ALLIANZ (1163)

Allianz Malaysia Berhad (Allianz) is principally engaged in underwriting various General Insurance and Life Insurance in Malaysia. It is a subsidiary of Allianz SE, which holds about 65% of its shares. The company mainly provides various commercial insurance products for small and medium-sized enterprises with industrial risks.

Overall, Allianz is a company in the insurance sector, with major peers TAKAFUL and LPI. At of now, the market value of ALLIANZ is about RM 2.6 bil. In terms of market value, it ranks 3rd among peers with listings. (TAKAFUL market value RM 3.8 bil, LPI market value RM 6.0 bil)

The company has 2 main businesses, General Insurance and Life Insurance.

The business model of insurance is simply to collect the premium with the customer, and when the customer has any accidents on the policy, the insurance company will use the premium received to compensate the customer.

At the same time, the insurance company will not just put the premiums received in the bank account but will invest into other investment platform. After calculation by a professional actuarial team, the premiums received by insurance companies and the income from investment often exceed the sum insured, which is how insurance companies make profit. Of course, this is a simplified version for easy explanation. In reality, the insurance company's model will be more complicated, but the concepts are similar.

From FY2012 to FY2018, the company's turnover showed continuous growth, with an average annual growth rate of 8.7%. However, FY 2019 only released the first three quarters of results, and the three quarters of sales have increased year-on-year, while also breaking through historical highs. With this trend, it is not a big problem to get RM 5.5 bil for the full year turnover of FY 2019.

From FY2012 to FY2018, the company's average annual growth rate of net profit was 10.4%. From FY 2014 to FY 2017, although the company's turnover has continued to grow, its profit has remained at around RM 300 mil per year, which means that the profit margin has fallen slightly, but it remains in the range of 6% -7%.

However, the profit suddenly increased by more than 20% in FY 2018 (Profit Margin also increased). According to this trend, the company's full-year profit in FY 2019 is expected to increase by more than 20% again. In general, ALLIANZ's turnover and profit (or even profit margin) have increased in the past 2 years and have performed well.

Louis Yap