Below Are Key Takeaways From Allianz’s 3Q23 Results Briefing:

General Business: Continued Growth Momentum

Despite the discontinuation of the Perlindungan Tenang Programme, Allianz general business reported a higher gross written premium of 11.4% YoY in 9M23 to RM2.25bn, driven by growth in all distribution channels. In addition, the combined ratio improved by 0.6 pts to 85.7% due to lower expenses and the hardening of engineering segment rates. More importantly, Allianz's market share increased to 13.7% in 9M23 (vs. 13.4% in 6M23), ahead of industry growth of 7.7%.

We are optimistic that Allianz will capture more market share moving forward. Moving into 4Q23, we believe that the general insurance segment will remain strong, given that new vehicle sales grew by 10% QoQ to 74,896 units in October, and the Malaysian Automotive Association expects November sales to be similar. We expect Allianz to benefit given the group's strong footprint in the motor business (40% of new car sales). As for EV cars, we gather that Allianz commands about 30% of the market share. Management shared that the group will launch a campaign for EVs next year. Note that Allianz has been a late mover in the EV market as the group focuses on service quality (i.e., enough road rangers and assets on the ground to charge EVs).

Growing Life Insurance Market Share

Allianz’s 9M23 life business annualised new premiums increased by 18.5% to RM552.8mn, surpassing industry growth of 10.8%. Meanwhile, market share rose to 10.3% (vs. 9.6% in 9M22). Growth is driven by all key distribution channels as: i) agency ANP rose by 21.3%, ii) bancassurance increased by 11.3% and iii) higher employee benefits of 22.1%.

Management reiterated that the group will focus on selling investment-linked products with protection riders. We gather that agency ANP for the investmentlinked business grew 12.4% in 9M23, and management will push for higher growth in 4Q23. The group has launched a few campaigns to acquire new customers while repricing activities are ongoing.

Continue to Work on Agency Recruitment Initiatives

We gather that Allianz currently has about 2.6k active agents. YTD, the group's total new recruit headcount, has grown by 31.2% and will continue to work on agency recruitment initiatives to gain market share. As such, Allianz will continue to invest in recruitment, such as the CEO program. With that, the expense ratio (11.2% in 9M23 as compared to 9.6% in 9M22) for the life insurance segment is expected to remain high over the next two years.

Separately, Allianz has launched five products under the Rahmah Insurance Initiative, such as the "Private Car Rahmah Package" and 'Allianz Kasih4All', addressing affordable insurance solutions for private cars and life insurance, respectively. Overall, we believe that the Rahmah package will help to address some of the added threats facing the underinsured segment and educate consumers about the importance of insurance.

Impact

No Change to Our Earnings Forecasts.

Valuation

We maintain our Buy recommendation on Allianz with a TP of RM19.28/share based on SOP valuation.

Source: TA Research - 27 Nov 2023