KUALA LUMPUR, April 15 — Insurance provider, Allianz Malaysia is expected to record a steady growth despite a projection of 14 per cent decline in earnings, mainly due to lower investment gains in 2020, said Maybank IB.
However, the company’s underlying fundamentals remain strong, it said.
Maybank IB in its equity note today said, taking into account the weaker economic prospects, it expects subdued gross written premium growth for Allianz.
It also projects a net profit contraction of 25 per cent in the financial year 2020 (FY20), in the absence of investment and one-off gains.
“Our dependent protection scheme forecasts are nevertheless maintained on a still undemanding payout ratio of 23.7 per cent in FY20E,” it said.
On the moratorium imposed by the government to alleviate the financial burden of Malaysians due to the Covid-19 impact, Allianz Life has seen very little impact from the moratorium, with just about 700 applications to date with premiums totalling less than RM1 million.
“Meanwhile, Covid-19 claims have been negligible if any at all at this stage. Earnings, however, will likely contract due to lower investment gains and a full-year’s minimum allocation rate impact,” it said, adding that slower premium growth is likely inevitable.
For Allianz General, the impact is likely to be felt predominantly in its new car franchise business where it is a leader, as well as in motor and fire insurance sales to small and medium enterprises (SMEs).
Maybank IB has maintained its “buy” call on the company’s share with a lower target price of RM16.75.
As at lunch break, its share price was at RM14.14 or 1.14 per cent higher with 18,600 shares transacted.
Its market capital stood at RM2.29 billion. — Bernama
