Allianz - Tie-Up with Estate Planner

THE BUZZ

The press reported that Allianz Life Insurance Malaysia has entered into a strategic tie-up with OSK Trustees to offer a value-added, niche proposition in estate planning. Through the partnership, Allianz Life's authorised agents will be able to provide recommendation to customers, who can immediately subscribe for OSK Trustee's services, specifically in the area of will-writing and setting up of private trusts.

OUR TAKE

Will and trust services a largely untapped market. According to OSK Trustees, less than 10% of the total population have a written will or private trust. In 2011, there were over RM42bn worth of unclaimed assets. We think this could potentially be a huge market segment which Allianz Life can leverage on, providing a new revenue stream for the group.

Extended to SMEs. Allianz plans to extend OSK Trustee's services to its corporate customers segments specifically to the small and medium enterprises (SMEs). Allianz Life has currently over 5,000 corporate customers. In addition to that, the CEO Jens Reisch commented that a large portion of the life insurance customers are also businessmen. Allianz' life insurance segment currently serves over 300,000 customers.

Training to be provided by OSK Trustees. We also think that this partnership comes at a minimum cost to Allianz. OSK will provide training for Allianz's agents in advisory and recommendation services. Once customers subscribe for the services, OSK Trustees will provide the expertise in managing the fund.

Maintain BUY, FV at RM7.09. We do not foresee any immediate impact on Allianz' financials. In addition, we note that this is Allianz’s first partnership in the areas of wills and trustees. We keep our BUY recommendation with unchanged FV of RM7.09, based on a sum-of-parts valuation attributed to an industry PE of 15x for general insurance, and P/EV of 1x on an embedded value (EV) of RM600m for Allianz’ life insurance.

Source: OSK