Insurance sector
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Profit to rebound in 4Q14, to prosper in 2015 Neutral
Insurance sector
- 3Q14 earnings not strong as expected
3Q14 total earnings of the 18 insurance companies (14 non-life insurance, one non-life
reinsurance, two life insurance, and one life reinsurance companies) were B1.98bn,
contracting 46.6%qoq but rising 137.6%yoy. 3Q14 net profit of the three life insurance
companies (BLA, SCBLIF, and THREL) made the record low in many years at B606m,
plunging 67.1%qoq and 75.2%yoy, accounting for only 30% of the sector's net profit
(versus 49% in 2Q14). Meanwhile, 3Q14 net profit of the 15 non-life insurance
companies was B1.35bn, falling 26.6%qoq but reviving from B1.6bn net loss in 3Q13.
3Q14 net profit of AYUD, BKI, and TIC grew most significantly in the sector. Although
their net premium income growth was limited (TIC's net premium income fell by over
11.4%qoq), claim payment reserve was lowered because there was no serious incident,
thus boosting earnings of non-life insurance companies (TIC's profit from non-life
- Profit to rebound in 4Q14, to prosper in 2015
Earnings of the insurance sector are projected to revive and make the year's peak in
4Q14. Four companies under our coverage - BLA (bond yield improved), BKI, THREL
and THRE (THRE already made a claim reserve) - are anticipated to revive and generate
net profit in 4Q14. Likewise, THREL's net profit is projected to rebound after losses from
a non-conventional reinsurance project and reinsured claim from credit life reinsurance
(over B22m) were booked in 3Q14. The insurance sector's net profit is anticipated to
return to normal in 2015; net premium income from non-life insurance business is
expected to rebound from 3%yoy in 2014 to 12%yoy in 2015, and net premium income
from life insurance business is projected to grow by at least 12%yoy.
- BLA, THREL for life insurance... BKI for non-life insurance
Top picks for life insurance business are BLA([email protected]) and THREL([email protected]). For
non-life insurance business, top pick is BKI(FV@B450).
