. Proven track record of financial performance (cont’d) Assets, Liabilities, & Shareholders’ Equity • Liabilities increased by 98% to THB 12,258 mm in 9M 2011 due to non conventional products initiated in 2009 (THB mm) Investment Weighting • THRE adopts the prudent and conservative investment policy • As at 2011E, investment assets reached THB 10,305 mm due to non conventional product 12.3% (THB mm) 23.1% 87.7% 38.1% 37.0% 37.9% 39.1% 32.2% 33.1% 35.5% 30.3% 17.9% 82.1% 69.7% 63.0% 60.9% 67.8% 66.9% 62.1% 64.5% 61.9% 76.9%

  16. 2. Proven track record of financial performance (cont’d) Net Profit & Net Profit Margin • Normalized net profit for 9M 2011 excludes the impact of flood that THRE partially booked (THB mm) Financial Policy Analysis Ratio • Non conventional product recorded in advance resulted in high D/E ratio of 4.58x in 9M 2011 (x)

  17. 2. Proven track record of financial performance (cont’d) Dividend per Share & Dividend Payout Ratio • Average Payout ratio from 2001 to 2010 equal 90% (THB/share) • Average ROI and ROE from 2001 to 2010 equaled 7.5% and 20.1%, respectively • Significant drop in annualized ROA in 2011 is due to impact of flood loss partially booked and large increase in assets as at 9M 2011 • 9M 2011 normalized ratios exclude impact from flood loss partially booked ROI & ROE & ROA Note: * Annualized

  18. 3. Experience Directors and management team

  19. 3. Experience Directors and management team (Cont’d)

  20. 4. Increased demand for insurance/reinsurance businesses Impact of flood catastrophe • Impact of flood catastrophe created massive floods that swamped 7 major industrial estates damaged more than 1,000 factories • From this major flood, more businesses will need to buy insurance to protect themselves from unexpected causes, even with higher premiums Implementation of RBC • Under the OIC Rules, it is required that each insurance business shall maintain its capital adequacy ratio (CAR Ratio), according to the requirement on Maintenance of Risk Based Capital (RBC), at the rate of not less than 125 percent • In order to meet the regulator’s requirement, most of insurance companies may choose to reinsure instead of increase its capital

  21. 5. Combined strengths of partners & shareholders • Established under the joint ownership of more than 50 life and non-life insurance companies from private and government support aggregately held approximately 38% • THRE is the only professional Thai reinsurer • THRE has all life and non-life insurances companies in Thailand as business partners • Approximately 50% of its clients are also shareholders

  22. 6. Growth prospect on Life reinsurance Life insurance market growth Insurance penetration by country (2010) CAGR = 12.15% (THB bn) Premiums written as a % GDP Source: Swiss Re THRE life assurance premium • Good growth prospects for life insurance market • Thailand life assurance penetration (premiums written as a percentage of GDP) was moderate compare to other Asian countries • Since its established in 2000, THRE life assurance has experienced considerable growth and expansion CAGR = 14.83% (THB mm)

  23. 7. Unique business model Key Strategic Strengths of THRE • Experienced and deep knowledge of senior management in the insurance/ reinsurance business • Strong support from most of prominent insurance companies in Thailand • Over 30 years insurance market data Specialized/Customized Services and Products Value Added Services • Provide solutions to its clients in developing new innovative insurance products • Provide tailor-made services and products for each segment and for each distribution channel • Offer IT services to insurance companies • Provide claim processing services for insurance companies • Organize staff training for insurance companies • Act as central organization to gather all policies within Thailand and provide extensive research on local insurance industry

  24. Preliminary Timeline Year 2012 18 Jan 6Feb 13Feb 5Mar 12Mar 13Mar 26Mar 28Mar 6 working days w/i 14 days RO Subscription period BOD EGM XR PPSubscription 1st day tradeof new shares Register Cap. Inc. w/ MOC

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