RAM Ratings assigns AA2 rating to Maybank Ageas’ proposed RM3 bil Subordinated Bonds Programme

Published on 04 Oct 2021.

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RAM Ratings has assigned an AA2/Stable rating to Maybank Ageas Holdings Berhad’s (the Group) proposed RM3 billion Subordinated Bonds Programme. 

The rating reflects the status of the bonds as unsecured and subordinated obligations of the Group. We have also considered Maybank Ageas’ group credit profile, its structural subordination as a non-operating holding company of regulated insurance entities, as well as moderate projected leverage. Based on the Group’s plan to issue RM1.0 bil of bonds this year, we estimate its gearing and double leverage ratios to come in at around 0.3 time and 1.0 time, respectively, at year-end – levels that are manageable in our view. 

Maybank Ageas is a leading domestic insurance and takaful group with life and non-life businesses operating under the Etiqa brand in Malaysia and Singapore. With a 13.9% share of combined gross premiums and contributions in 2020, Maybank Ageas is the largest player in Malaysia’s non-life arena and among the top three motor insurance and takaful providers. Maybank Ageas also houses the largest takaful operation in the country by combined gross contributions. The Group’s life and family franchise is less prominent given the dominance of some locally incorporated foreign insurers, ranking fourth with a share of new business (NB) premiums and contributions of around 10% in the last three years. Its Singapore franchise is likewise smaller in stature, with market shares of no more than 5% in the general and life segments.

As its life and non-life businesses contribute almost equal proportions of overall gross premiums and pre-tax profit, the Group’s risk and earnings profile is well diversified. Topline gains on the back of business growth and largely stable investment returns have supported Maybank Ageas’ profit performance, with investment-related income consistently contributing 25%-30% of aggregate premiums and investment returns in the last five years. A robust increase in gross premiums in 2020 and 1H 2021 (+44% and +26% y-o-y, respectively) – mostly stemming from Singapore – sustained the Group’s bottomline improvements through 1H 2021 despite additional growth-driven reserving needs. Pre-tax return on assets averaged a healthy 2.6% in the last three years.

In view of its close ties to Malayan Banking Berhad (Maybank, which owns 69.05% of the Group), Maybank Ageas reaps significant benefits from the former’s extensive branch network and customer base, through which it has generally derived about a third of aggregate life/family NB and non-life premiums and contributions. Distribution synergies are apparent from Maybank Ageas’ operating efficiencies, seen in the life and non-life businesses’ lower-than-industry commission and management expense ratios (three-year averages: 16.3% and 29.5%; industry: 24.9% and 35.3%). The Group however faces some degree of distributor concentration, while single-pay plans account for a high proportion of the Malaysian life and family segment’s NB premiums and contributions (close to 75% of domestic NB).

Maybank Ageas and its subsidiaries were adequately capitalised, with capital adequacy ratios above their respective individual target capital levels as at end-December 2020. Most of them had a buffer of at least 30 percentage points between the two indicators. The proposed bond programme is intended to provide capital and funding to the Group’s Singapore subsidiary following the latter’s exceptional growth in 2020 and 1H 2021. The Malaysian subsidiaries will not require such funding for the next few years, based on recent projections.

Established in 2001, Maybank Ageas is a partnership between Maybank and Ageas Insurance International N.V. (Ageas), which owns the remaining 30.95% of the Group. Maybank is one of the largest financial services groups in the ASEAN region by asset size while Ageas is a Belgium-based insurance group with life and non-life businesses in 14 countries across Europe and Asia. The Group’s core subsidiaries in Malaysia and Singapore have operated under the Etiqa brand since 2007, with Singapore being a small profit contributor (generally constituting around 3% of the Group’s pre-tax profit).


Analytical contacts
Loh Kit Yoong
(603) 3385 2493

Sophia Lee
(603) 3385 2619


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

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Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

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