Key takeaways from Allianz’s results briefing are: i) general business growth remains intact, ii) life insurance business is driven by Bancassurance, and iii) expect Allianz to report a strong 4Q24 performance. We maintain our FY24-26 earnings projections and reiterate our Hold recommendation with an unchanged TP of RM21.30/share.

General Segment: Continued Growth Momentum

To recap, Allianz's general business 9M24 PBT declined by 4.2% to RM388.1mn, primarily due to higher claims in the fire and engineering segments. We understand there were five significant losses YTD, including the floods in Johor and Sabah. This led to a higher claims ratio of 64.3%, compared to 59.4% in 9M23. On a positive note, Allianz continued its growth momentum, reporting a 14.2% increase in gross written premiums for 9M24, driven by an 18.2% rise in premiums from the motor business. Overall, Allianz's market share increased to 14.6% compared to 14.0% in 2023, as the group's GWP growth outperformed the industry by 3.6 pts.

Moving into 4Q24, we expect Allianz's market share to increase to c. 15% (vs. 14.0% in 2023). The group is expected to solidify its number 1 market share position as its closest competitor is still behind by at least RM900mn GWP. Growth will be fuelled by the group's strong footprint in the motor business (40% of new car sales). Recently, the MAA has raised its 2024 TIV forecast from 765k to 800k units. This revised estimate aligns closely with the 2023 figure of 799.7k units. More importantly, Allianz's loss ratio is expected to remain 3 pts better than the industry average.

Life Business Driven by Bancassurance

Meanwhile, Allianz's 9M24 life business annualised net premiums (ANP) surged by 16.4% to RM643.0mn, surpassing the industry growth rate of 10.9%. The growth in ANP was led by Bancassurance (+57.2%) and Employee Benefits (+16.4%). Management shared that Employee Benefits has turned around and will continue to improve its combined ratio. Additionally, the new business value reached RM272.6mn, up 15.6%, driven by higher sales and continued focus on high-margin products. As a result, the market share for 9M24 improved to 10.8%, compared to 9.8% in 2023.

Going forward, management will remain focused on selling investment-linked products with protection riders. More importantly, the 9M24 block persistency ratio improved by 2.3 pts to 87.5%, indicating that customers are paying for the repricing. The group's agency transformation programme, namely, the Kingmaker project, targets to double the agency sales force by 2028 (vs c.4,700 agents in FY23). This ambition remains intact.

Expect a Strong 4Q24

We are optimistic that Allianz will close the year strongly, driven by the general and life segments. In our forecast, we expect Allianz’s FY24 earnings to grow by 5.6% to RM771.9mn. Meanwhile, we project a dividend yield of 5.4% for FY24. Looking ahead, we believe Allianz growth will continue as the group focuses on driving a profitable product mix and maintain strict discipline in areas of underwriting and claims management.

Impact

No Change to Our FY24-26 Earnings Estimates.

Valuation

We maintain our Hold recommendation on Allianz with a TP of RM21.30/share based on SOP valuation.

Source: TA Research - 26 Nov 2024