Malaysia: Syarikat Takaful's bancassurance partnerships expected to boost earnings
Source: Middle East Insurance Review | Jun 2019
Syarikat Takaful Malaysia Keluarga Bhd’s (STMKB) strong bancassurance partnerships with four major partners, including Bank Islam Malaysia, Bank Rakyat and Affin Bank, will continue to be the major contributor to boost STMKB’s earnings, said RHB Research.
Currently, STMKB commands only about 1% of the total customer base of four to five million customers from these four banks, suggesting enormous potential for the company. “We also appreciate STMKB’s effort in integrating the IT systems of these four banks with its own, which gives it an edge over other takaful operators,” said RHB Research.
STMKB posted robust first-quarter results in 2019 thanks to its partnership with Bank Rakyat and strong wakala fee income growth (1QFY19: +32% y-o-y). Group gross earned contribution (GEC) grew 39.7% y-o-y, largely driven by its family segment. Its claim ratio improved 8.7 percentage points sequentially (4QFY18: 51.2%) due to lower claims incurred. Its general segment’s underlying loss narrowed to MYR7.2m ($1.7m), compared to MYR31m in FY18.
RHB Research has revised STMKB’s earnings per share (EPS) by 24.3% and 37.2% to 42 sen and 47 sen, suggesting 17% and 13% EPS growth for 2019 and 2020, respectively, on the back of robust growth in family takaful’s GEC and wakala fee income.
The research house viewed STMKB’s prospects as favourable based on the following factors: the overall low insurance penetration in Malaysia; takaful growth outpacing that of the industry; STMKB’s strong links in the bancatakaful channel; and its innovation in digitalising the business. M
MYR1 = $0.21