MAA Assurance's Annual Report 2005 - Zurich

Chief Executive
Officer’s Statement
11
The Malaysian economy remained resilient
with a Gross Domestic Product (GDP)
growth of 5.3% in 2005 despite the high
oil prices, increasing pressure on inflation
and the downturn in the global electronics
cycle in the first half of the year. The
economic growth was again driven by the
private sector and favourable financial
conditions in the country. All sectors with
the exception of the construction sector
registered positive growth, as the
Malaysian Government and Bank Negara
Malaysia continued to adopt supportive
macroeconomic policies to position the
economy for sustainability and long-term
growth.
Despite the challenging economic
environment, the Company was able to
sustain its performance with the on-going
cost efficiency strategies, productivity
enhancement and introduction of
innovative products.
PERFORMANCE REVIEW
For the year under review, the Company’s total operating revenue grew by
10.5% to RM2.1 billion (2004: RM1.9 billion).
The Company’s profit before tax was RM4.0 million for the current year
under review (2004: RM71.3 million). The lower profit registered was due
mainly to downturn in the stock market resulting in losses in disposal of
equities and provisions for diminution in value of investments.
As at 31 December 2005, the Company’s total assets stood at RM6.0 billion,
an increase of 3.4% over 2004 of RM5.8 billion.
REVIEW BY BUSINESS DIVISIONS
LIFE INSURANCE DIVISION
The Life Insurance Division posted a moderate growth of 9.4% in its total
premium income to RM1,396 million (2004: RM1,276 million), largely from
single premium business, in particular endowment and investment-linked
plans. The continued premium growth was attributed to MAA’s extensive
network of branches countrywide (currently numbering 76), its sizeable
agency force that underpin its distribution capacity and brand awareness.
The current low interest rate regime and the shift in consumer preference
from plain protection to savings/investments type of policies have
contributed to the increased sales of investment-linked products and
endowment plans.
In terms of annualised new business premiums, a measure of the year’s new
sales activity, the Life Insurance Division has registered a commendable
growth of 12.3% to RM898.4 million (2004: RM800.2 million). This
outperforms the 6.9% growth recorded by the industry, which reflects MAA’s
ability to further penetrate the market.