Review

• Allianz Malaysia Berhad (Allianz) 1HFY24 net profit of RM356.8mn was in line with expectations at 46.2% of our full-year forecasts and 46.6% of consensus earnings.
• 1H24 PBT increased 4.5% to RM475.8mn while revenue improved by 16.4% to RM2.7bn. The solid performance was driven by the life insurance segment. The life insurance business reported a higher PBT of 17.5% YoY to RM229.4mn, boosted by investment-linked protection business and higher investment income. Growth is driven by all key distribution channels.Agency ANP grew by 26.5%, Bancassurance increased by 71.2% and Employee Benefits improved by 12.9%.
• However, the general business PBT decreased 5.8% to RM248.5mn in 1H24 due to higher claims from the fire and engineering segment. As such, the combined ratio increased 3.0 pts to 88.4%. Positively, the gross written premium increased by 15.2% YoY to RM1.7bn, boosted by higher premiums stemming from the motor business (+20.1% YoY).
• QoQ, 2Q24 PBT declined 10.4% to RM224.8mn despite higher revenue of 2.6% to RM1.4bn. The general segment PBT decreased by 12.2% due to higher claims (claims ratio: +2.3 pts to 65.2%). Similarly, the life insurance segment reported a lower PBT of 12.4% on the back of higher claim experience from investment-linked protection businesses.

Impact

• No change to our FY24-26F earnings estimates.

Outlook

• Moving into 2H24, we expect further growth in the life insurance business through agency recruitment and partnership expansion. Allianz has launched an agency transformation programme namely, Kingmaker, targeting to double the agency sales force by 2028 (vs. c.4,700 agents in FY23).

Valuation

• We value the stock at RM23.00/share based on SOP valuation. We place our Hold recommendation under review pending management guidance at today’s analyst briefing.

Source: TA Research - 26 Aug 2024