INVESTOR PRESENTATION UNDERWRITER OPERATI ON : Well-known and stable - - PowerPoint PPT Presentation

BODI I NSURANCE

INSPIRING ASSURANCE

INVESTOR PRESENTATION

UNDERWRITER

2

OPERATI ON: Well-known and stable company providing service through 25 branches and 800 representatives, with an experience

• f 25 years

SERVI CE: Over 70 products of 15 types of insurance services MANAGEMENT OF THE COMPANY: CRM solution to control relation between executives and employees, management team with

• ver 10 years experience

I NSURETECH TECHNOLOGY: E-Office solution to improve and accelerate the relation between all employees, clients and

executives

CLAI MS PAYMENT: The fastest claims payment on TPL within only 20 minutes. (Other companies take up to 2 – 20 days) REI NSURANCE SERVI CE: Well experienced in reinsurance service, leader in the sector by owning around 30+ % of the market

share

COOPERATI ON WI TH AXA GROUP: The sole representative in Mongolia providing AXA health services and looking to expand its

cooperation in the near future.

FI NANCI AL PERFORMANCE: Net profit increase for the last three years. SECTOR GROWTH: As GDP growth in Mongolia is estimated to be around 6%-8%, same growth would be shown in insurance

• sector. Insurance penetration is around 10% in developed countries and 4%-5% in developing countries compared to only 0.5% in

Mongolia

4.9% 5.0% 5.0% 5.7% 5.5% 6.3% 6.2% 5.0% 2020 2021 2022 2023 2024

ОУВС Дэлхийн банк Сангийн яам

MACROECONOMI C AND I NSURANCE SECTOR CORRELATI ON

INSURANCE SECTOR

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• Insurance sector has increased by more than 1.43 times than the

nominal GDP growth since 2010

• As of 2019Q3, the economic growth was 16% and insurance growth was

26%.

• If we presume that insurance sector’s growth would be 1.43 times

higher than GDP growth, insurance sector would be grown by 1.88 times in 5 years.

Mongolia’s GDP growth expectation

0.5%

HI GHLI GHTS OF THE I NSURANCE SECTOR:

15% 16% 27% 26% 2011 2012 2013 2014 2015 2016 2017 2018 2019Q3 Economic growth Sector growth IMF World Bank MoF*

* Ministry of Finance * * Insurance penetration: Percentage of insurance premium in GDP / Insurance density: Insurance premium in per one person * * * FX rate – 2750 MNT/USD

1/ 10

1 out of 10 people in Mongolia is insured Expenditure on insurance from annual income

26% 18

Total insurance companies Insurance Sector Growth Mongolia, USD World rates, USD

I NSURANCE PENETRATI ON AND DENSI TY RATE* * *

4

320 mln USD

MID TERM LONG TERM

• Total insurance premium was 40 million

USD in 2018. Bodi Insurance company’s sales potential is 12 million USD.

• Entity – 3.6 mln USD
• Citizen – 1.8 mln USD
• Regional – 2.2 mln USD
• Agent/representative - 1 mln USD
• Bank/ NBFI- 1.5 mln USD
• Broker – 0.7 mln USD
• Online and others-1 mln USD
• There are 150 million USD opportunity for

insurance sector.

• Motor: 22.6 mln USD
• Health: 127 mln USD
• Renter responsibility: 0.5 mln USD
• Bodi

Insurance’s product development team is looking to have 5.1% of above

• market. It will be derived from additional

demands and market share in midterm.

• Bodi Insurance is estimating that the

long term marketable size would be 320 mln USD.

• Motor: 18 mln USD
• Health: 218 mln USD
• Renter responsibility : 29 mln

USD

• Livestock: 54 mln USD
• Haven’t included entity insurance

3.6 billion USD

Gray area: 1/3 of the total banking system

MARKETABLE SI ZE OF THE SECTOR

150 mln USD 40 mln

USD

12 mln USD 12+7

mln USD

SECTOR POTENTIAL

* FX rate – 2750 MNT/USD

SHORT TERM

25 branches

The widest sales channel with 3 branches in UB city and 22 branches regionally. 5

25 years

Established in 1995, one of the first companies in insurance market and

• perated constantly for 25 years

70+ products

Provide the most or 75+ types of products to clients

800+ representatives

Have more than 800 representatives in regional and capital city areas

VISION:

Mid-tier financial services company in Asia.

MISSION:

To help people plan their bright future.

GOAL:

To time-travel the 400 years of advancement of established insurers in a decade.

COMPANY OVERVIEW

HI STORI CAL MI LESTONE

25

years ago

15

years ago

5

years ago

2020 10

years ago Bodi latest developments:

• On-demand products
• Online channels
• Integrations +

Insurtech + AI/BI

• Bodi was founded as

a travelers’ insurer.

• Bodi writes 30% of

livestock policies.

• High-end healthcare re-

insurance: >90%

• Started leading in the claim
• service. Motor insurance

market share: 20%

• Entered re-insurance

commission business at zero profit. Now Bodi’s market share is 50%.

1400s

Establishment

• f Insurance

COMPANY STRUCTURE, ORGANIZATION

Shareholders Board of Directors Executive Director Office of Board of Directors Internal auditor Nomination Committee Compensation& Remuneration Committee Executive Committee Risk Management Committee Insurance Department

Operations & Business Development Department

Finance and Risk Department Legal & Claim Department Institutional Insurance Division General Insurance Division Branch Executive Division

Administration & Human Resource Division

Online Development Division

Business Development& Marketing Division

Client Service Division Finance & Investment Division Risk Management Division Legal Division Claim & Emergency Call Division

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COMPANY STRUCTURE EXECUTI VE TEAM BOARD OF DI RECTORS

Executive Director

B.Zolbayar

Director of Operations, Business Development Department

J.Bayarmagnai

Director of Finance and Risk Management

B.Bilguun

Director of Legal and Claims Deparment

J.Davaasuren

Director of Insurance Department

B.Khudertulga

Name Position

1 L.Boldkhuyag Board Chairman 2 G.Saruul Regular member 3 B.Bilegt Regular member 4 Sh.Sukhbaatar Regular member 5 E.Byambajav Independent member

L.Boldkhuyag, 50%

L.Bold, 40% Bogd Bank LLC, 10%

SHAREHOLDERS

PRODUCTS AND SERVICES

Mining Petroleum and Oil Construction and Road Transportation Bank, Finance, I nsurance

CORPORATE CLIENTS

The company provides insurance to the top entities in Mongolia

RETAIL CLIENTS

• Agriculture and food factory
• Production, service, trade
• Health
• Tourism
• Reinsurance
• Life and health
• Property
• Liability
• Vehicle
• Farming
• Livestock

The company operates in all provinces and soums through the

• ver 1000 employees and delegations.

7 Insurance products:

The most or over 70 types of products 33 types

• f

products contributes to most of the sales.

INSURANCE PREMIUM

CORPORATE AND INDIVIDUAL BY BRANCHES INSURANCE PREMIUM BREAK DOWN

14% 21% 21% 44% Broker Regional branches Representative UB branches

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* Based on 2018 performance

Constant and stable operation

The equal ratio of corporate premium and individual’s premium decreases the risk of total premium income. Leads in Livestock Insurance

• wning 34% of market share

Company has 14% -34% market share in cargo insurance, aircraft, crop insurance, trust insurance

Opportunities to increase sales points 22 branches 800+ representatives Health and Accident 24% Property 26% Motor (own damage) 9% Cargo insurance 4% Aircraft, (third party) ownership liability 2% Motor (third party) 17%

49.70% 50.30% Corporate insurance Retail insurance

9 Bodi Insurance was chosen as the official representative in Mongolia the of world’s leading company “AXA Group”.

2014

• Cooperated with AXA Group on AXA

PPP Healthcare management – the international health insurance service, as well as provides with AXA corporate solution, PPP , healthcare, assistance.

• The Sales of the Bodi Health – the

product which is offered along with AXA product have been increasing rapidly.

from 2020

• Planning

to introduce new health product with AXA Group.

• Expansion of the cooperation

2014-2020

COOPERATION WITH AXA GROUP

• Leadership culture
• Keen digital awareness:

– Financial Innovation = Data + Experience + Process – R&D in Insurtech: Sensors and telematics tests – Plug and play tactic for BI + AI.

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• Technology
• Widest range of product offerings.
• Highest number of sales channels including
• nline.
• Modern Omni-channel CRM and Lead

management system.

• Marketing automation.
• Specialists and experienced sales managers.
• Sales

Product developments in last 12 months Sales channels and Re- insurance

Widest range of products, sales channels, and business.

KEY DIFFERENTIATORS

• Re-insurance
• Highest share in the mandatory markets .
• Re-insurance commission business market

share is 50%.

Client Based Scalable Leverageable

575 358 230 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 1.6 1.2 '13 '14 '15 '16 '17 '18 '19 Net income (thousand USD) Operating expense vs. Net income (million USD) The speed to solve claims on motor insurance:

Continuously leveraging our brand and leadership. Making sure our business is:

• + 10 working days
• 1 week
• 2 days
• 8 hours
• 20 minutes
• Additional services

2000s 2010s 2015 2016 2018 2020

• Leadership culture
• Keen digital awareness:
• Financial Innovation = Data + Experience + Process
• R&D in Insurtech: Sensors and telematics tests
• Plug and play tactic for BI + AI.

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Continuously leveraging our brand and current leadership. Plus:

3T: Transformation + Transparency + Trust

• Transform into adaptable enterprise

for Plug-and-play extensions. As investment in Insurtech becomes larger and larger, it is becoming cheaper and cheaper.

• Modern insurers demand hyper

transparency because of the effect of social networks.

• Incoming fast growth phase needs

trust and growth management. Asia: Specialty Play

• Current claim settlement speed

is more than 10x faster than developed countries.

• Asian countries have same

development profile and low penetration rate. Mongolia’s fintech is leveled up by fierce competition in banking. Growth accelerator: In-organic growth

• Pure play company to a diversified

financial service group.

• Ecosystem: 2/3 of customers will

make decision based on add-on services and insurance ecosystem

• model. The raise of the startup

trend.

EXPANSION STRATEGY

FINANCIAL PERFORMANCE

* RPI – Reinsurance Premium Income * * All figures in USD are in million USD, all figures in MNT are in billion MNT * * FX rate: 2750 MNT/USD

• Total Asset
• Premium Income

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• Total Claims paid
• Net profit
• Reinsurance premium
• Reinsurance commission income, percentage

11 12.3 17.6 28.2 32.8 4.0 4.5 6.4 10.3 11.9

2015 2016 2017 2018 2019 Total Asset, MNT Total Asset, USD

2.8 4.5 6.3 7.97 1.0 1.6 2.3 2.9

2016 2017 2018 2019 Total Claims, MNT Total Claims, USD

18.4 13.1 16.7 11.6 13 6.7 4.8 6.1 4.2 4.7

5 10 15 20

2015 2016 2017 2018 2019 Reinsurance premium, MNT Reinsurance premium, USD

0.3 0.4 0.9 0.9

0.11 0.15 0.33 0.32 2% 2% 8% 7%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 0.2 0.4 0.6 0.8 1

2016 2017 2018 2019 RPI* , MNT RPI, USD Commission, %

20.1 28.2 23.6 27.9 7.3 10.3 8.6 9.5

• 25%

40%

• 16%

18%

• 40%
• 20%

0% 20% 40% 60% 10 20 30 2016 2017 2018 2019

Total Premium Income /MNT/ Total Premium Income /USD/ Growth

0.8 1 0.6 1.6 1.7 0.29 0.36 0.22 0.58 0.62 2015 2016 2017 2018 2019

Net Profit, MNT Net Profit, USD

FINANCIAL STATEMENT

FI NANCI AL STATEMENT / ‘000 USD/ 2017 2018 2019

Cash and cash equivalents

211 1,396 270

Investment

2,753 2,627 3,368

Insurance receivables

999 1,475 2,231

Other finance assets

198 950 1,098

Other non-finance asset

501 284 328

Investment capital

920 2,764 2,000 CURRENT ASSET 5,581 9,496 9,296

Property, plant and equipment (net)

739 693 674

Intangible asset (net)

72 61 50 NONCURRENT ASSET 811 754 724 TOTAL ASSET 6,392 10,250 10,020 13 LI ABI LI TI ES / ‘000 USD/

2017 2018 2019

Insurance liabilities

516 1,912 1,762

Unearned Premium Reserve

2,347 3,922 3,690

Claim reserve fund

1,193 1,267 999 TOTAL LI ABI LI TI ES

4,262 7,452 6,923

Share Capital

1,546 1,818 1,818

Revaluation surplus

189 189 189

Retained earnings (losses)

396 790 1,090 TOTAL EQUI TY 2,130 2,797 3,097 TOTAL EQUI TY AND LI ABI LI TI ES 6,392 10,250 10,020

* FX rate – 2750 MNT/USD

I NCOME STATEMENT / ‘000 USD/

2017 2018 2019

Gross written premium

10,259 8,578 10,162

Reinsurance premium cost

6,081 4,218 4,738 Net written premium

4,038 4,167 5,103

Net earned premium

3,518 4,289 4,529

Net losses and LAE paid

1,197 1,615 2,006

Insurance agreement cost

505 621 701

Reinsurance commission income

143 329 326

Investment gains (losses)

370 360 390 I nsurance operating gains (losses)

2,111 2,742 2,790

Net profit after tax

376 215 576

* Net profit margin

15.1% 5.3% 13.8%

Type of shares

Common Shares

Nominal Price

MNT 25

Number of shares

200,021,760

Number of shares after IPO

235,319,718

Price per share

MNT 113

MSE listing

Tier - 1

IPO INFORMATION

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Offered to public

20%

From shareholder

5%

Issued Additionally

15%

Strategic investors:

/Fixed price/

Up to 75% 25% and over

Public:

/Book building/

113 MNT

113-135

MNT

I PO SUBSCRI PTI ON I PO I NFORMATI ON

* FX rate – 2750 MNT/USD

TOTAL FUNDS TO RAI SE: MNT 5,318,225,672 Minimum: MNT 5,577,077,364 Maximum: To the Company To Shareholders 1,899,366 USD 1,991,813 USD 1,519,493 USD 379,873 USD

L.Boldkhuyag, 50% L.Bold, 40% Bogd Bank LLC, 10% L.Bolkhuyag, 40% L.Bold, 32% Bogd Bank LLC, 8%

Public, 20% Pre-I PO O Sh Shar areholders Post st -I PO O Sh Shar areholders

SHAREHOLDERS STRUCTURE

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Shareholders

PRE I PO POST I PO

Number of Shares Percentage Number of Shares Percentage Individual L.Boldkhuyag

100,010,880 50.00 % 94,127,887 40.00%

Individual L.Bold

80,210,880 40.10 % 74,327,887 31.59%

Bogd Bank LLC

19,800,000 9.89 % 19,800,000 8.41%

Public

• 47,063,944

20.00%

Total

200,021,760 100.00%

235,319,718 100.00%

SHARE PRI CE VALUATI ON

125 MNT

DI SCOUNT

10 percent

OFFERI NG PRI CE

113 MNT

Valuation made by: Gerege Estimate LLC Business Valuation: 25,046,577 thousand MNT / 9,107,846 USD Valuation method, approach: Discounted cash flow Discount rate 22.6% Terminal growth rate: 11.0%

0.045 usd 0.041 usd

BUSINESS VALUATION

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* FX rate – 2750 MNT/USD

BUSI NESS VALUATI ON I PO PARTI CI PANTS

UNDERWRI TER:

“BDSEC” JSC

AUDI T:

“BDO Audit” LLC

VALUATI ON:

“GEREGE ESTIMATE” LLC

LEGAL ADVI SORY:

ELC LLP

I ndirect benefits by raising funds

1. Increase income from reinsurance service 2. Increase market share in the sector 3. Influence financial sector by participating in capital market 4. Implement ESOP program

USE OF PROCEEDS

• Equity (MSE)

10%

• Equity (International Stock Exchange)

5%

• Savings, Certificate (Bank, 1st rank)

30%

• Savings, Certificate (Bank, 2nd rank)

20%

• Government bond, similar products

15%

• Alternatives

10%

• Othes

10%

• Cyber office system;
• Mobile workers;
• Mobile representatives;
• Business intelligence
• 360 protection on driving;
• Automatization on claims payment

Target yield: 15.3%

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I nvestment Technological improvement

BUSINESS PLAN

ASSET / ’000 USD / BP2020 BP2021 BP2022 BP2023 CAGR

Cash and cash equivalents 314 345 360 369

• 4.22%

Investments 6,488 8,350 10,614 13,375

12.27%

Insurance assets 3,007 3,122 3,259 3,434 1.89% Premium receivables 1,785 2,052 2,373 2,793 6.97% Other receivables 1,065 905 770 654

• 6.67%

Property, plant and equipment (net) 679 672 667 661

• 0.40%

Intangible asset (net) 98 83 70 95

10.69% TOTAL ASSET 13,435 15,531 18,112 21,382 6.71% LI ABI LI TY/ ’000 USD/ BP2020 BP2021 BP2022 BP2023

Payables 478 478 478 478

• 5.56%

Total Net Written Premium 4,645 5,052 5,539 6,178 4.21% Total Claims reserve fund 1,339 1,586 1,888 2,267

8.38%

Others 352 352 352 352 0.00%

Total liability 6,813 7,468 8,257 9,274 3.72%

Share Capital 3,161 4,603 6,394 8,647

19.86%

Revaluation surplus 3,461 3,461 3,461 3,461 0.00%

Total equity 6,622 8,064 9,855 12,108 9.82% TOTAL LI ABI LI TY AND EQUI TY 13,435 15,531 18,112 21,382 6.71%

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* FX rate – 2750 MNT/USD

I NCOME STATEMENT/ ’000 USD / BP2020 BP2021 BP2022 BP2023 CAGR I nsurance Premium

5,845 6,722 7,771 9,147 6.97% Net written premium 5,477 6,284 7,247 8,459 7.21% Total claims paid 2,282 2,696 3,203 3,831 8.84% Underwriting expense 117 135 155 183

10.00% Total margin 1,979 2,209 2,473 2,807

4.01% Operating expense 1,852 2,066 2,293 2,540 5.08%

Underwriting profit 128 143 179 267

2.54%

Net profit 1,172 1,442 1,791 2,253 9.32%

BUSINESS PLAN

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* FX rate – 2750 MNT/USD

I NCOME STATEMENT / ’000 USD/ BP2020 BP2021 BP2022 BP2023 Net Profit 1,172 1,442 1,791 2,253 Net written premium 5,845 6,722 7,771 9,147 Net claims paid 2,282 2,696 3,203 3,831

Total investment 6,488 8,350 10,614 13,375 Total investment profit 882 1,135 1,451 1,835

Net profit margin 20.06% 21.45% 23.05% 24.63% EPS 5.16 6.34 7.88 9.91 BVPS 3.57 2.90 2.34 1.86

Contact us at:

HEADQUARTER BDSec JSC, Zaluuchuud Avenue 27/1, Sukhbaatar District, Ulaanbaatar city, Mongolia Phone/Fax: 75551919, 11-321763 Email: info@bdsec.mn

: www.bdsec.mn : www.facebook.com/BDSecJSC : www.twitter.com/BDSecJSC

A MEMBER OF MONGOLIAN STOCK EXCHANGE A MEMBER OF MONGOLIAN ASSOCIATION OF SECURITIES DEALERS

JOINT STOCK COMPANY LISTED IN THE TIER-1 CATEGORY OF MSE

Please be informed that registering securities with the Mongolian Stock Exchange does not serve as grounds to provide any guarantee on risk of such securities. Please be informed that investing in the purchase of securities is ALWAYS RISKY at all times for you investors. It is highly recommended to review the securities prospectus and securities issuance procedures carefully before any investment decision.

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INSURANCE SECTOR 2019 PERFORMANCE COMPARISON

* All figures are in million USD * * FX rate – 2750 MNT/USD

9.22 6.87 5.59 5.24 4.29 4.19 3.81 3.20 2.68 2.43 0.99 0.60 0.74

• 0.44 0.43 0.34

0.28 0.19 0.26

I NVESTMENT

Investment Investment gain/loss

15.74 14.80 10.58 10.02 9.97 7.57 6.45 6.56 4.20 3.72

TOTAL ASSET

7.83 6.54 5.77 5.10 4.29 3.88 3.23 2.98 2.85 2.12

TOTAL WRITTEN PREMIUM

5.73 2.04 1.72 1.70 1.62 1.03 1.03 0.65 0.41

NET INCOME

0.33 0.09 0.08 0.07 0.03

BODI Mongol Tenger AIC MNDL

REINSURANCE INCOME

10.81 6.57 6.07 5.99 4.82 4.55 4.38 3.56 2.89

TOTAL CLAIMS PAID