Etiqa Insurance Bhd

Malayan Banking Bhd (Maybank) conventional insurance arm Etiqa Insurance Bhd is aiming to grow its revenue by 10% next year and anticipates a big portion of that growth to be driven by its life insurance business.

In an interview with The Edge Financial Daily, Etiqa Insurance chief executive officer Zaharudin Daud expects both life and general insurance segments to register single-digit revenue growth in 2016.


“We are looking at growth of about 10% growth in top line in 2016. The bigger portion of the growth is expected to be contributed by our life business. Life insurance is expected to grow by about 5%, while the general insurance business is expected to grow between 6% and 8% in revenue next year,” he said.


Currently, general insurance contributes to 52% of its revenue, while life insurance contributes the balance 48%, said Zaharudin.
For the life insurance segment, he said Etiqa Insurance will be focusing more on regular premium insurance, which provides better new business margin, to improve its profits.


“When it comes to life insurance, there are two main types of premiums — the single and the regular premium. We are fairly sizeable in our single premium, but in terms of margins and sustainability, it is not as healthy as the regular premium.”


For general insurance, he said the company aims to increase its net retention premium and will also concentrate on well-spread, but smaller, risk insurance, such as personal accident (PA) insurance.
He explained that for PA, the issuances are very small, thus removing the need for reinsurance; he also noted that the loss ratio for the product is very good.


He added that this strategy will leverage on its bancassurance model with Maybank.


“The key is in how we are delivering the product. We are fortunate as we are a part of the Maybank group. We have our kiosks located at close to 450 Maybank outlets nationwide.


“Imagine over 400 branches selling at least three PA products a day. At an average premium of RM300 to RM400 [per day/per product/per week], we can easily get over RM6 million per month.


The loss ratio for PA is also very good, [the] maximum is at around 25%,” he said, adding that Etiqa Insurance aims to take the lead in the PA market.


However, in the company’s latest unaudited results for the six months ended June 30, 2015, Etiqa Insurance saw its net profit fall 32% to RM121.28 million from RM179.61 million in the same period last year, as revenue fell 6% to RM1.68 billion from RM1.78 billion.


Zaharudin said Etiqa Insurance faces a tough operating environment in 2015, along with the rest of the Malaysian insurance industry.


“I think everybody is quite familiar with the current economic situation. The investment market is not doing very well, so it has an impact on our business. Etiqa Insurance is not the only one affected,” he said.


Domestically, he said people have been more cautious since the implementation of the goods and services tax (GST) in April.


“With the unfavourable market and GST coming into play in the same year, people are a bit cautious and very selective in their insurance purchases,” he said, adding that Etiqa Insurance is expecting lower investment returns in 2015.


Meanwhile, the group will continue investing in its online insurance business, which has grown exponentially, reporting sales of RM73 million in 2014, compared with RM16.2 million in 2010, added Zaharudin.