El-Erian, the chief economic adviser to Allianz: "Think of sterling as facing a double whammy with no strong anchor."
KUALA LUMPUR: Allianz Malaysia
's H1FY17 net profit declined 10.6% year-on-year but life operations' growth remains impressive, says Affin Hwang Capital Research.
THe research house says H1FY17 net profit was slightly below its expectations, at about 41% of its original 2017 forecast due to slightly higher medical claims costs and higher effective tax rate.
Allianz's lower profits were mainly due to exceptional provisions of RM19mil. Excluding provisions, the core profit before tax (PBT) would have grown 3.7% y-o-y.
Q2Fy17 gross written premium (GWP) and PBT of the general operations grew 2% and 6.1% y-o-y respectively despite a challenging industry as motor vehicle and property sales remain lacklustre.
PBT for H1FY17, however, declined by 7.6% yoy, with key culprits being the one-off provision of RM19mil recognised and the absence of MMIP reserve release of RM7.7m (in 1H16) but cushioned by better investment income.
"We understand that the provisions include the arbitration with Virginia Surety (which was first disclosed in Q1FY17) as well as a dispute with an American insurer for one of its co-insurance power plant account.
"We note that management remains confident that AllianzM has strong legal grounds and that the insurer involved was the only party who was unwilling to honour its obligations under the multi-party arrangement. We also note that there could be future writebacks should these disputes be resolved in AllianzM’s favour," says Affin Hwang Research.
GWP and PBT of life operations grew 5.7% yoy and 7.4% yoy respectively for 2Q17. Meanwhile, the annualised new premium (ANP) for life operations continue to grow at an impressive 27.4% yoy for H1FY17 vs industry growth of 4.7% as Allianz Life continues to see good reception of its investment-linked products with protection rider which provides higher margins.
Meanwhile, H1FY17 new business value (NBV) is estimated to be around RM88mil.
Affin Hwang Research maintains its "buy" call with an unchanged target price of RM16.30.
Limited time offer:
Just RM5 per month.
