Insurance Sector

Insurance Sector  

 

- Premium income weakens. Life insurance remains strong 

Both non-life and life insurance businesses weakened in 2M15 (the latest data of direct premium income of the non-life insurance business was in February while the latest data of direct premium income of the life insurance business was in March, so we can present gross premium income only for 2M15). Gross direct premium income of the non-life and life insurance businesses was B120bn, growing 5.4%yoy; direct life insurance premium income increased 7.7%yoy to B85bn, while direct non-life insurance premium income rose only 0.1%yoy to B35bn. The Thai General Insurance Association (TGIA) has recently estimated gross direct premium income at B768bn or the growth of 9%yoy in 2015, which is threefold bigger than our GDP growth forecast of 2.5%; direct non-life insurance premium income is projected to grow 7.0%yoy to B220bn, while direct life insurance premium income is projected to grow 10.0%yoy to B549bn. 

 

- 2Q15 profit to rebound for life insurance and decline for non-life insurance 

Of 18 insurance companies under our coverage, 14 of them are non-life insurance companies, one re-insurance company, two life-insurance companies, and one re-life insurance company. 1Q15 net profit of the sector was B689bn, increasing significantly by 36.7%qoq and 36.9%yoy (except BUI has not yet reported its 1Q15 financial statement); the growth came mainly from non-life insurance business, especially THRE from sales and adjustment of fair value of its investment in THREL. For the life insurance business, net profit shrank sharply in this quarter, led by BLA that had to increase its premium reserve as a result of falling interest rates in the market. However, contrary growth is foreseen in 2Q15; the life insurance business would improve, driven mainly by BLA, while profit from the non-life insurance business would decline for there is no longer extraordinary income from THRE. 

 

- BKI, BLA are top picks 

We select BKI as a top pick of non-life and BLA as a top pick of life insurance plays for their strong business, potential for stable growth when the economic revives, and good upsides.