Thai Life Insurance may benefit from new reporting standard

Thai Life Insurance may see its earnings rise by up to 9% between FY2025 to FY2027.

Thai Life Insurance (TLI) is well-positioned to benefit from Thai Financial Reporting Standard (TFRS17), according to Maybank Securities.

“In our base case, FY24 earnings could rise by 7%, with 7–9% growth in FY25–27E, driven by its regionally high [value of new business (VONB)] margin,” said Maybank Securities analyst Nontapat Sahakitpinyo.

TFRS17 is a new financial reporting standard for insurance contracts, covering both non-life insurance and life insurance contracts. It focuses on the duration of the contract rather than its 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. Having already optimised its product risk earlier than its peers, TLI may even regain market share moving forward, Sahakitpinyo said.

Pricing in the market is expected to become less aggressive as the insurance industry starts to prioritise margins, partly in preparation for TFRS17.

Under this, VONB margin will effectively reflect profitability in the profit and loss statement (P&L), whilst selling loss making products would hurt the P&L, as losses must be recognized immediately.