Maybank Investment Bank Research has trimmed its FY17-19 earnings forecast for Allianz by 5% to 7% to account for higher claims and lower bancassurance contributions. It has lowered its target price by 10 sen and maintained a Buy call on the stock.
Allianz's Q317 core net profit of RM75.7mil took 9M17 core net earnings to RM224mil, which came below Maybank IB Research's expectations at 71% of full-year forecasts.
"We lower our FY17 earnings by 7% to account for higher insurance claims as well as on imputing an estimated MYR10m of claims from the recent Penang floods. We lower FY18/19 earnings by 7%/5% to factor in higher claims and lower bancassurance contributions with the termination of its banca agreement with CIMB," it said.
Its combined ratio rose to 94% in 9M17 from 90% in 9M16 as the group invested in its digital strategy resulting in a higher expense ratio of 20% versus 17% in 9M16.
Allianz Life's GEP, however, expanded 5% year-on-year and its value of new business jumped 26% driven by annualised new premium growth of 21% and improved margins.
Coupled with investment income growth of 16% YoY in 9M17, its pretax profit rose 26% YoY, compensating in part for a 7% y-o-y decline in Allianz General’s core net profit.
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