The JPWALL ASEAN 20

ASEAN’s Most Valuable Non-Life Insurers 2015


Jeremy Wall

Group Managing Director
jeremy@jpwall.com

When ranking non-life insurers, most often GWP is used. "We're number 8", "We're in the top 10", "We moved up from #7 to #6". It's a simple measure and one that is easily determined. But is it the best measure? If ranking market share - yes. If ranking value - no.

The role of the CEO is to increase value (and manage risk) for shareholders - who ultimately, want a high valuation for the business. Increasing market share is necessary, but must be combined with efficient levels of capital, a well run operation and ultimately, a profitable book of business - if value is to be generated.

The best way to estimate value is to perform an actuarial appraisal valuation, normally only conducted during a transaction. So at JPWALL we decided to do an appraisal valuation of every non-life insurer in ASEAN (based on publicly available information) and determine a ranking based on value. This meant performing over 300 individual appraisal valuations.

Firstly, we valued the entire industry. Then we valued every company in the industry and calibrated the valuations to ensure the total equaled the sum of the parts. We used high-level valuation assumptions and a simplified model, only using publicly available information, i.e. not discussing assumptions with individual companies. As a result, the study is as objective as possible - but at the same time - approximate and indicative only, and this should be clearly noted.

The two main significant drivers of valuation are equity and future profitability. This means that companies with excess capital will have higher valuations, but lower price to book (P/B) ratios. Higher returns on equity (ROE) are directly proportional to higher P/B ratios, as are lower combined ratios (COR). The key then to building value is to focus on growing profitable business, running an efficient and effective operation and managing capital efficiently.

Please enjoy the report which I'm sure you will find very interesting and I look forward to hearing from you should you wish to discuss any aspect.

Sincerely,


The JPWALL ASEAN 20

(USD mil except P/B ratio)

Rank Company Country Value P/B Equity GWP NEP Net Profit
1 Thailand 996 1.1 925 1,028 1,026 94
2 Singapore 922 0.6 1,494 424 293 57
3 Malaysia 878 2.1 418 650 477 73
4 Singapore 865 2.1 407 420 157 66
5 Malaysia 738 5.9 124 327 188 58
6 Singapore 674 1.2 555 224 222 99
7 Thailand 650 0.6 1,025 467 333 71
8 Malaysia 586 1.7 349 454 354 65
9 Singapore 542 1.6 347 272 217 33
10 Singapore 519 1.9 269 342 298 34
11 Singapore 510 1.2 439 143 92 53
12 Thailand 509 3.2 160 742 168 42
13 Thailand 508 3.7 137 309 161 26
14 Singapore 501 3.1 163 129 113 47
15 Indonesia 463 1.7 226 346 276 80
16 Thailand 452 3.2 143 181 174 32
17 Thailand 424 2.4 177 296 278 30
18 Thailand 404 0.6 685 160 140 130
19 Malaysia 395 2.0 200 261 181 43
20 Malaysia 388 2.5 153 347 261 31

Note: All figures are as of year 2014