Thai Life Insurance (TLI) is poised to benefit from the Thai Financial Reporting Standard (TFRS17), a new financial reporting standard for insurance contracts. According to Maybank Securities analyst Nontapat Sahakitpinyo, TLI’s earnings could rise by 7% in FY24 and grow by 7-9% in FY25-27E, driven by its high value of new business (VONB) margin.
TFRS17 focuses on the duration of insurance contracts rather than their nature, according to Actuarial Business Solutions (ABS). TLI has been an early mover in shifting its focus from volume to margin in preparation for TFRS17. Sahakitpinyo noted that having already optimized its product risk earlier than its peers, TLI may regain market share moving forward.
The new reporting standard is expected to make market pricing less aggressive as the insurance industry prioritizes margins. Under TFRS17, VONB margin will reflect profitability in the profit and loss statement (P&L), while selling loss-making products will negatively impact the P&L as losses must be recognized immediately.
The implementation of TFRS17 is a significant development for the Thai insurance industry, particularly for life insurance companies like TLI. By focusing on margin rather than volume, TLI is well-positioned to capitalize on the new reporting standard and potentially increase its earnings in the coming years.
