Company For Cooperative Insurance · TADAWUL:8010
Company For Cooperative Insurance — The Company for Cooperative Insurance (Tawuniya) — Q3 2019 Earnings Presentation
41 slides from Company For Cooperative Insurance's earnings presentation, 2019
Slide 1: Investors' Presentation Q3 2019 - Earnings Conference Call
INVESTORS’ PRESENTATION Q3 2019 - EARNINGS CONFERENCE CALL
Slide 2: Table of Contents
Table of Contents I. KSA Insurance Industry Market Conditions & Dynamics Market Performance by Line of Business Market Opportunities II. Tawuniya’s Performance III. Company Overview 2
Slide 3: KSA Insurance Industry
KSA INSURANCE INDUSTRY Change Separator
Slide 4: KSA Insurance Industry: regulators, insurers, compulsory products
KSA INSURANCE INDUSTRY Active regulators… Over-supplied with Insurers… Compulsory-Driven market… REGULATORS LICENSED COMPANIES COMPULSORY PRODUCTS Saudi Arabian Monetary Authority (SAMA) 33 insurance & reinsurance companies All private sector employees (including their dependents) must have 86 Broke
Slide 5: Underpenetrated market with medical premium domination
KSA INSURANCE INDUSTRY Underpenetrated Market with Medical premium domination… COUNTRY-LOOK GLOBAL-LOOK MARKET DISTRIBUTION (2018) (2018) (9M, 2019) – MILLION SAR SR PENETRATION 18,000 USA, 7.1%, 16,804 16,000 UK, 10.6%, 16,886 3,995, 14,000 14% 1.20% 1.82% OECD, 7.2%, 10,958 Total GDP Non-oil GDP 1
Slide 6: Current market conditions
KSA INSURANCE INDUSTRY Current market conditions… Consumers purchasing power is facing deflation from the beginning of 2019 Expats exodus is mainly associated with dependents The introduction of Hajj & Umrah Program and Overall Medical (drop by 180K since Q4 2018, primary increased by 52K) gov
Slide 7: Market facing challenging conditions in profitability
KSA INSURANCE INDUSTRY Market facing challenging conditions in profitability… MA RK E T G W P NET INCOME 1,453 28.5 27.2 -2.2% +7.0% 902 847 26.6 9M, 2017 9M, 2018 9M, 2019 9M, 2017 9M, 2018 9M, 2019 MA RK E T LO SS RAT I O INVESTMENT INCOME NON-INVESTMENT INCOME Earned Premium Incurred Claims 833 7
Slide 8: 65% of market premiums controlled by top players
KSA INSURANCE INDUSTRY 65% of market premiums are controlled by the top 4 players… l Tawuniya, MedGulf & Alrajhi cover all lines of Y-O-Y MARKET SHARE business while Bupa only covers health insurance 60% MedGulf Bupa GWP: 2.7b Growth: +31.1% GWP: 9.6b MedGulf, 40% Growth: +14.2% Share: 7.4% COMPANY
Slide 9: Corporate segment dominates market premiums
KSA INSURANCE INDUSTRY Corporate segment dominates market premiums… Overall Market Segment MEDICAL MOTOR P&C Small Micro Retail Retail Micro Retail 206.7 100.4 93.2 Micro 3,482.0 741.5 644.1 5% 3% 2% 915.0 12% 4% 3% Medium 3% Small 550.3 1,348.0 14% Small 7% Retail 1,787.7 2,628.8 6% 40% Medium 2,53
Slide 10: Medical market growth driven by price increases
KSA INSURANCE INDUSTRY Medical Market experiencing growth mainly driven by price increases… MA RK E T G W P 16.1 18.4 Y-O-Y MARKET SHARE 15.2 +5.5% +14.5% 60% Tawuniya GWP: 6.4b 40% Growth: +9.4% Share: 27.7% COMPANY GROWTH 9M, 2017 9M, 2018 9M, 2019 Medgulf 20% +13.1% GWP: 2.0b Growth Market Growth
Slide 11: Medical insured lives experiencing mild growth
KSA INSURANCE INDUSTRY Medical insured lives experiencing mild growth… TOTAL INSURED LIVES Saudis (‘000) -2% Expats +3% +17% 10,802 11,302 11,372 11,150 7,947 8,048 8,073 7,820 26% 29% 29% 30% 2,854 3,254 3,298 3,330 74% 71% 71% 70% Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Pri
Slide 12: Medical market has major room for growth
KSA INSURANCE INDUSTRY Medical market has major room for growth in the coming decade… Medical Market Opportunities Tawuniya’s Competitive Position Saudi dependents: 2 M lives to be added by 2020 Current large market share (23.9%) Government Programs: 3 M lives up to 2030 Comprehensive insure
Slide 13: Motor market experiencing premium decline
KSA INSURANCE INDUSTRY Motor Market experiencing premium decline… MA RK E T G W P Y-O-Y MARKET SHARE 8.6 60% -15.4% 7.3 -11.5% 6.5 AXA Others GWP: 793m GWP: 5.1b 40% Growth: -11.5% Growth: -2.5% Share: 9.6% Share: 61.3% COMPANY GROWTH 9M, 2017 9M, 2018 9M, 2019 Rajhi 20% GWP: 1.8b Growth: -21.0% MA
Slide 14: Insured vehicles increasing while average premium declining
KSA INSURANCE INDUSTRY # of insured vehicles increasing while average premium is declining… TOTAL INSURED VEHICLES GWP (mil SAR) (Y-O-Y) # of Vehicles (’000) 10,881 Average Premium (SAR) 11,000 10,163 9,836 10,000 9,540 9,364 8,856 8,693 9,000 8,500 8,000 7,000 6,566 6,264 6,163 6,229 6,370 6,070 6,
Slide 15: Motor market holds promising factors to double
KSA INSURANCE INDUSTRY Motor market holds promising factors to double its size in the coming decade… Motor Market Opportunities Tawuniya’s Competitive Position Vehicles: around 14.6 m in Q3, 2019 Strong technical performance to compete for market share. Government Programs: increase insurance
Slide 16: P&C market experiencing premium increase
KSA INSURANCE INDUSTRY P&C Market experiencing premium increase… Tawuniya has the “lion-share” MA RK E T G W P Y-O-Y MARKET SHARE 60% 3.5 3.3 +12.3% Wala’a Others -7.2% 3.1 GWP: 448m 40% GWP: 2.3b Growth: +29.9% Growth: -0.9% Share: 10.3% COMPANY GROWTH Share: 54.2% 9M, 2017 9M, 2018 9M, 2019 20% +6
Slide 17: P&C market positively impacted in coming decade
KSA INSURANCE INDUSTRY P&C market will be positively impacted in the coming decade… P&C Market Opportunities Tawuniya’s Competitive Position Number of business establishments: 548K (up to Q2, 2019) Dominating position in the market. Government Programs: mega projects by the government (Solar P
Slide 18: Tawuniya's Performance
Tawuniya’s Performance Change Separator
Slide 19: Overall Highlights: GWP, earned premium, loss ratio
TAWUNIYA PERFORMANCE Overall Highlights… all lines of business GWP (MILLION SAR) 2018 2019 +17.2% +13.9% +17.8% 2,096 2,457 1,756 2,000 │ GWP grew by 16.3% YTD 1,208 1,423 │ GWP growth has been steady for the past 3 quarters (above market growth) Q1 Q2 Q3 NET EARNED PREMIUM (MILLION SAR) -8.2% -5.3%
Slide 20: Overall Highlights: overheads, investment income, pre-tax income
TAWUNIYA PERFORMANCE Overall Highlights… +3.4% TOTA L OVE RHEA DS 2018 2019 (MILLION SAR) 718 742 236 251 242 241 239 251 │ A well contained growth in overheads Q1 Q2 Q3 YTD (Sep) -13.2% I NVEST ME NT I NCO ME (MILLION SAR) 214 186 │ 28m behind (YTD), but Q4 likely to be much stronger than the 27m o
Slide 21: 9M 2019 growth in Medical and P&C premiums
TAWUNIYA PERFORMANCE 9M 2019 experienced growth in Medical and P&C premiums… GWP HIGHLIGHTS (MILLION SAR) +16.2% -6.5% 5,879 Medical GWP grew by 18% mainly due to 5,411 price increases to restore the loss ratio. 5,059 897 +25% 717 718 582 -3% 1,074 Motor GWP declined by 3% due to adverse 602 +18
Slide 22: Medical GWP Growth Rates
KSA INSURANCE INDUSTRY Medical GWP Growth Rates… QUARTER ON QUARTER 34% 22% 18% 16% 10% 7% 8% 6% 2% 5% 5% 6% -2% -5% -6% -10% -10% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 ROLLING 12 MONTH 13% 5% 3% 2% Q3
Slide 23: Motor GWP Growth Rates
KSA INSURANCE INDUSTRY Motor GWP Growth Rates… QUARTER ON QUARTER 58% 28% 28% 5% -2% -1% -4% -11% -9% -8% -10% -16% -16% -14% -13% -15% -22% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 ROLLING 12 MONTH 15% -1
Slide 24: P&C GWP Growth Rates
KSA INSURANCE INDUSTRY P&C GWP Growth Rates… QUARTER ON QUARTER 30% 17% 17% 9% 10% -1% -2% 2% -1% -10% -6% -5% -13% -13% -17% -21% -21% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 ROLLING 12 MONTH 16% 2% -10%
Slide 25: Reported loss ratio by line
TAWUNIYA PERFORMANCE Now turning to the loss ratio, the life blood of any insurance business… REPORTED LOSS RATIO MEDICAL MOTOR P&C 120% 100% 80% 60% 40% 20% 0% Q1-2018 Q2-2018 Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q3-2019 25
Slide 26: Medical loss ratio recovery in full swing
TAWUNIYA PERFORMANCE Medical loss ratio recovery in full swing… Medical – Actual 2019 % Change Average Earned Premium (6 RF) % Change Ultimate BC (6 RF) 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 201801 201802 201803 201804 201805 201808 201809 201810 201811 201812 201901 201902 201903 201904 201905 201
Slide 27: Medical loss ratio future challenge: medical inflation
TAWUNIYA PERFORMANCE Medical loss ratio future challenge to bear down on medical inflation… Medical – Forecast 2020 % Change Average Earned Premium (6 RF) % Change Claims Cost Per Life (6 RF) % Change Average Earned Premium (6 RF) - Forecast % Change Claims Cost Per Life (6 RF) - Forecast 201901 201
Slide 28: Cost of acquisition/servicing and fixed overheads
TAWUNIYA PERFORMANCE Cost of Acquisition/Servicing and Fixed overheads… ALLOCATED EXPENSE AND G&A RATIO HIGHLIGHTS Expenses G&A Total costs (excluding BDP) rose only 3.4% YTD, 12% but due to an earned decline of 4% the expense 11% ratio rose from 13.4% to 14.4% (excluding Manafeth) 9.9% 10% PAC
Slide 29: Bad debt provisions impact in Q3
TAWUNIYA PERFORMANCE Article 69 heavily impacts the insurance industry Bad Debt provisions in Q3… Comparison Description Tawuniya Al Rajhi Takaful Bupa Medgulf Receivables Opening Balance (Dec '18) 1,678 535 1,120 1,210 Plus: Gross Written Premium 5,879 1,972 8,421 2,115 Gross Total Receivables 7,55
Slide 30: Effective management of receivables
TAWUNIYA PERFORMANCE Effective Management of receivables and stable “Due Amounts” from invoice date… Gross Receivables Collection & Adjustments Due Amount 3,000 2,500 2,000 MILLIONS 1,500 1,000 500 0 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 30
Slide 31: Other elements feeding into reported net income
TAWUNIYA PERFORMANCE Other elements that feed into the Reported Net income… TOTAL INVESTMENTS (SR MILLION) UN-REALIZED INVESTMENT INCOME (SR MILLION) 5,967 6,013 6,058 5,702 87.6 5,249 5,016 14.6 -10.1 -10.5 Q3 ’16 Q3 ’17 Q3 ’18 Q3 ’19 REALIZED INVESTMENT INCOME (SR MILLION) 2014 2015 2016 2017 2018
Slide 32: Leveraging balance sheet structure
TAWUNIYA PERFORMANCE Leveraging Balance Sheet Structure… TAWUNIYA AL RAJHI TAKAFUL MEDGULF BUPA Description Q3-2019 Q3-2019 Q3-2019 Q3-2019 INVESTMENTS + CASH 7,749 2,740 1,286 7,310 PROPERTY & EQUIPMENT 251 16 70 173 GOODWILL 0 0 480 98 LESS : EQUITY -2,330 -872 -696 -2,896 WORKING CAPITAL * 5,671
Slide 33: Company Overview
Company Overview Tawuniya «LigleiJl
Slide 34: Leading Saudi insurer with sustained achievements
COMPANY OVERVIEW Leading Saudi insurer with 33 years of sustained achievements… Introduced medical IPO to float 70% of First insurer to insurance plans the total capital launch digital services in KSA 1986 2004 2006 2017 1995 2005 2010 Tawuniya SAMA License, first “A” credit rating Paid-up capital E
Slide 35: Government entities own 37% of Tawuniya
COMPANY OVERVIEW Two of the strongest government entities own 37% of Tawuniya… GOSI Tawuniya is an enlisted company Investment Portfolio: With a paid-up capital of SAR 1,250 m SAR 134 billions More than 51 companies GOSI 18% PPA Investment Portfolio: Publicly Floated PPA SAR 68.5 billions 19% 63% 65
Slide 36: Our Vision & Mission
COMPANY OVERVIEW Our Vision & Mission… OUR VISION OUR MISSION Be the companion that presents Sustain momentum for our society’s safety innovative and customer centric insurance and continuous progress towards the solutions, so our customers feel secure, future. empowered and ready for the future. So
Slide 37: The largest comprehensive insurer in GCC
COMPANY OVERVIEW The largest comprehensive insurer in GCC… Portfolio of SR 8 billion with multi-offerings across all lines of business & segments CORPORATE – SME – RETAIL MEDICAL MOTOR PROPERTY & CASUALTY • My Family • Al-Shamel • Engineering • Aviation • Balsam • Sanad • Fire & Property • Energy •
Slide 38: Largest regional & global reach to clients and providers
COMPANY OVERVIEW The largest regional & global reach to clients and providers… 5 Regional Offices + 2,000 Network of over a million Providers health care providers 105 Branches in 13 Regions 24 Agents + 2,000 20 Employees International Reinsurers Treaties 38
Slide 39: High credit rating and A-rated reinsurance partners
COMPANY OVERVIEW Insurance company with high credit rating within KSA… and (A) rated reinsurance partners… OUR INTERNATIONAL REINSURERS Solicited CCR is rated “AA” by S&P (BBB+) Munich Re is rated “AA-” by S&P Swiss Re is rated “AA-” by S&P Everest Re is rated “A+” by S&P Un-Solicited Transatlantic
Slide 40: 15,740 organizations across sectors trust Tawuniya
COMPANY OVERVIEW + 15,740 organizations across various sectors trust Tawuniya… Aviation Financial Telecommunication Mining & Petro. Manufacturing Other 40
Slide 41: Thank You
THANK YOU ًشكرا 41
The Company for Cooperative Insurance (Tawuniya) — Q3 2019 Earnings Presentation on 6ix