4Q21 results within expectations
Operationally stable
Allianz’s FY21 net profit was within expectations. Its underlying general business remains stable while its life business continues to see robust growth. We raise FY22-23E earnings by 3-7% on marginally lower claims. We expect a much-improved operational performance into FY22, though the ongoing risk is of higher interest rates that could contribute to lower investment results. BUY maintained with an unchanged RNAV-derived TP of MYR16.75 – yields are an attractive 5%.
Within expectations
Allianz’s 4Q21 net profit of MYR155m (+7% YoY, +34% QoQ) took FY21 net profit to MYR479m (-8% YoY) – within our expectations at 104% of our full year forecast. FY21 gross written premiums (GWP) expanded a decent 7% YoY but pretax profit contracted 14% YoY due to marked-to-market investment losses stemming from the rise in bond yields during the year, mainly at the life division. As a result, Allianz General contributed to a larger 66% of group pretax profit in FY21.
Stable performance from Allianz General
Despite the difficult operating environment amid slower auto sales and the lockdown, Allianz General’s FY21 GWP eked out growth of 3.2% YoY, driven by the motor and engineering businesses. Its partnership with Pos Malaysia contributed to 6.5% of GWP during the year. Its underwriting surplus expanded a decent 9.1% YoY on the back of a lower combined ratio of 87.8% versus 88.4% in FY20, with lower commission and expense ratios buffering a higher claims ratio of 56.6% versus 55.5% in FY20. Pretax profit was however flat on lower investment income.
Strong growth in NBV at Allianz Life
Allianz Life’s FY21 GWP expanded a decent 10.5% YoY and grew across all key distribution channels. However, pretax profit declined 29% YoY due to fair value losses on investments. Positively, nevertheless, annualized new premiums jumped 33% (due in part to lower volumes in 2020) and outpaced industry growth of 13%, while new business value (NBV) rose 15% YoY due to higher sales volume and higher margins