Allianz Malaysia announces financial results for Q1 2020
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Allianz Malaysia Berhad (AMB) Group announced its results for the first quarter of 2020. The Group recorded a total Gross Written Premiums (GWP) of RM1.36 billion for the first quarter this year, a 12.9 percent increase from RM1.21 billion in the first quarter of last year. The Group’s Total Assets grew 7.1 percent to RM19.33 billion as at 31 March 2020 as compared to RM18.05 billion last year, while the Profit Before Tax dipped by 39.2 percent to RM91.9 million in the first quarter of 2020 as compared to RM151.2 million in the first quarter of 2019. This is mainly due to the volatile financial markets which resulted in lower valuation of investment and changes in insurance contract liability arising from interest rate movements. Excluding the above, the core Profit Before Tax remained strong at RM116.3 million as compared to RM129.5 million in the first quarter of 2019.
AMB Chief Executive Officer, Zakri Khir said: “For the first quarter of the year, Allianz Malaysia has managed to stay resilient. We saw increased top line in GWP, thanks to our higher gross earned premiums and investment income while Profit Before Tax dipped due to lower profits from our general and life insurance segments. It goes without saying that businesses have been impacted mid-March onwards by the COVID-19 pandemic and subsequent imposition of the Movement Control Order. However, we cannot be distracted by challenges. Given the fluidity of the situation, our focus is on applying short-term strategies and to continue to push for business agility. The market will be very challenging and our end goal, as always, is to do better than last year.”
Allianz General stays resilient thanks to higher motor premiums
AMB’s general insurance subsidiary; Allianz General Insurance Company (Malaysia) Berhad (Allianz General) recorded RM613.6 million GWP in the first quarter of 2020, a 11.9 percent jump from RM548.3 million in 2019. Underwriting Profit fell 33.2 percent to RM26.3 million in the first quarter of 2020 compared to RM39.4 million in the first quarter of 2019 while Profit Before Tax also dipped 13.0 percent to RM74.5 million in the first quarter of 2020 as compared to RM85.6 million in the first quarter of previous year. Total Assets rose 7.2 percent to RM6.66 billion as at 31 March 2020 from RM6.22 billion in previous year. Combined Ratio for the first quarter of 2020 stood at 94.8 percent, compared to 91.3 percent in first quarter of 2019. Based on Persatuan Insurans Am Malaysia (PIAM), Allianz General is ranked first among the general insurance industry, capturing an increased 12.9 percent market share in the first quarter of 2020 as compared to 11.7 percent recorded in first quarter of 2019.
“Allianz General’s approach during the first quarter of the year was defensive as we focused on managing our books. Our results in the second quarter will be a better reflection of what lies ahead for the rest of the year. Our higher top line in GWP for the first quarter was a result of higher premiums from the motor business while the 13.0 percent dip in profit before tax was mainly due to higher claims. The COVID-19 pandemic has brought some good and unpleasant surprises but we are a strong company and I am optimistic that we will eventually be able to get back on track,” said Zakri Khir, who is also the Chief Executive Officer of Allianz General.
Allianz Life persistent in pursuing positive growth
The life insurance subsidiary of the Group; Allianz Life Insurance Malaysia Berhad (Allianz Life) registered a GWP of RM748.5 million in the first quarter of 2020, a 13.8 percent increase from RM657.9 million it achieved in the first quarter of 2019. Annualised New Business Premiums (ANP) grew by 4.3 percent to a total of RM122.6 million in the first quarter of 2020 from RM117.5 million in the first quarter of 2019 driven by growth in Bancassurance and Employee Benefits channels. Profit Before Tax dipped 65.9 percent to RM23.5 million in first quarter of 2020 as compared to RM68.9 million achieved in first quarter of 2019. Total Assets rose 7.6 percent to RM12.28 billion as at 31 March 2020 as compared to RM11.41 billion in 2019. Based on Life Insurance Association of Malaysia (LIAM) statistics for January to March 2020, Allianz Life holds the fifth position among the life insurance industry, capturing an increased 8.2 percent market share compared to 8.0 percent in 2019.
Allianz Life Chief Executive Officer, Joseph Gross said: “Our decline in Profit Before Tax was largely a result of the volatile financial market. This resulted from lower valuation on investment and changes in insurance contract liabilities arising from interest rate movement from the currently volatile financial markets. Excluding the above, core profit for the life business grew by 2.1 percent. To safely navigate this climate, we will need to stay on the positives, but arm ourselves with a defensive mindset. That said, Allianz Life will continue to focus on driving new business as much as possible. Our aim is to outperform the market and our competitors in terms of new business. As a Group, we will need to collectively pull together our general and life insurance business to mount a strong, sustained comeback for the rest of the year. Malaysians will be looking for protection, for brands that are strong and that is right up our alley.”
He added that Allianz Life has in the past years, been driving simplicity and digitisation and COVID-19 has reinforced the need for these foundations.
The impact of COVID-19 and the Movement Control Order
While the COVID-19 downturn is expected to weigh heavily on profitability, through weak customer sentiments and contracting premium growth, insurers have yet to see the overall impact.
“The impact on the insurance industry in Malaysia will follow the fortunes of the economy. Insurers which have more capital and operate from a lower cost base will survive. As for customers, when the climate changes, so too will the buying habit. That is just how it is. And we are prepared for that,” said Zakri.
“Despite the challenging operating environment and economic slowdown, our resolve is to remain positive. We have two strong pillars – our general and life insurance business, a resilient business model and a strong balance sheet. While we continue to emphasise on solid premium growth, profitability and service, we will also monitor market forces and be vigilant in our decisions,” added Zakri.