Imposition of the MCO arising from the Covid-19 pandemic has impacted businesses from mid-March, says the insurance company

by SHAHEERA AZNAM SHAH

ALLIANZ Malaysia Bhd’s net profit fell 19.6% in its first quarter ended March 31, 2020 (1Q20) to RM79.5 million from RM98.92 million the year prior, dragged mainly by lower earnings from its general and life insurance segments.

Revenue rose 10.4% to RM1.48 billion during 1Q20 from RM1.34 billion in 1Q19, underpinned by higher gross earned premiums and investment income.

“While the group recorded growth in gross earned revenue during the quarter under review, the imposition of the Movement Control Order (MCO) arising from the Covid-19 pandemic has impacted businesses from mid-March,” Allianz Malaysia told Bursa Malaysia yesterday.

Profit before tax from the group’s general insurance segment fell 13% to RM74.5 million in 1Q20 from RM85.6 million previously, largely due to higher claims.

Meanwhile, life insurance profit before tax plunged 65.9% to RM23.5 million from RM68.9 million in 1Q19.

“This was mainly due to the volatile financial market which has resulted in lower valuation on investment and changes in insurance contract liabilities arising from interest rate movement from the currently volatile financial markets,” the group said.

For its investment holding segment, the insurance company registered a loss before tax of RM6.1 million compared to a loss before tax of RM3.3 million a year ago, as a result of higher management expenses.

General insurance revenue climbed 5.8% to RM604.6 million in 1Q20 from RM571.4 million previously, mainly due to stronger gross earned premiums and investment income.

“The increase in gross earned premiums of the general insurance segment was attributable to higher premiums from motor business,” the firm said.

Life insurance operating revenue jumped 14% to RM876.8 million in 1Q20 from RM769.2 million last year on higher gross earned premiums and investment income.

The outlook for both general and life insurance industries is projected to remain challenging for the medium term, amid weak consumer sentiment and subdued domestic economic activity during the Covid-19 pandemic, Allianz Malaysia said.

“The group remains cautious in delivering profitable results to its shareholders in 2020 amid the uncertainties in the current economic environment arising from the Covid-19 pandemic.”