Allianz Malaysia eyes higher core profit in 2020

KUALA LUMPUR: Insurance provider Allianz Malaysia Bhd is looking to post better results for the current financial year ending Dec 31, 2020 with a single-digit topline growth in revenue.

Its chief executive officer Zakri Mohd Khir said: “As long as our revenue grows when things goes back to normal (postmco), we expect that our core profit could possibly be higher than our FY19 numbers.”

Having said that, the company has no way of trying to estimate or anticipate on the financial capabilities of its policyholders to make payment, once the moratorium on loan repayments is lifted, he told reporters after Allianz’s virtual AGM yesterday.

“We have no idea on their financial capabilities, how many loans they have, are they cash-strapped.

“Right now, it could be masked by the fact that they do not have to pay (moratorium period from April 1 to Sept 30).

“So come October, we will see what happens next,” he added.

Zaki pointed out that the insurance business is driven by consumption, which has been greatly impacted by the moratorium on the loans.

“Once the loan moratorium is lifted, will it affect the paying ability of the customers? “This we don’t know.” Meanwhile, Allianz Life Insurance Malaysia Bhd CEO Joseph Gross also envisaged better bottomline results for FY20 compared with a year ago.

Despite during the initial stages of MCO, whereby face-to-face interactions with clients were not allowed, he expects that gross written premiums “should be in good shape”.

However, new business for its life and health insurance segments are not likely to recuperate compared with a year ago.

Gross also noted that medical claims have declined during the MCO period, but claims for surgeries and other elective procedures are now recovering.

“But there is an open question not in the number of claims, but in the cost of claims.

“Medical practitioners and hospitals now have imposed new SOPS (standard operating procedures) in place with PPE (personal protective equipment), the number of people treated, disposal of equipment and cleaning.

“How this will affect the cost of claims remains to be seen.

“It is foreseeable that if the measures continue to be pushed so aggressively that there will be a cost inflation pressure per treatment,” he added.

On the general insurance side, Zakri said there have been fewer claims given less accidents due to lower traffic flow during the MCO period.

For 1QFY20, Allianz’s net profit dropped 19.6% to Rm79.5mil from RM98.92 a year earlier.

This is on the back of a higher operating revenue of Rm1.48bil.

“As long as our revenue grows when things go back to normal (post-mco), we expect that our core profit could possibly be higher than our FY19 numbers.” Zakri Mohd Khir