KUALA LUMPUR (Jan 13): Allianz Malaysia Bhd’s (KL:ALLIANZ) earnings outlook is clouded by uncertainties over future premium increases, Maybank Investment Bank said and downgraded the country’s largest general insurer.

It remains uncertain whether medical costs and claims can be contained, even as there is no near-term impact on profits, Maybank said and cut the stock to ‘hold’ from ‘buy’. The house also slashed its target price by RM2.45 to RM22.40, following a 10% discount to reflect the earnings concerns.

“Until there is some conclusion to negotiations among stakeholders,” Maybank said in a note, “we expect uncertainty over the impact on Allianz’s earnings to prevail.”

Private healthcare costs have skyrocketed amid soaring medical inflation in Malaysia, and spikes in premiums for medical insurance have prompted public outcry, prompting the central bank to step in.

Bank Negara Malaysia, which also regulates the insurance industry, has asked insurance and takaful operators to spread out the increases in premiums over a minimum of three years for all policyholders affected by the repricing, among other interim measures.

“Failure to cap claims could have some negative implications for future earnings” of Allianz, Maybank flagged. If claims at its life insurance business rise by 20% and revenue only grows 10%, Allianz's earnings could decline as much as 4% in the financial year ending Dec 31, 2026 (FY2026), according to Maybank's estimates.

For now, the house is keeping its net profit forecasts of RM744.8 million for FY2024 and RM809.2 million for FY2025. 

Maybank now joins TA Securities and AmInvestment Bank with ‘hold’ calls on Allianz, while three other research houses still have the stock on ‘buy’. The average 12-month target price for the stock is RM23.26, according to the Bloomberg consensus, offering a 12% premium to the current price.

Shares of Allianz rose 18% last year, thanks to robust earnings, and were relatively unchanged in the first two weeks of 2025.

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