ALLIANZ TARGETS SINGLE-DIGIT GROWTH
Insurer says not expecting spike in withdrawal or lapse rates
ALLIANZ Malaysia Bhd is aiming for a “strong” single-digit bottom-line growth for the current financial year ending Dec 31 this year.
“We have to be careful with our financial projections but we are looking at a strong single-digit growth in the bottom line.
“If it runs well and there are no major disruptions, maybe we can see a growth in our top line as well,” said Allianz Malaysia chief executive officer (CEO) Zakri Khir after its virtual annual general meeting yesterday.
Still, Zakri said Allianz Malaysia was bracing for a challenging year, especially in general insurance sales as many businesses had been affected by the Covid-19 pandemic and subsequent imposition of the Movement Control Order (MCO) since March.
However, he said the company had managed to stay resilient and saw an increased top line in gross written premium (GWP) in the first quarter ended March 31, mostly due to higher gross earned premiums and investment income.
“In general insurance, it is about pure consumption. If people do not want to buy insurance, we will be affected. But we do not foresee any spike in withdrawal and lapse rates.
“As such, we believe our GWP this year could possibly see positive growth, despite a likely contraction in annualised new premiums,” he added.
Allianz Malaysia’s general insurance revenue increased 5.8 per cent to RM604.6 million in the first quarter from RM571.4 million in the same period a year ago on the back of higher gross earned premiums and investment income by RM32.1 million and RM1.1 million, respectively.
As for the life insurance, its revenue increased 14.0 per cent to RM876.8 million from RM769.2 million previously.
This was boosted by increased gross earned premiums and investment income by RM90.6 million and RM17.0 million, respectively, which was mainly contributed by growth in all key distribution channels.
Allianz Malaysia also expects more insurance payment defaults from October once the sixmonth loan moratorium period ends.
“Come October, when the loan moratorium has concluded, how will it affect the paying ability of customers? This we don’t know. We have no way of estimating or anticipating this,” he said.
Meanwhile, Allianz Life Insurance Malaysia Bhd CEO Joseph Gross said the new business for its life and health insurance segments were unlikely to perform well versus a year prior.
However, he believed that life insurance would catch up soon as people would be considering the short-term cash consumption versus the long-term benefits that they might lose if they did not purchase life insurance protection.
In terms of how claims were expected to develop over the remainder of this year, Gross said medical claims during the MCO period had declined but elective claims for surgeries and other elective procedures were now recovering.
“The business-as-usual claims will be coming back. But there will be a question not in the number of claims, but in the cost of claims.
“Medical practitioners and hospitals have a new standard operating procedure, and we will also have to consider personal protective equipment, the number of people treated, disposal of equipment and cleaning.
“How all this will affect the cost of claims remains to be seen. It is foreseeable that if the measures continue to be pushed so aggressively, then there will be a cost inflation pressure per treatment,” Gross added.