Attractive 5% yield
The rise in bond yields will impact earnings of the group this year, but we
have largely taken that into account with expectations of marginally lower
core earnings this year. This, however, does not negate from the fact that
the underlying business performance of both the life and general divisions
remains healthy. BUY maintained with an unchanged RNAV-derived TP of
MYR16.75 – yields are an attractive 5%.
Within expectations
Allianz’s 1Q22 core net profit of MYR101m (-6% YoY, -35% QoQ) was within
expectations, accounting for 20% of our full-year forecast. 1Q tends to be
the slowest period for the group and we expect momentum to pick up in
the following quarters. Stripping out marked-to-market (MTM)
movements, core net profit grew at a robust pace of 30% YoY.
Improved market share for Allianz General
Allianz General saw its gross written premiums (GWP) expand at a healthy
pace of 11.8% YoY. As a result, its market share rose to 14% in 1Q22 from
13.3% in 1Q21. Net earned premiums growth was a slower 3.8% YoY but
with a lower combined ratio of 88.9% versus 90.5% in 1Q21, its pretax
profit expanded at a decent pace of 10.4% YoY.
Higher market share for Allianz Life as well
Allianz Life’s 1Q22 GWP expanded 7.7% YoY. While its annualized new
premiums (ANP) declined by 11.2% (from a higher base in 1Q21 which
benefited from a suppressed 1Q20 with the start of the lockdowns), the
industry’s ANP contracted by a larger 15.7%. As such, its market share
improved as well to 9.3% from 8.8% in 1Q21. New business value (NBV)
declined 28.5% YoY due to lower sales volume from its agency business.
With lower fair value losses, however, Allianz Life’s pretax profit
rebounded to MYR68m in 1Q22 from a loss of MYR20m in 1Q21.