Bangkok Life Assurance : Management Discussion and Analysis Quarter 2/2023

Management's Discussion and Analysis for 2Q2023

15th August 2023

Executive Summary

• In the second quarter of 2023, Bangkok Life Assurance PCL. reported a net profit of 789 million Baht, decrease 34% from the second quarter of 2022 representing an earnings per share of 0.46 Baht. In the six-month period of 2023, the net profit was 1,545 million Baht, a decrease of 22% YoY representing an earnings per share of 0.90 Baht. The main reasons were due to a decrease in investment income and renewal premium as expected.
• In the second quarter of 2023, the Company recorded a total revenue of 10,166 million Baht, a decrease of 8% YoY. First year premium (FYP) was increased by 5% YoY. Renewal Premium (RYP) decreased by 8% YoY.
• In the six-month period of 2023, a total revenue is 21,274 million Baht, a decrease of 7% YoY. The FYP was 3,522 million Baht, an increase of 32% YoY. The RYP in the second quarter of 2023 was 12,334 million Baht, decreased by 11% compared to the same period last year.

• The FYP by distribution channel in the six-month period of 2023 were as followed: bancassurance, agent and other channels accounted for 66%, 20% and 14%, respectively.
• The total investment income in the second quarter of 2023 was 2,933 million Baht, a decrease of 15% from the same period last year. The reason was due to a decrease from realized gain. The return on investment (ROI) in 2Q23 was 3.72% and ROI of the six-month period of 2023 was 3.71%
• Total expense in the second quarter of 2023 amounted to 9,237 million Baht, a decrease of 4% from the same period last year. Total expenses in the six-month period of 2023 amounted to 19,439 million Baht decreased by 5%. The key reason was from a decline in underwriting expenses.
• The Capital Adequacy Ratio (CAR) in the second quarter of 2023 was at 375%, an increase from 369% at the first quarter of 2023.

Bangkok Life Assurance Public Company Limited

1

Performance Overview

Total Premium

In the second quarter of 2023, the Company's total premium amounted to 7,060 million Baht, a decrease of 6% YoY. The main reason was a decrease in renewal premium.

In the first-half of 2023, the Company's total premium amounted to 15,856 million Baht, a decrease of 4% YoY. Contribution of the total premium by distribution channel were bancassurance 55%, agent 37% and other channels 8%.

First Year Premium

In the second quarter of 2023, the Company's FYP was 1,324 million Baht, an increase of 5% from the same period last year. This was resulted mainly from the Bancassurance channel which FYP increased by 16% YoY. Agency channel saw FYP decreased by 10% For other channels, FYP decreased by 20%.

In the first-half of 2023, the Company's FYP was 3,522 million Baht, an increase of 32% YoY as a result of increase in FYP from bancassurance channels by 52%, Agent channels decreased by 10% and other channels increased by 39%. The contribution by distribution channel was 66%, 20% and 14% respectively for bancassurance, agent and other channels.

Renewal Year Premium

In the second quarter of 2023, the Company had a renewal year premium of 5,736 million Baht, a decrease of 8% from the same period last year. In the first-half of 2023, the Company's RYP was 12,334 million Bath, a decrease of 11% YoY as expected.

Management's Discussion and Analysis for 2Q2023

15th August 2023

Figure 1: Total Premium by channels (Baht: million)

								-4% YoY
							16,553	15,856
							1,206
				-6%YoY			1,341
				-20%QoQ			5,957	5,839
	8,796
7,482
1,029	7,060
358	312
2,947
2,921	2,893			9,390
					8,676
4,203	4,821	3,855
2Q22	1Q23	2Q23				6M22	6M23
			Bancassuranc		Agent		Other

Figure 2: First Year Premium by channels (Baht: million)

			+32% YoY
				3,522
				478
		+5%YoY	2,665
	2,198	-40%QoQ	343	710
1,260	404	1,324	789
353
93		74		2,334
397	1,441	357	1,534
771	893
2Q22	1Q23	2Q23	6M22	6M23

Bancassuranc Agent Other

Figure 3: Renewal Premium by channels (Baht: million)

-11% YoY

								13,888
								864	12,334
										863
				-8%YoY				5,168
				-13%QoQ
									5,129
	6,598
6,222	5,736
265	625
239
2,525	2,594
2,536				7,856
							6,342
3,432	3,380	2,962
2Q22	1Q23	2Q23					6M22	6M23
			Bancassuranc			Agent		Other

Bangkok Life Assurance Public Company Limited

2

Investment Asset and Investment Return

In the second quarter of 2023, the Company's total investment asset was 320,661 million Baht, a decrease of 1.9% from the first quarter of 2023 due to policy maturity. The Company's investment proportion in fixed income was at 84%, equity at 9% and REIT at 4%.

In the second quarter of 2023, the Company's investment income (3) was 3,011 million Baht, a decrease of 15% from the same period last year due to the realized loss.

In the first-half of 2023, the Company's investment income was 6,057 million Baht, a decrease of 12% YoY. Excluding realized gain, interest and dividend income decreased 1% YoY.

In the second quarter of 2023, the return on investment (ROI) equals to 3.72%, decreasing from 4.25% in the previous year, and increasing from 3.69% in the previous quarter. Investment yield (including interest and dividend income) was at 3.88%, increasing 6 bps YoY, and 22 bps QoQ.

In the first-half of 2023, the return on investment (ROI) and Investment yield equaled to 3.71% and 3.77% respectively.

(3) Interest income + Dividend + Profit (Loss) from Investment

Management's Discussion and Analysis for 2Q2023

15th August 2023

Table 1: Investment Assets as of 30 June 2023

Figure 4: Investment Income (Baht Million)

							-12%YoY
						6,892	6,057
						653
			-15%YoY
			947	903
			-1%QoQ
3,546
3,047	3,011
358
27
527	494	5,292	5,255
409
2,661	2,610	2,645
			-128			-101
2Q22		1Q23	2Q23		6M22	6M23
		Interest			Dividend		Realized gain

Figure 5: Return on Investment

Bangkok Life Assurance Public Company Limited

3

Underwriting Expenses

In the second quarter of 2023, the Company underwriting expenses totaled 8,735 million Baht, a decrease of 6% YoY In the first-half of 2023, the underwriting expenses was 18,540 million Baht, a decline of 7% YoY. The major reason came from a decrease of life policy reserves.

Figure 6: Underwriting Expenses (Baht, million)

						-7%YoY
				-6%YoY			18,540
				-11%QoQ			356
				19,852	1,196
			9,805	8,735
			305
9,297	206	150	1,240	31,867
642	553
133	15,067	16,801	16,493
543
7,927			1,814
694	(6,110)	(8,768)	(14,878)
2Q22	1Q23	2Q23		6M22	6M23
		Life policy reserves increased		Gross benefit and claims paid
		Commissions and brokerages		Other underwriting expenses

Operating Expenses

In the second quarter of 2023, the Company had an operating expense of 428 million Baht, an increase of 10% from the same period last year. The main reasons were due to employee expenses and system development expenses. In the first-half of 2023, operating expense increased by 11% YoY. The company continues to focus on expense management.

Figure 7: Operating Expense (Baht, million)

+11%YoY

+10%YoY

		+9%QoQ	742	823
388	394	428
2Q22	1Q23		2Q23	6M22	6M23
				Operating expenses

Management's Discussion and Analysis for 2Q2023

15th August 2023

Net Profit

In the second quarter of 2023, the Company had a net profit of 789 million Baht a decrease of 34% from the same period last year and the increase of 4% from the previous quarter, representing an earnings per share of Baht 0.46.

In the first-half of 2023, the company reported a net profit amounting to 1,545 million Baht a decrease of 22% YoY. representing an earnings per share of Baht 0.90 per share.

Figure 8: Net Profit (Baht, million) and earning per share (Baht)

					-22%YoY
			-34%YoY	1.17
			+4%QoQ	0.90
0.70
	0.44	0.46	1,990
1,189				1,545
756	789
2Q22	1Q23	2Q23	6M22	6M23
			Net profit	Earning per share

Capital Adequacy and Risk-Based Capital (RBC)

In the second quarter of 2023, the Company's Capital Adequacy Ratio ("CAR") was at 375%, an increase from 369% at the first quarter of 2023. This improvement can be attributed to more effective management of assets and liabilities, along with a reduced of risk due to policy maturity during the first half of the year.

Bangkok Life Assurance Public Company Limited

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