KUALA LUMPUR: Etiqa International Holdings hopes to close its financial year ending Dec 31 2023 with a RM1 billion pre-tax profit.
The insurance arm of Malayan Banking Bhd also aims to be among the top three insurers in Southeast Asia.
It is currently fifth largest in the region, Etiqa group chief executive officer Kamaludin Ahmad said.
"We shouldn't be too far from achieving RM1 billion (pre-tax profit)," Kamaludin said at a media luncheon on Wednesday.
Etiqa already surpassed its 2022 pre-tax profit of RM472 million in the first half of FY23, registering a pre-tax profit of RM503.9 million or a 114.5 per cent year-on-year (Y-o-Y) surge.
The RM472 million was a drop of 48 per cent Y-o-Y from RM907.6 million in FY21, dragged down by its operations in Singapore, which were hit by volatile investment market conditions.
Etiqa's business is split evenly between life and general insurance.
For life insurance business, its profit emerges over a longer period of time while general insurance is more immediate, he said.
"For life insurance, we collect a lot of funds because we collect premiums and then we invest. The movement in the market can have an impact on our profitability " he noted.
Etiqa has operations in Malaysia, Singapore, Cambodia, the Philippines and Indonesia.
It is number one in the general insurance and Islamic insurance/takaful market in Malaysia with a 16 per cent share.
Its total gross written premium (GWP) declined 3.3 per cent y-o-y to RM11.09 billion in FY22 from RM11.47 billion in FY21.
This marked the company's first decline, having successfully achieved GWP growth for five consecutive years mainly due to a restructuring of its products in Singapore.
Its GWP in the first half of FY23 came in at RM5.5 billion, which is a 7.5 per cent decline Y-o-Y.
Chief strategy officer Chris Eng said Etiqa's profitability last year was affected by some of the investments made in China by its Singapore operations.
Those had been disposed of and the investments pivoted to the right markets.
"We still have some holdings in China. These are assets (stocks and bonds) held by our fund managers for Etiqa Singapore. But our operating entities in Malaysia have been doing well all this while," he said.
He expects the local insurance industry to do well next year, in line with Malaysia's anticipated stronger economic growth.
"There's a lot of excitement in the infrastructure and green energy space, offering opportunities for corporate insurance. Etiqa, as the largest corporate insurance company in Malaysia, should naturally do well."
Global macroeconomic trends such as increases in US interest rates, however, may pose challenges next year.
This, he said, could drive a selldown in markets, which in turn would dampen interest in investment-linked policies and impact life insurance sales.
Etiqa is set to enter the takaful markets in the Philippines and Singapore in the first half of 2024.
It is in talks with regulators in the two countries to bring its takaful expertise there, Eng said.