This article first appeared in The Edge Malaysia Weekly on December 27, 2021 - January 2, 2022

The domestic general insurance sector remained weak in 2020, with a 0.6% decline in gross written premiums (GWP), while the life insurance industry saw a 0.4% fall in annualised new premiums.

Yet, insurer Allianz Malaysia Bhd achieved a growth in net profit in the last three financial years starting from FY2018 ended Dec 31. That year, its net profit grew 30.9% year on year to RM377 million, and the momentum continued in FY2019 with a 30.6% increase in net profit to RM492.5 million.

The insurer was not spared from the adverse impact brought about by the Covid-19 pandemic, but it managed to stay on the growth path despite the pace slowing down to 5.6% y-o-y to RM520.3 million in FY2020. This was backed by higher underwriting profit from its general business segment.

Between FY2018 and FY2020, Allianz’s net profit grew at a three-year compound annual growth rate of 21.8% — the highest among its peers in the financial services sector (below RM10 billion market capitalisation).

Allianz General remains the market leader in the general insurance segment, with a market share of 13.3%, while its life insurance unit Allianz Life Insurance Malaysia Bhd continued to maintain its No 5 position in the segment, with a market share of 7.7%.

Allianz General achieved a GWP of RM2.36 billion in FY2020, an 11% growth from RM2.13 billion in FY2017. It achieved a profit before tax of RM432.1 million in FY2020, an increase of 62% from RM266.88 million in FY2017. 

Allianz Life recorded a 37% increase in GWP to RM2.95 billion in FY2020 from RM2.15 billion in FY2017.

Allianz’s total assets expanded 11.1% y-o-y to RM21.9 billion as a result of the growth of its investment portfolio.

The group’s investment portfolio grew 16.4% to RM18.73 billion as at Dec 31, 2020. The investment mix remained relatively stable during the year, comprising government and government-related bonds, unquoted bonds of corporations, quoted equity securities and unit trusts, and loans and deposits with banks.

Allianz has rewarded shareholders with regular dividends. It is worth noting that the insurer has been more generous over the past three years as its earnings ballooned. 

The group declared a dividend per share of 40 sen for ordinary shares in FY2018, 65 sen in FY2019 and 58 sen in FY2020. Ordinary shareholders enjoyed total dividends of RM1.63 per share in that three-year period. 

For irredeemable convertible preference shares, the group declared a dividend of 48 sen per share in FY2018, 78 sen in FY2019 and 69.6 sen in FY2020. 

To provide equal opportunity to repairers, along with the prospect of raising the standard of service given to Allianz Motor Comprehensive policyholders, Allianz General in 2020 became the first insurer to hold an open tender inviting car workshops under the PIAM Approved Repairers Scheme to join its panel of Allianz Authorised Repairers. 

While this move allowed for greater transparency concerning the selection process, it was met with resistance from repairers nationwide, wrote the group’s CEO Zakri Mohd Khir in its FY2020 annual report. However, he stressed that Allianz Malaysia remained undeterred in its pursuit of good governance. 

Zakri pointed out that while both the life and general businesses faced varying challenges, the ramifications were amplified for the life business, and there was a sense of urgency to regain lost ground during the lockdown. 

“The life insurance penetration rate remains at 54%, and there needs to be a paradigm shift in the products and services that Allianz Life can offer to its customers and the community at large to shift the needle. This includes adapting to an alternative, more agile operating model and leveraging new value pools such as Pos Malaysia,” the chieftain wrote in the annual report.

“The general business will continue to prioritise growth, especially in our non-motor business, while the strategy moving forward will include innovation, adjusting to economic disruptions and adopting more digital practices.”

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