ALLIANZ: Insurance Group Reports Strong Earnings Beat, Target Price Raised on Robust Outlook

A leading insurance group has seen its rating upgraded to “BUY” from “Neutral” by an investment bank, following a comprehensive review of its 9M25 financial performance and future prospects. The positive adjustment comes on the back of results that exceeded expectations, prompting a more optimistic management tone regarding operational resilience and dividend policy.

The target price for the insurer has been lifted to RM21.40, indicating a 15.0% upside potential from the current traded price of RM18.50. This revised target also implies an attractive approximately 6% FY26F yield.

Performance Review

The group’s 9M25 results were notably strong, leading to an 8-10% upward revision of FY25F-27F earnings estimates. This impressive performance was underpinned by robust contributions from both its life and general insurance segments.

In the life insurance division, a strong uptake of newly introduced co-payment insurance policies contributed to improved claims experience and a significant expansion in underwriting margins, which climbed to 18.7% in 9M25 from 16.4% in 9M24. The persistency ratio remained broadly stable at 84%, reflecting consistent customer trust.

Concurrently, the general insurance segment demonstrated strong revenue indicators in 9M25, with both motor and non-motor premiums outpacing industry averages. Strategic focus areas, including commercial lines (such as data centre-related projects) and residential fire insurance, are expected to drive further growth. Proactive risk management measures, including the cession of higher-risk policies to reinsurers and increased claims reserves, have been implemented to mitigate potential impacts from seasonal events like the monsoon season.

Future Outlook and Shareholder Returns

Management expressed heightened confidence in the group’s capital and solvency positions, which have strengthened significantly compared to 12 months prior. This enhanced financial stability, coupled with greater clarity on regulatory developments—including medical insurance repricing and the new capital framework from Bank Negara Malaysia (BNM)—is expected to allow the group to increase its dividend payouts.

Consequently, dividend per share (DPS) estimates have been substantially increased by 33-34%, reflecting a higher assumed payout ratio of 24.5% for FY25F-27F, up from 20% previously. Additionally, the group is undergoing leadership changes with a strategic emphasis on fostering “homegrown” talent to ensure long-term operational continuity and sustained excellence.