(From left) Allianz Life Insurance Malaysia Bhd CEO Charles Ong, Allianz Malaysia CEO Sean Wang and chief financial officer Guilio Slavich. (Picture by Low Yen Yeing/ The Edge)

KUALA LUMPUR (June 22): Allianz Malaysia Bhd is targeting a full-year FY2023 dividend payout ratio of over 30% its net income. This comes on the back of its record dividend payout of 85 sen per share for the financial year ended Dec 31, 2022 (FY2022).

The dividend that the group could pay to its shareholders will be influenced by several factors, namely Bank Negara Malaysia’s approval, required retained surplus to fuel growth and provisions for future shocks, said its CEO Sean Wang.

“Last year, we thought about all these things as well, still we declared what we declared. So hopefully we can maintain, but our target is definitely more than 30% payout,” he told The Edge on the sidelines after the insurer’s annual general meeting on Thursday (June 22).

Allianz started FY2023 strong with a 14.8% increase in net profit for the first quarter ended March 31, 2023 (1QFY2023) to RM172.7 million from RM150.5 million a year ago, as revenue rose 9.2% to RM1.16 billion from RM1.06 billion previously.

The higher revenue was on both higher general and life insurance revenue.

On the back of this, the group declared a first interim dividend of 31.5 sen with a June 14 ex-date, to be paid on June 28.

Speaking on its prospects for the remainder of FY2023, Wang said he expects momentum seen in the first quarter to carry forward into subsequent quarters, reiterating the group’s target to outperform the overall insurance industry.

However, he said the group remains cognisant of various headwinds that impact on consumption and in turn the insurance industry, namely the ringgit’s weakening versus major currencies, continued inflationary pressures, interest rate hikes and forecasted moderating gross domestic product growth in 2023.

Its motor insurance portfolio — the general insurance segment's main gross written premiums (GWP) contributor in FY2022 — is expected to slow in FY2023, in view of the forecasted decline in total industry volume to 650,000 this year, from 720,658 in 2022.

Meanwhile, its life insurance segment is to also maintain its momentum, according to Allianz Life Insurance Malaysia Bhd’s CEO Charles Ong. He highlighted that the group’s life insurance business grew 11% versus the industry’s 3% in 1QFY2023.

"In 2022, we were shrinking, the industry was also shrinking. We now see some restoration. We are very confident in our value creation model,” he noted.

Ong said: "If you look at our life insurance business, one of the businesses with better margins was actually our protection business. If we sell more comprehensive protection — medical, personal accident, accelerated critical illness — we can actually increase our margins."

Allianz Malaysia chief financial officer Giulio Slavich said the life insurance business is expected to see continued strong revenue contribution from its investment-linked protection business.

One Allianz strategy, value-creation through cross-line business synergy

On its One Allianz strategy, Wang said the insurer plans to drive value creation through cross-line synergy of its products between its general and life insurance businesses.

Wang cited the group's overall customer base of 3.8 million, but noted that customer overlap between the two businesses is still limited at 200,000 to 100,000, citing that it could expand its margins by distributing more products to its customers.

"For any recruitment that we do this year, we want them to be able to sell life insurance products, and also general insurance products,” he added.

“This is why we find that the size of the One Allianz opportunity is very high, others (other insurance players) might be combining with different companies, but we can actually work on our existing customer base. This is why One Allianz is important,” Slavich said.

Meanwhile, Slavich stressed that the success of the strategy’s implementation lies in the group’s ability to synergise its general and life insurance operations.

“For the customer, it is rather intuitive to embrace the concept: Why should I (the customer) have my contracts with two different providers when I can have them with a single point, and talk to a single person at a single number?” Slavich opined.

“It's more on us operationally to bring together two companies (the general and life insurance businesses) with two licences, systems, separate distribution forces, so we have to eliminate a number of practical obstacles,” he added.

At the time of writing, shares in Allianz were down eight sen or 0.56% at RM14.32, giving the group a market capitalisation of RM2.55 billion.