Allianz Rapid Growth In Malaysia

Allianz Malaysia Bhd whose bancassurance agreement with CIMB Group Holdings Bhd will be terminated upon expiry next year, is open to new opportunities in sourcing for alternative strategic partners. The business now accounts for about 8% of Allianz’s total gross written premiums. The bottom-line contribution from the bancassurance business was about 4.5% of Allianz General’s financial year 2015 pre-tax profit and about 3.5% of pre-tax earnings, assuming a combined ratio of 90%.

Allianz continued to operate a robust property and casualty portfolio in Malaysia and was committed to strengthening its diverse multi-channel distribution platform in the country, including growing agency model and digital capabilities. Allianz had entered into the bancassurance arrangement with CIMB in 2008 for RM89mil that will expire in August next year.

In June, CIMB announced that it had entered into a strategic non-life partnership with Sompo Japan Nipponkoa Holdings for South-East Asia, whereby the former will distribute Sompo’s general insurance products through its regional distribution network.

Allianz had a 10-year bancassurance tie-up with HSBC that has “recorded above market double-digit growth since its inception. The tie-up, which runs until 2021, is a regional agreement for the distribution of conventional life insurance products covering four countries, namely, Taiwan, China, Indonesia and the Philippines.

Allianz is a composite insurer involved in both general and life insurance and is backed by Germany-based Allianz SE, which is one of the largest insurance groups in the world. Allianz ranked number one in 2015 in terms of gross written premiums with a 12.4% market share. Meanwhile, it ranked as the fifth-largest in the life insurance business with a market share of about 7% of total annualized new premiums.

Allianz like all life insurers - operates in a market where yields have trended lower of late and turning to accumulate more bonds when yield value emerges. To safeguard its investment income, Allianz continued its practice of focusing on good-quality issuers for credit selection, while equity investments would be broadly tilted towards undervalued companies with resilient earnings and decent dividend yields. In addition, it also has in place derivatives to manage interest rate risk and equity market tail-end risks.

The Malaysian economy is fundamentally sound, as reflected by the recent appraisal by Fitch Ratings which affirmed Malaysia’s long-term sovereign rating at ‘A-’ with stable outlook. However, we acquiesce that our markets could still be exposed to a degree of volatility stemming from both external and domestic headwinds.”

Allianz plans to launch several core insurance services on mobile application platforms to keep pace with customer requirements of on-demand service availability. Digitalisation and the advent of social media are trends very much to look out for. Allianz have made significant investments in this area and will consider investing in more digital propositions, including our distribution channels and the delivery of our products and services.

The company’s Facebook page that was set up in mid-2011 had more than 190,000 fans today. It hopes to capitalise on expanding Internet and social media usage among the younger generation.

The stock closed unchanged at RM10.10, giving it a market capitalisation of RM1.74bil.