PETALING JAYA: MBSB Research expects the insurance sector to stay on a firm footing in the near term, underpinned by strong dividend yields, resilient premium growth and still-attractive valuations that continue to support earnings.
“Despite possible headwinds in subsequent quarters, the sector’s solid dividend yields and strong growth momentum make it a very attractive pick,” the research house said.
The research house, which maintained a “positive” call, said the sector should at least sustain its strong momentum into the first quarter of 2026 (1Q26), extending the strong pace seen in late 2025.
This was despite pressure that could emerge in later quarters if the ongoing Middle East conflict starts feeding more visibly into medical costs and consumer spending.
“The insurance sector should at least maintain its tremendous momentum in 1Q26, but subsequent quarters could see a negative impact from the ongoing war and its effect on the local macroeconomic environment,” it added.
Medical claims inflation in 2025 came in at just 5.3% year-on-year, the lowest in recent years, reflecting the effectiveness of insurers’ cost-control measures.
This helped keep overall life insurance claims growth at a manageable 3.4%, easing concerns that had earlier weighed heavily on sector sentiment.
However, MBSB Research warned that renewed logistical disruptions linked to the Middle East conflict could push up medicine and medical equipment prices again, echoing pandemic-era supply chain shocks.
The research house noted reports of drug prices rising overseas and cited local concerns that medicine costs in Malaysia have already climbed by as much as 30% to 40% in certain categories.
The research house expects this to reintroduce healthcare inflation pressures later this year, especially once existing stockpiles are depleted.
Slower retail loan growth and softer household spending could weigh on general insurance demand, especially products tied to vehicle and property purchases.
Family takaful sales linked to bancassurance channels may also moderate if financing activity weakens further.
MBSB Research further said 1Q26 results should benefit from the lagged impact of war-related costs, while the stronger ringgit continues to help contain imported claims costs, particularly for motor spare parts.
Allianz Malaysia Bhd
remains a top sector pick, supported by rapid non-motor expansion and improving life insurance growth.
