Allianz Malaysia (ALLZ)’s 1QFY13 results were within our and consensus estimates, accounting for 24% of both full-year forecasts. Gross written premiums (GWP) jumped 16.9% y-o-y but  the group’s bottom-line growth was flat at 1.3% y-o-y, offset by persistently high bancassurance distribution expenses and claims for medical products. No changes to our forecast pending the company’s briefing today. Maintain NEUTRAL, with MYR 9.09 FV.  

-  Spectacular showing by Allianz General (AGIC).  The general insurance (GI) segment continued to outpace the industry with a robust GWP  growth of 17.2% (vs the industry’s 8.2%).  AGIC’s bottom-line growth was impressive, as underwriting profits surged 25.6%, boosted by an improved combined ratio of 84.1% (vs 85.2% in 1QFY12 and 87.7% in FY12).

- Allianz Life (ALIM) maximizes distribution. The life insurance (LI) business also saw strong growth as GWP rose 13.7% y-o-y while new business expanded at 13.8% vs the industry’s 2.2% in FY12. We believe this momentum will be sustained for the remaining quarters due to the group’s  enhanced distributions channels, especially via the new bancassurance initiative with HSBC.

- ALIM profits still subdued. The group’s overall profit was dampened by higher expenses,  amortization incurred for ALIM’s distribution channels and higher claims expenses for certain life medical products. This resulted in a flat y-o-y net profit  growth of 1.3%, despite q-o-q growth being much higher at 22.1%. In 4QFY12, ALIM was also hit by higher claims for its medical products. In our previous company update, we understood that the company planned to re-price the affected products by re-introducing riders to help counter inflation and medical costs. However, its results show that this remains as a significant challenge.

- Maintain NEUTRAL. We keep our NEUTRAL call despite the share price having exceeded our target price by 5%. As the results were within our expectations, we retain our forecasts for now,  pending the company’s briefing for analysts today.

Source: RHB