ALLIANZ: Strong Earnings Momentum Drives Robust Performance, Outlook Positive
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading insurer has demonstrated a robust financial performance for the nine months ended FY25 (9MFY25), posting a net profit of RM661.2 million. This result was in line with internal expectations and significantly outpaced consensus estimates, accounting for 78.4% and 82.0% of full-year forecasts, respectively. The company’s revenue for the period climbed 11.7% year-on-year (YoY) to RM4.6 billion, underpinned by strong contributions from both its general and life insurance segments.
Performance Review
The general insurance segment recorded a substantial 23.6% increase in pre-tax profit (PBT), reaching RM479.5 million. This growth was primarily driven by an improved claims experience, particularly within fire and engineering businesses, coupled with enhanced net insurance and investment results. The motor business also saw a 10.5% YoY rise in premiums, attributed to higher renewal rates and a robust agency channel. Consequently, the segment’s combined ratio improved by 1.1 percentage points to 87.6%.
Concurrently, the life insurance division reported a 15.1% YoY increase in PBT, totaling RM393.3 million. This was bolstered by stronger net insurance and investment results stemming from investment-linked protection and employee benefit businesses. The introduction of a new medical product featuring a copayment option, combined with reduced expense overruns, contributed to an 11.8% rise in new business value, which reached RM304.9 million. Agency sales played a pivotal role as customers transitioned their existing medical plans to the new copayment-based offerings.
On a quarter-on-quarter basis, 3Q25 net profit expanded by 9.4% to RM234.2 million, supported by stronger investment and insurance service results, alongside a lower tax rate of 21.6%.
Future Outlook and Challenges
Looking ahead into 4Q25, the company anticipates continued momentum in investment-linked products bundled with protection riders, driven by agents pursuing stronger growth. The group’s 9MFY25 persistency ratio of 84.0% is expected to remain resilient, supported by initiatives such as automated payment features, co-payment options, and proactive management of medical inflation to maintain a healthy health loss ratio.
However, the general segment is projected to see a slightly higher FY25 combined ratio of 88.1%, compared to 87.6% recorded for 9MFY25. This anticipation reflects the expectation of higher claims during 4Q, particularly influenced by the monsoon season.
Recommendation
The investment bank maintains a “BUY” recommendation for the company, with an unchanged target price of RM20.66 per share, based on a Sum-of-Parts (SOP) valuation.
