Fwd Group Holdings Limited · HKEX:1828
Fwd — H1 2024 Earnings Presentation
30 slides from Fwd's earnings presentation, October 2024
Slide 1: 1H24 results presentation
1H24 results presentation October 2024
Slide 2: Strong financial performance across key metrics continuing into 1H24
Strong financial performance across key metrics continuing into 1H24 $876m $404m $573m Growth Profitability (+8%) Profitability (+14%1) Profitability (+26%1) +10% on a like-for-like basis1 New business sales (APE) Value of new business (VNB) New business CSM $223m $3m $4.7bn Profitability Profitabil
Slide 3: Business highlights
01. Business highlights
Slide 4: Demonstrated consistent and resilient business growth
Demonstrated consistent and resilient business growth Value of new business (VNB1) New business sales (APE2) New business CSM1 Net capital generation3 +10% on a like- for-like basis YoY: $876m $573m $423m YoY: $404m $845m YoY: YoY: +14% +8% +26% +34% $369m $480m $334m 1H23 1H24 1H23 1H24 1H23 1H24 1
Slide 5: Overview of our business segments
Overview of our business segments Thailand & Cambodia Emerging Markets • Extended banca partnership with SCB in 2023 • Market disruption in Vietnam offset by steady growth in other Emerging Markets • Continued strong growth; #1 in bancassurance channel in Thailand countries, with a continued shift t
Slide 6: Overview of our business segments (cont’d)
Overview of our business segments (cont’d) Japan Hong Kong & Macau • Focus on enhancing capital efficiency of the business and freeing up capital • Increase in new business sales driven by increase in offshore sales as borders through Athene reinsurance transaction reopened in 2023 • VNB increased d
Slide 7: Executing on our strategy: An elite and tech-enabled distribution network
Executing on our strategy: An elite and tech-enabled distribution network Sustainable bancassurance growth driven by Strategically investing in scaling a productive Partnership with businesses across the partners with strong strategy alignment agency force eCommerce, retail and fintech industries No
Slide 8: On clear path to achieve strategic ambitions
On clear path to achieve strategic ambitions • Maintain focus on our customer led and digitally enabled strategies in order to deliver sustainable growth and profitability • Scale up high quality agency force to match leading position built in bancassurance • Expand presence in each market with the
Slide 9: Financial highlights
02. Financial highlights
Slide 10: Further advancement of management priorities in 2023 and 1H24
Further advancement of management priorities in 2023 and 1H24 – setting the stage for consistent and profitable growth Strong investment • Investment Grade credit ratings affirmed by both Moody’s and Fitch with positive outlook from Moody’s 1 grade credit ratings • Testament to our strong financial
Slide 11: Robust balance sheet further boosted by enhanced liquidity management
Robust balance sheet further boosted by enhanced liquidity management Enhanced maturity profile from successful refinancing ($m) Refinancing Undertaken Enhanced Maturity Profile Undrawn Credit Facilities Successfully issued $325m notes, $900m subordinated notes and $600m tier-2 subordinated dated ca
Slide 12: Focus on expense discipline leading to reduction in expense overrun
Focus on expense discipline leading to reduction in expense overrun EV operating variance – expenses1 ($m) Key highlights Expense growth lower than growth in 210 allowances 149 132 Dynamic expense management 70 32 Ongoing cost rationalisation and streamlining with prudent measures taken to manage 20
Slide 13: Continual expansion of free surplus generation
Continual expansion of free surplus generation Adjusted net UFSG1 ($m) ’21-23 CAGR: 285% 786 625 YoY: 34% 423 334 95 2021 2022 2023 1H23 1H24 1 Adjusted net underlying free surplus generation (“UFSG”) is Net UFSG excluding one-off opening adjustments, non-economic assumption changes and expense vari
Slide 14: Higher capital remittances on the back of profitability improvements
Higher capital remittances on the back of profitability improvements Net remittances by segment1 ($m) Hong Upstreamed dividends for the first time post HK RBC Operating profit after tax3 Kong adoption in 2023, which has continued in 20242 ($m) 606 223 All four operating 3 segments operating profit 1
Slide 15: Financial results
Celebrate living fwd.com 03. Financial results
Slide 16: Stable and growing operating profit under IFRS 17
Stable and growing operating profit under IFRS 17 Operating profit after tax1 ($m) IFRS 4 IFRS 17 ’22-23 YoY: 29% Turned positive for the first time ’1H YoY (Underlying)3: 22% 378 299 17 154 164 196 240 223 97 151 20 198 3 114 99 105 127 63 210 64 168 109 114 98 (77) (4) (56) (57) (129) (170) (149)
Slide 17: CSM release remains the core driver of operating profit
CSM release remains the core driver of operating profit IFRS 17 operating profit bridge (1H24) ($m) Insurance service result % of operating profit2 62% CSM release % of CSM1 11% 1H24 432 18 1H24 165 34 15 291 267 213 10 223 (73) (170) (67) CSM release Operating Risk adjustment Others 3 Net insurance
Slide 18: High organic growth of CSM before assumption change
High organic growth of CSM before assumption change CSM evolution (1H24) ($m) +7% organic growth, before assumption changes CSM amortisation rate: Organic CSM movement3: $(55)m 11% 26 46 549 14 5,296 5,046 4,978 (20) 4,687 (385) (298) (291) 1 Opening CSM New business Interest Operating Operating Oth
Slide 19: Improvement to net profit from reductions in one-off impacts
Improvement to net profit from reductions in one-off impacts IFRS 17 OPAT to NPAT (1H24) ($m) Non-market Related Market Related 67 280 223 213 (10) (108) (74) 49 (17) (18) 11 3 (39) (81) (8) OPAT Non-controlling OPAT Operating tax OPBT Finance1 costs 2 Others Implementation Short-term Loss Other non
Slide 20: Diminishing one-off impacts to embedded value
Diminishing one-off impacts to embedded value 1H24 embedded value (EV) evolution1 ($m) Organic EV movement: $160m Economic factors: $(538)m 404 25 298 5,842 5,682 (32) (224) 5,197 (311) (105) (38) (500) Indicative reduction of $202m with JPY+5% and THB+5% vs USD3 2023 EV Expected VNB Operating Opera
Slide 21: Appendix
Appendix
Slide 22: Balanced investment portfolio to achieve sustainable growth
Balanced investment portfolio to achieve sustainable growth Investment portfolio by asset class1 Corporate bonds by credit ratings1 1H24 1H24 3.5% Total investment Government yield4 2% 1% 90% 1% Investment bonds grade 6% 36% 3.04% Other fixed 8% 6% 6% income Fixed income AAA securities7 12% portfoli
Slide 23: Diversified products suite designed for sustainable growth across all channels
Diversified products suite designed for sustainable growth across all channels Provide customers with a suite of accessible product offerings through diversified channels, allowing them to choose the protection coverage they want 1 Standalone Protection riders to Diverse product portfolio protection
Slide 24: Embedded value: economic assumptions
Embedded value: economic assumptions Risk discount rate comparison (%) 14.0% 14.0% 13.8% 13.8% 12.8% 12.5% 12.8% 12.8% 10.8% 10.8% 10.8% 10.8% 8.8% 8.8% 8.8% 9.0% 9.0% 9.2% 9.2% 7.8% 7.8% 8.3% 7.2% 7.6% 7.0% 7.2% 7.6% 7.6% 6.0% 6.0% 6.3% 6.3% Hong Kong Thailand Japan Indonesia Philippines Vietnam Si
Slide 25: Embedded value and value of new business sensitivities
Embedded value and value of new business sensitivities Key embedded value sensitivities comparison1 (%) 1.3% 0.8% (0.3)% (2.3)% (2.5)% (2.3)% (1.9)% (3.3)% (3.0)% (3.2)% (3.3)% (3.1)% (3.2)% (3.0)% (3.0)% (2.8)% (5.8)% (6.0)% (6.0)% (6.9)% (6.5)% (7.3)% (7.2)% (7.0)% RDR +100bps Equities -10% Intere
Slide 26: IFRS 17: risk-free rates with illiquidity premium comparison
IFRS 17: risk-free rates with illiquidity premium comparison Risk-free rate (“RFR”) with illiquidity RFR with illiquidity premium – HKD RFR with illiquidity premium – THB premium – USD 6.0% 5.7% 5.4% 5.6% 5.3%5.4% 5.2% 5.3% 5.2% 4.7% 4.8% 4.9% 4.6% 4.0%3.9% 4.3% 4.3%4.5% 4.4%4.5% 4.5% 4.5% 3.7% 3.6%
Slide 27: Disclaimer (1/4)
Disclaimer (1/4) THIS PRESENTATION IS PROVIDED TO YOU FOR REFERENCE ONLY. Forward Looking Statements This presentation may contain a number of "forward-looking statements". Forward looking statements include information concerning FWD Group (“FWD”)’s possible or assumed future results of operations,
Slide 28: Disclaimer (2/4)
Disclaimer (2/4) Key Performance Indicators This presentation may also contain indicators of historical financial and operating performance that are based on a number of assumptions. These indicators include, but are not limited to, value of new business, new business margin, embedded value (EV), ad
Slide 29: Disclaimer (3/4)
Disclaimer (3/4) Financial Presentation This presentation includes historical financial data, including operating profit after tax, net profit attributable to Equity Holders of the Company, annualised premium equivalent ("APE"), total weighted premium income (“TWPI”), leverage ratio and return on eq
Slide 30: Disclaimer (4/4)
Disclaimer (4/4) No invitation is made by this presentation or the information contained herein to enter into, or offer to enter into, any agreement to purchase, acquire, subscribe for or underwrite any securities or structured products, and no offer is made of any shares in or debentures of a compa