[RAM] RAM Ratings affirms Maybank Ageas' AA1 corporate credit ratings

RAM Ratings has affirmed Maybank Ageas Holdings Berhad’s (the Group) AA₁/Stable/P1 corporate credit ratings and the AA₂/Stable rating of its RM3 billion Subordinated Bonds Programme (2021/-).

The rating action considers the Group’s strong domestic franchise under the Etiqa brand, its well-diversified earnings and risk profile and sound capitalisation. With a 17% share of aggregate gross premiums and contributions in 2023, Maybank Ageas is the largest player in the domestic non-life insurance and takaful industry. While the Group has a less prominent life and family takaful franchise relative to some large locally incorporated foreign life insurers, it is consistently in the top few ranks by new business (NB) and a leader in the bancassurance segment. 

Thanks to its close ties with major shareholder Malayan Banking Berhad (Maybank), the Group has reaped significant benefits from Maybank’s extensive network and customer base, from which it has derived about a third of aggregate life/family NB and non-life premiums and contributions in the last five years. However, a strong reliance on credit takaful/insurance business referrals from Maybank also subjects it to the former’s loan growth strategies.

Operating in four segments of the insurance and takaful sector – life, non-life, family takaful and general takaful – Maybank Ageas’ earnings and risk profile is diversified. Pre-tax profit increased multifold to RM1.1 bil in 2023 (2022: RM201 mil) owing to strong topline growth, lower insurance service expenses and a recovery in investment performance on the back of lower bond yields. Bottomline improvement in 1H 2024 (RM534 mil; 1H 2023: RM487 mil) was largely driven by the same factors. This is despite the discounting effect on insurance contracts arising from bond yield movements which partially moderated upticks in earnings for both periods. The pre-tax return on assets, averaging a healthy 1.7% in the last three years, would have been higher if not for weak investment returns in 2022.

Maybank Ageas and its subsidiaries remained well capitalised, with capital adequacy ratios comfortably above individual target capital levels as at end-June 2024. Based on the Group’s multi-year stress test, its subsidiaries have sufficient capital to fund their growth plans. With overall borrowings unchanged since it tapped the bond market in 2021, Maybank Ageas’ financial leverage stood at 9% as at end-June 2024 (end-December 2022: 10%). Gearing and double leverage ratios were a respective 0.3 times and 0.9 times (end-December 2022: 0.3 times and 1.0 times), well below our rating thresholds for its current ratings (0.5 times and 1.4 times). The Group does not expect to take on further debt in the near to medium term.


Analytical contacts
Loh Kit Yoong
(603) 3385 2493
kityoong@ram.com.my

Sophia Lee
(603) 3385 2619
sophia@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my