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,
(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
