Allianz Strong Earnings Growth In Business Bounce Back
Allianz General saw gross earned premium growth of 6% YoY, while its combined ratio improved slightly to 87.3% in FY22.
Allianz reports strong earnings in Q4 2022, with analysts at Maybank maintaining a BUY rating with an unchanged SOP-derived TP (Sum-of-the-Parts Valuation) of MYR16.75.
The company's earnings bounced back in the fourth quarter, resulting in stronger-than-expected profits for the year. FY23/24E earnings were raised by 4%/5% respectively, to factor in higher investment income.
Allianz reported a 4Q22 net profit of MYR166m, which took FY22 core net profit to MYR472.8m, 10% above expectations. The main variance was the reversal of MTM losses in recent quarters to a substantial MTM gain in 4Q22, brought about by the decline in bond yields during the period.
A Maria
Premiums Growth
Allianz Life saw topline gross earned premiums growth of just 5% YoY in FY22, while ANP contracted 4% YoY. Its pretax profit jumped 30% YoY on the back of improved investment results. Management’s focus will be on intensifying agency recruitment and uplifting agent productivity.
Allianz General saw gross earned premium growth of 6% YoY, while its combined ratio improved slightly to 87.3% in FY22. Its agency and franchise distribution channels were the main sources of premiums growth at 9.9% and 14.2% respectively. The company retained its number 1 position in the industry with a market share of 13.3%.
Maintain Buy
"Our SOTP valuation is maintained at MYR16.75, assuming an embedded value (EV) of MYR3.5b for Allianz Life and a P/EV of 1x, and a PBV of 1x for Allianz General.
However, there are several risk factors for our earnings estimates, target price and rating for Allianz. Its life business is dependent on consumer sentiment and the growth in household wealth, while high claims would affect overall profitability.
"Its general business is dependent on demand for transport vehicles and housing/commercial properties, which may wane amid slower economic growth. Moreover, 'de-tariffication' of fire and motor tariffs would affect overall profitability if rate competition intensifies," says Maybank.
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