Thai Life Insurance is expected to see steady earnings growth thanks to a new financial reporting standard. Analysts believe the company’s early moves will strengthen its market position in the coming years.
Thai Life Insurance Expected to See Earnings Boost
Thai Life Insurance (TLI) could see its earnings rise by up to 9% between FY2025 and FY2027. This prediction comes from Maybank Securities, which highlights that TLI is well-positioned to benefit from the new Thai Financial Reporting Standard (TFRS17).
Analyst Insights on Growth Potential
Maybank Securities analyst Nontapat Sahakitpinyo explained that TLI’s FY2024 earnings could increase by around 7%. Between FY2025 and FY2027, the company may see annual growth of 7% to 9%. This is driven by TLI’s strong value of new business (VONB) margin, which is considered high in the region.
What is TFRS17?
TFRS17 is a new financial reporting rule for insurance contracts. It covers both non-life and life insurance. Unlike old standards, TFRS17 focuses on the duration of contracts rather than their type. According to Actuarial Business Solutions (ABS), this shift aims to give a clearer picture of an insurer’s financial health.
Early Strategy Helps TLI
TLI moved early to adjust its strategy for TFRS17. It shifted its focus from selling high volumes to improving profit margins. By optimizing its product risks ahead of its competitors, TLI is now better prepared for the new rules. Analyst Sahakitpinyo also noted that TLI may be able to regain lost market share thanks to these early efforts.
Changes in the Insurance Market
With TFRS17 taking effect, insurance companies are expected to change their pricing strategies. Aggressive pricing is likely to decrease as firms start to focus more on profit margins. The new rules mean that Value of New Business (VONB) margins will directly show up in the profit and loss statements. Selling unprofitable products will also immediately hurt a company’s financial results, as losses must be recognized right away.
Outlook for TLI
Given its early action and strong VONB margins, Thai Life Insurance is in a strong position. The company could not only increase its earnings but also strengthen its place in the market as the industry adapts to TFRS17. The future looks promising for TLI as it navigates these changes.
Related topics:
