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RAM Ratings reaffirms Maybank Ageas’ AA1 corporate credit ratings
Published on 29 Dec 2022.
RAM Ratings has reaffirmed Maybank Ageas Holdings Berhad’s (the Group) AA1/Stable/P1 corporate credit ratings as well as the AA2/Stable rating of its RM3.0 billion Subordinated Bonds Programme (2021/-).
The rating action reflects the Group’s strong market position in Malaysia, a well-diversified earnings and risk profile and still-sound capitalisation. Although lower bond valuations and market volatility weighed on earnings in 2021 and 1H 2022, necessitating remedial action for one subsidiary, the capital positions of Maybank Ageas and its operating subsidiaries have remained largely intact. All but one subsidiary had a buffer of at least 30 percentage points between their capital adequacy ratios and individual target capital levels. The Group’s financial leverage stayed comfortable at 13% as at end-June 2022, with company-level gearing and double leverage ratios standing at 0.3 times and 1.0 times, respectively.
As it operates both life/family and non-life businesses, Maybank Ageas’ risk and earnings profile is diversified, with non-life operations contributing a respective 40% and 60% of gross premiums and pre-tax profit on average (FY Dec 2021: 31% and 62%). Growth in overall gross premiums was flattish in 2021 and 1H 2022 (+0.5% and +0.4% y-o-y, respectively; 2020: +44%). This, as well as poorer bond valuations (owing to higher yields amid monetary policy normalisation), led to weaker pre-tax profits in 2021 (RM932 mil; 2020: RM958 mil) and 1H 2022 (RM195 mil; 1H 2021: RM412 mil).
The Group’s distribution synergies with Malayan Banking Berhad (its majority shareholder) continue to support its domestic franchise in Malaysia, consistently contributing a third of aggregate life/family new business (NB) and non-life premiums and contributions. The synergies are apparent from Maybank Ageas’ operating efficiencies, seen in the lower-than-industry commission and management expense ratios of its life and non-life businesses (three-year averages of 14% and 28%, respectively, against industry’s 24% and 36%). The Group was still the largest player in the general insurance and takaful space by gross premiums in 2021, while staying in the top five ranks in the life and family industry, with a market share of slightly more than 10%.
Analytical contacts
Loh Kit Yoong
(603) 3385 2493
kityoong@ram.com.my
Sophia Lee
(603) 3385 2619
sophia@ram.com.my
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.
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
© Copyright 2022 by RAM Rating Services Berhad
