KUALA LUMPUR (Nov 6): Malayan Banking Bhd's (Maybank) 69.05%-owned insurance arm Maybank Ageas Holdings Bhd has been assigned corporate credit ratings of AA1/Stable/P1 by RAM Rating Services Bhd (RAM Ratings), which indicated that Maybank Ageas' ratings reflect its overall credit profile, status as a non-operating holding company of regulated insurance entities, as well as its moderate leverage or debt measure.

In a statement on Friday (Nov 5), RAM Ratings analysts Loh Kit Yoong and Sophia Lee said based on Maybank Ageas’ projected debt load of RM1 billion at the end of 2021, RAM Ratings estimates its gearing and double leverage ratios to come in at around 0.3 times and one times respectively.

Loh and Lee said Maybank Ageas’ gearing and double leverage ratios "are manageable" in RAM Ratings’ view.

"Maybank Ageas is a leading domestic insurance and takaful group with life and non-life subsidiaries operating under the Etiqa brand in Malaysia and Singapore.

"In view of its close ties to Maybank, which owns 69.05% of the group, Maybank Ageas reaps significant benefits from the former’s extensive branch network and customer base, through which it has generally derived about a third of aggregate life/family NB (new business) and non-life premiums and contributions,” the analysts said.

Established in 2001, Maybank Ageas is a partnership between Maybank and Ageas Insurance International NV, which owns the remaining 30.95% of Maybank Ageas, according to the analysts.

According to them, Maybank is one of the largest financial services groups in the ASEAN region by asset size, while Ageas Insurance is a Belgium-based insurance group with life and non-life businesses in 14 countries across Europe and Asia. 

"The group’s (Maybank Ageas) core subsidiaries in Malaysia and Singapore have operated under the Etiqa brand since 2007, with Singapore being a small profit contributor (generally constituting about 3% of Maybank Ageas’ pre-tax profits).

“[In Malaysia,] with a 13.9% share of combined gross premiums and contributions in 2020, Maybank Ageas is the largest player in the local non-life arena and among the top three motor insurance and takaful providers. It also houses the largest takaful operation in the country by combined gross contributions. 

"The group’s (Maybank Ageas) life and family franchise is less prominent given the dominance of some locally-incorporated foreign insurers, having ranked fourth with around 10% market share of NB premiums and contributions in the last three years. Likewise, its Singapore franchise is smaller in stature, with market shares of 5% or less in the general and life segments,” they said.

As its life and non-life businesses contribute almost equal proportions of overall gross premiums and pre-tax profit, Maybank Ageas’ risk and earnings profile is well diversified, according to the analysts.

They said topline gains on the back of business growth and largely stable investment returns have supported Maybank Ageas’ profit performance, with investment-related income consistently contributing 25% to 30% of aggregate premiums and investment returns in the past five years.

"Pre-tax return on assets averaged a healthy 2.6% in the last three years. Maybank Ageas and its subsidiaries were adequately capitalised, with capital adequacy ratios above their respective individual target capital levels as at end-December 2020. Most of them had a buffer of at least 30 percentage points between the two indicators,” they said.

At Bursa Malaysia on Friday (Nov 5), Maybank’s share price closed up one sen or 0.13% at RM8.01 for a market value of about RM95.08 billion.

Maybank’s latest-reported number of issued shares stood at 11.87 billion, according to its Bursa filing on Oct 21, 2021.