PETALING JAYA: Listed insurers’ prospects remain positive, supported by strong macroeconomic growth, a bright outlook for dividend payouts and attractive valuations when compared to regional peers, says MBSB Research.
The research house has maintained a “positive” recommendation on domestic listed insurers, with “buy” calls on Syarikat Takaful Malaysia Keluarga Bhd
(STMB) and Allianz Malaysia Bhd, with target prices (TPs) of RM4.51 and RM26.77 respectively.
It has a “neutral” call on LPI Capital Bhd and TP of RM14.54.
It said strong macroeconomic growth should drive the life and general segments of these companies, with a rebound in vehicle sales being particularly promising given the general insurance reliance on motor premium growth.
However, it cautioned that while revenue growth may be higher, profitability could moderate due to claims inflation and persisting investment income volatility.
While claims have been manageable so far contingent on each insurer’s underwriting ability, MBSB Research urged investors to look forward to a brighter 2027.
“A strong macroeconomic backdrop continues to drive growth but manage your expectations.
“The life segment’s growth is very strong (particularly the employee benefit segment), and we expect MediAsas offerings to continue to drive growth,” it said.
As an economic growth proxy, general gross written premium growth has done well, and a strong rebound in June’s vehicle sales figures looks to maintain this momentum.
“We are more optimistic on the motor segment than anything else.
“After a weak first half, pent-up demand could flood in,” it said.
“Valuations remain attractive, especially when compared to regional peers.
“For some reason, the Malaysia insurance sector sees less attention.
“It could be due to its complexity, constant regulatory overhang, and high degree of volatility,” said the research house.
Dividends remain solid at the mid-single-digit range and expect higher payout ratios in 2026.
“Apart from LPI’s ongoing special dividend programme, Allianz, STMB, and MNRB Holdings Bhd have signalled positive changes of their own,” it added.
If it were not for regulatory delays, Allianz’s first quarter ended March 31, 2026 dividend could have been issued as part of the financial year ended Dec 31, 2025 (FY25) cycle.
“This implies FY25’s payout could have been a higher 45%, which is closer to pre-FY24 levels and a lot higher than FY25’s reported 32% payout.
“STMB wants to introduce interim dividends and increase its dividend payout above 40%. MNRB’s RM1.64bil disposal of Takaful Ikhlas is confirmed to involve capital return intentions,” it added.
It does not see the Risk-Based Capital (RBC) 2.0 rules framework to significantly impact near-term dividends.
“With Bank Negara Malaysia (BNM) releasing minimal updates, it seems unlikely that RBC 2.0 will come online before 2029.
“Although most proposed changes will negatively impact capital, BNM is also proposing that the capital adequacy ratio regulatory threshold could be reduced to 100% from 130%, providing some offset,” it said.
“So far, insurers are not worried about the need to hoard capital in preparation for RBC 2.0 changes.
“However, do expect some level of portfolio mix rebalancing to ease into these changes – particularly changes prioritising diversification benefits and climate-related factors.
“For example, some element of STMB’s ongoing family portfolio diversification may be to optimise its portfolio mix,” it added.
