MNRB's  9MFY13  net  profit  at  RM97.1m  was  above  our expectations,  accounting  for 124% of our full FY13 earnings estimate. The 91.6% surge in profit was mainly due to lower  net  claims  ratio,  24.4%  higher  investment  income,  and  an  improvement  in
underwriting margins. We take the opportunity to upgrade our earnings estimates by as  much  as  50%  for  FY13/14  and  thus  upgrade  the  stock  to  a  BUY,  pegged  to  0.6x FY14  BV.  The  stock  is  a  laggard  amongst  reinsurers  in  the  region  which  trade  at closer to 1x BV with a 29% upside to our fair value.

Exceeded  expectations.  MNRB's  9MFY13  net  profit  at  RM97.1m  was  above  our expectations,  accounting  for 124%  of  our  full  year  earnings estimates.  During  3QFY2013, the  group  registered  a  net  profit  of  RM59.0m,  333%  higher  than  the previous year's corresponding period and higher q-o-q from 2Q's RM12.3m loss. The 9MFY13 profit surge of  91.6%  was  mainly  due  to:  i)  significantly  lower  net  claims  ratios  across  a  few  key business  segments,  ii)  24.4%  higher investment  income,  iii)  improvements  in  underwriting margins  as  well  as  increase  in  net  profit  margins  from  3.2%  to  5.6%.  This  was  however
offset  by:  i)  overall  moderate growth  of  8.4%  in  premiums/contributions,  and  ii)  higher  fee and commission expenses growth.

Source: OSK