• Still BUY, unchanged MYR17.90 TP offers 36% upside, with a c.3% FY22F yield. Allianz Malaysia’s (AMB) 1H22 core net profit of MYR264m is in line with our estimate, but beat Street expectations, at 53% and 56% of full-year projections. While reported numbers were largely dragged down by marked-to-market losses, topline items including operating revenue and gross written premiums (GWP) demonstrated sturdy growth. We make no changes to our forecasts for now, pending the analyst briefing on 25 Aug. This report marks the transfer of coverage to Nabil Thoo.

• Group results review. AMB booked a 2Q22 net profit of MYR96.6m, ie down 34% YoY (QoQ: -4.6%) against an encouraging operating revenue increase of 5.5% YoY (QoQ: -3.1%). The decrease in net profit largely came from losses in the fair value of financial instruments amounting to MYR448m (vs a gain of MYR49m in 2Q21) from the life insurance segment. 1H22 reported net profit made up 40% and 42% of our and Street full-year forecasts, whereas (estimated) core net profit of MYR264m amounted to 53% and 56% of full-year projections.

• Allianz General (AGIC) – still a consistent performer. AGIC’s 1H22 GWP gained 13% YoY, on higher premiums from the motor and personal accident businesses. The segmental claims ratio rose slightly to 59.6% from 58.9% in 1H21, following a 4% rise in claims incurred. However, a 16% YoY reduction in management expenses led to a lower combined ratio of 87% (1H21: 89%). As a result, 1H22 PBT for the division stood at MYR219m (+5.4% YoY).

• Allianz Life (ALIM) – dragged by fair value losses. ALIM recorded 1H22 annualised new premiums (ANP) of MYR303m, down 6% YoY (against an industry decline rate of 7%). This was mainly due to an ANP decrease of 16% YoY from the agency channel, offset slightly by the 24% YoY gain from bancassurance. GWP grew 8.2% YoY as a result of a 12% increase in single premium sales. However, the segment recorded MYR584m in fair value losses (1H21: MYR365m) due to rising interest rates affecting fixed income and equity instruments. Despite posting a lower combined ratio of 82% (1H21: 91%), segmental PBT contracted by 1% to MYR76m.

• Maintain BUY with a MYR17.90 TP as we await the analysts’ briefing to be held on 25 Aug. We make no changes to our forecasts for now, but see downside risks arising from the worse-than-expected YTD fair value losses. At present, our forecasts do not yet include any MFRS 17-related adjustments. Our TP bakes in a 4% ESG premium, based on AMB’s ESG score of 3.2 as per our in-house proprietary scoring methodology.

Source: RHB Research - 25 Aug 2022