After 80 years in business, Thai Life Insurance (TLI), the country's second largest life insurer, is going public in 2022 to enable sustainable growth through digital transformation, business expansion and improvement of corporate governance.
TLI filed for an initial public offering (IPO) with the Securities and Exchange Commission (SEC) and plans to list on the Stock Exchange of Thailand (SET). It appointed Capital Nomura Securities and Kiatnakin Phatra Securities as financial advisors for the offering.
According to FSS International Investment Advisory research, TLI plans to float 2.207 billion shares, including 850 million new shares and 1,218.82 million existing shares, comprising 19.3% of the company's total shares.
The company will also offer a greenshoe option for over-allotment of no more than 320.8 million shares from Her Sing (H.K.), the company's shareholder.
TLI's major shareholder is the Chaiwan family, which has businesses covering insurance, banking and other sectors.
SUSTAINABILITY FOCUS
TLI chief executive Chai Chaiwan said the company filed a registration statement and draft prospectus with the SEC for the IPO to offer approximately 20% of the company's total shares. There may be an excess allocation of up to 15% of all ordinary shares offered for sale, said Mr Chai.
The company expects to list this year, its 80th year in operation.
He said being listed on the SET will help raise funds for the company's plan to achieve sustainable growth and restructure the organisation to ensure TLI's corporate governance is in line with the rapidly changing insurance landscape.
TLI also wants to establish and enhance its brand awareness on the international stage, said Mr Chai.
He said public fundraising will also help strengthen the company's business development and expansion plan to maintain a leading position in the life insurance industry in Thailand and Southeast Asia.
The proceeds will be used to create strong and sustainable growth through investment in digital technology and the expansion of distribution channels and businesses, said Mr Chai.
"The company's financial condition remains strong with a capital adequacy ratio of 334% as of June 30, significantly higher than the rate required by the Office of the Insurance Commission at 120%," he said.
"The company also has shareholders' equity of 82.14 billion baht, which is the third-largest in the Thai life insurance business."
During 2018-2020, the company recorded total revenue of 101 billion baht, 108 billion and 108 billion respectively, with net profits of 6.71 billion baht, 6.78 billion and 7.69 billion.
TLI recorded a cumulative average annual growth rate of 7.1% during the period.
As of March 31 this year, TLI had total assets of 535 billion baht, total revenues of 25.95 billion baht and net profits of 3.79 billion baht, with total insurance premiums received of 19.5 billion baht.
As of December 2021, the company had 4.47 million total policies and a fundamental value of 142 billion baht, said Mr Chai.
While many businesses, especially those in the non-life businesses, have been affected by the Covid epidemic, TLI has maintained a healthy financial position because the amount of health claims were consistent before and after the pandemic, he said.
The company also has a high level of capital reserves at 345 billion baht, which is sufficient for claim payments.
Mr Chai said TLI's vision is to become a sustainable life insurance company that caters to all life and personal finance plans by developing products and services to meet the needs of customers at every life stage and lifestyle.
BUILDING CHANNELS
The company has various distribution channels, with agents as the main distributors. There are more than 66,000 life insurance agents available nationwide, creating a vast network that helps the company offer both basic life insurance products as well as sophisticated and more profitable products. TLI also has customer service centres at 270 branches nationwide.
In addition to agents, TLI is developing various distribution channels such as telephone sales and e-commerce, as well as building business alliances to sell products and provide services to customers through commercial banks, state banks, government organisations, leasing and hire-purchase companies, and consumer finance firms in which the company enters into both exclusive and non-exclusive distribution agreements.
These alliances allow TLI flexibility to choose the best partner in each area and support the value of the company in the long term, he said.
The company currently partners with four commercial banks with a network of more than 750 branches nationwide and is affiliated with banks and five other government organisations with a network of more than 1,500 branches across the country.
According to the "Thailand Life Insurance" business report released by Milliman Ltd, an independent actuarial consultancy, the industry has grown exponentially over the past decade.
The industry recorded a compound annual growth rate of 7.3%, the second-largest in Southeast Asia, with the third-highest penetration rate in the region.
In 2020, the penetration rate for life insurance in Thailand was still low, accounting for 3.8% of the nation's GDP, allowing ample space for the industry to grow based on supporting factors such as an increase of the elderly population, a growing need for adequate health coverage and life insurance, and increasing demand for retirement planning and general savings, according to the report.
STRONG GROWTH PROSPECTS
Finansia Syrus Securities (FSS) said considering the company's total insurance premiums received this year, TLI has a relatively strong chance of recovery in 2022 by taking advantage of the interest rate hike and raised health awareness. The brokerage said TLI should focus on increasing consumer protection and products with higher profit margins.
FSS said the insurance firm adjusted its strategy to improve yield by focusing on the outcome of products, resulting in much higher earnings reports. The brokerage expects TLI's 2022 earnings to increase by 16.8% from the same period last year and to record annual growth of 2.9% for total insurance premiums and 15.8% cumulative average annual growth rate during 2022-2024.
FSS said the company has a strong distribution network based on insurance agents and a comprehensive product range that meets customers' needs.
TLI is one of only two life insurance companies in Thailand with a strong agent base that can offer more sophisticated products, said the brokerage. It also has effective asset and liability management that helps protect the company from interest rate volatility. TLI's return on interest rates is above the industry average, making it less likely to face liquidity problems amidst lower interest rates.
