Review

• Allianz’s FY23 net profit of RM730.9mn came within expectations, accounting for 101.4% and 104.1% of ours and consensus’ full-year forecasts respectively. YTD dividend stood at 100.5sen per share (vs. 85.0sen per share in FY22).

• FY23 net profit surged 19.1% to RM730.9mn, ahead of insurance revenue growth of 11.8% to RM4.9bn. We attribute the commendable performance to the absence of Cukai Makmur (tax rate: -6.1 pts to 23.6%) and higher contribution from both insurance segments. The general insurance delivered a stronger PBT of 7.9% to RM556.2mn, boosted by higher premium from motor business and higher investment income. Combined ratio increased by 0.7 pts to 85.7% due to higher claims ratio (+1.0 pts to 59.4%).

• Meanwhile, the life insurance segment PBT rose to RM411.2mn (vs. RM377.6mn in FY22) on the back of higher net insurance and investment results. Gross written premiums (GWP) grew by 5.2% YoY, boosted by agency and employee benefit channels. More importantly, new business value stood at RM349.3mn (+16.3% YoY).

• QoQ, PBT decreased 8.8% to RM239.4mn despite higher revenue of 0.3% to RM1.3bn. We attribute the weaker performance to higher claim experience from investment-linked protection business.

Impact

• No change to our earnings estimates pending updates from analyst briefing.

Outlook

• We are optimistic that Allianz’s growth will continue in FY24, driven by expansion of distribution channels, repricing activities and operational efficiency.

Valuation

• Maintain Buy on Allianz with a target price of RM19.88/share based on SOP valuation.

Source: TA Research - 27 Feb 2024