Allianz Malaysia Bhd
(Nov 25, RM11.98)
Maintain “buy” with a target price (TP) of RM13.50: Allianz General Insurance Co (M) Bhd’s (AGIC) gross premium growth of 8% was above the general insurance (GI) industry’s 5.1% in nine months of financial year 2014 (9MFY14).The above-industry growth was partly attributed to its ability to capture market share in the new vehicle segment. Its combined ratio of 86.3% was below the industry’s 88.0%, due to its superior track record of 17.6% expense ratio. In the near term, AGIC retains its view of a lacklustre industry’s premium growth due to the challenging environment, slow growth in motor industry and a change in consumption pattern amid cautious spending. We note that the industry’s 9MFY14 growth of 5.1% was below the first half of FY14 (1HFY14)’s 6.8%.

Allianz Life Insurance (M) Bhd remains focused on boosting its agency force to 10,000 by FY15 (vs 7,088 currently), although the number of productive life agents remains unchanged at 2,000 to 2,500. Year-to-date (YTD), Allianz saw commendable performance in its agency investment-linked (19.7% vs industry’s 9.1%) and bancassurance products (160% vs industry’s 17.7%). We like AGIC’s leading market position (12.4% GI market share) and Allianz’s long-term strategies. Maintain “buy” and sum-of-parts-based TP of RM13.50. — RHB Research Institute, Nov 25

This article first appeared in The Edge Financial Daily, on November 26, 2014.