MAA Assurance's Annual Report 2005 - Zurich

Chief Executive Officer’s Statement (continued)
conservative investment philosophy that emphasises capital
preservation, profitability and consistent income flows. Fixed
income investments are expected to remain the core portfolio
asset, with corporate bonds being the preferred instrument.
In additions, moving forward we may reassess the investment
portfolio of Life non-participating fund and the General fund
by reducing the quoted equity portfolio to shelter the Group’s
earnings against the volatility of the equity market.
Nevertheless, the Company will constantly review and revise its
strategies to take advantage of the expected strong economic
and financial environment in the coming years.
BRAND EQUITY
The Company will continue with its philosophy of brand equity
as one of our most important assets to maintain the strong
corporate image that we have developed to-date. This image
has been the mainstay of our continued growth, in revenues
and in profits, and has been the pillar that has kept our clients
and our agents loyal to us.
In this respect, ownership of our own office buildings, of which
there are 48 in numbers, throughout Malaysia with excellent
visibility, has provided our clients and agents with the
confidence to continue to place their trust in our Company.
The Company is also the most visible insurer in the advertising
and media arena. Our image is most notably remembered in
our television commercials (the only insurer appearing regularly
on TV), road and highway billboards (over 58 sites throughout
Malaysia), newsprint advertisements (at least one insertion in
major newspapers a week), as well as concerted public
relations activities and charity programmes.
Our tag-line is well recognised, “Say Yes to MAA. Say Yes To
Solid Financial Security”.
QUALITY FOCUS
The Company is also proud to report that for the last six years,
the Company has been able to retain its ISO 9001 quality
status. Its on-going focus on maintaining tip-top IT systems and
internal processes, staff training and education programs help
to ensure that our clients and agents get the best possible
service. Only through a focused effort on quality, can the
Company guarantee our success in the future.
The Company has further enhanced its cutting-edge standards
by adopting Six Sigma programme in 2005.
INFORMATION TECHNOLOGY
The Company will continue with its effort to invest in the latest
information technologies to further enhance its operational
and cost efficiency. Towards this end, MAA has formulated a 5
year Information Technology (“IT”) Strategy Plan with the main
aim to support future business requirements. The IT Strategy
Plan will address main issues of:
• organisation alignment for effective IT strategy execution
• application development, automation and system integration
• datawarehousing, data mining and business intelligence
• e-business strategy process modeling initiative
CORPORATE GOVERNANCE
The Company has in place systems and checks to ensure good
corporate governance and reporting in line with best practices
and also consistent with the principles prescribed under the
Prudential Framework of Corporate Governance for Insurers
issued by Bank Negara Malaysia.
VALUATION OF INSURANCE BUSINESS
As in prior years, the Company has engaged an external
actuary to compute the Appraisal Value of its Life Insurance
Business, following the same valuation technique used
internationally to value life insurance businesses. The Appraisal
Value is the discounted cash flow of profits to the shareholder,
from policies sold in the past (“embedded value”) and from
future policy sales (“structural value”).
Based on the Appraisal Value, as set out on page 14 to 17, the
life insurance portfolio is assigned three (3) values, based on
assumed future growth scenarios, namely RM2.3 billion,
RM2.9 billion and RM3.7 billion.
If one were to value the general insurance business at 85% of
2005 gross premium income of RM424.3 million, this would
value the Division at RM361 million.
The combined life and general insurance divisions are thus
valued at RM4.1 billion (Full Valuation), RM3.3 billion (Mid
Valuation) and RM2.7 billion (Low Valuation).
The Board is constantly monitoring this valuation as it will be
used as the base for any future merger or acquisition
negotiations.
PROSPECTS
Bank Negara Malaysia reported in its Annual Report 2005 that
the Malaysian economy in 2006 is expected to strengthen
further albeit the environment of a more favourable global
conditions. With real GDP projected to grow at a faster rate of
6%, driven by strengthening export performance and resilient
domestic demand, coupled with the Government launching
the Ninth Malaysia Plan which sets out the foundation for
further development and strengthening the prospects for the
Malaysian economy, the insurance industry is poised to register
favourable growth in the years ahead.
The Company is well aware of the many challenges ahead and
the increasing competitive environment it is facing. Towards
this end, the Company will continue its initiative to invest in the
latest technologies to further enhance operations efficiency,
strengthening distribution system, human resource and agency
development and developing innovative products to improve
further the quality of services to customers.
We are optimistic of achieving better results in the years ahead
through the various strategies undertaken to position itself as
one of the leading insurance company in Malaysia.
ACKNOWLEDGEMENT AND APPRECIATION
I would to like express my deepest appreciation to the
management team, staff and agency force for their continued
commitment, dedication, loyalty and contributions to ensure
the continued growth and success of the Company.
I would also like to take this opportunity to extend our
appreciation to Bank Negara Malaysia and the regulatory
bodies for their continued guidance and support; to our valued
customers and business associates for their invaluable support,
confidence and trust they have placed in us.
Finally, I would like to thank my fellow Board members for their
stewardship and contribution to the Company.
DATUK RAMLAN BIN ABDUL RASHID
Executive Director/Chief Executive Officer
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