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Insurance: good development of the listed sector in the 1st half of 2022

Rise in written premiums, growth in half-year results, analysts’ recommendations… Here is how the listed insurance sector is changing.

The listed sector index “Insurance” has shown a limited decline compared to that of the MASI, standing at 3.7% since the start of 2022, compared to 8.2% for the benchmark benchmark index.

This index is made up of five stocks: three insurance companies, namely Sanlam Morocco (formerly Saham Assurance), Wafa Insurance, AtlantaSanad, and two brokers (Afma and Agma).

The drop in this index is caused by Sanlam Morocco and Wafa Assurance which dropped 13.7% and 11.3% respectively.

For their part, AtlantaSanad, Afma and Agma gained 10.6%, 2.9% and 22.6%, in respective order.

Half-yearly achievements on the rise

Overall, the achievements of listed insurance companies and brokers for the first half of 2022 showed a positive development. But this development shows some disparities, particularly with regard to the rate of growth of the activity.

It should be recalled that the premiums issued by insurance and reinsurance companies amounted to 29.7 billion dirhams at the end of June 2022 in Morocco, up 5.3% compared to the same period of the previous year.

Reached by LeBoursier, a local analyst comments on the achievements of insurers in the first half. “Insurers’ business was able to continue to grow this year. The results of listed companies are generally good. They are showing strong resistance to the economic context, which remains sluggish. »

As for the factors that influenced insurers’ activity in the first half of the year, our interlocutor indicated that “the two main ones are improvement in claims and the downturn in financial markets. The activity of insurers has benefited from the first factor. Regarding the second, the impact differs from one company to another since it is linked to the financial strategy and management that are adopted by these companies”.

Here is how the activity of listed insurers evolved in the first half of 2022:

Wafa Assurance stands out

The group Wafa Insurance achieved a consolidated turnover of 5.89 billion dirhams, up 7.7%, driven by the performance of the activity in Morocco and abroad. Net income stands at 554 million dirhams, up sharply by 47.4% compared to 2021, driven by the improvement in the technical and financial indicators of Wafa Assurance Maroc and the increase in the profitability of international subsidiaries. These achievements are driven by the improvement in claims and the improvement in financial results – despite the decline in the financial markets.

BMCE Capital Global Research (BKGR) recommends in its latest Inventory Guide to accumulate the Wafa Assurance title in the portfolios, with a target price of 4,419 dirhams, i.e. a 2.7% upside potential (in comparison with the closing price of 4,300 dirhams, observed this Friday). This recommendation is based on the following factors:

> The financial solidity of the insurer, which translates into a solvency margin of 300%, as well as its ability to maintain its status as a leader despite a sector context marked by tough competition.

> The promising prospects that arise for WAA, particularly in Africa, with the acceleration of its expansion strategy through new locations planned over the next five years, in order to achieve a coverage rate of 65% (compared 39% today).

> The expected diversification of its investments by integrating other asset classes, in particular OPCIs, which should reduce its high exposure to listed equity investments (27.6% in 2021).

Stagnation of Sanlam Morocco’s net income

Sanlam Morocco recorded a half-yearly turnover up 8.3% to 3,367 million dirhams. It was driven by the good performance of Life activities, up 5.5% to 525 million dirhams, and Non-Life activities, up 8.8% to 2,841 million dirhams. On the other hand, its net result is stagnant at 191 MDH against 189 MDH during the same period in 2021. This stagnation is mainly linked to the impact of the poor performance of the financial markets.

BKGR recommends that investors keep the Sanlam Maroc share in their portfolios, with a target price of 1,416 dirhams. The title thus retains a upside potential of 13.2% (in comparison with a course of 1,250 dirhams, observed this Friday).

According to analysts, the outlook for this insurance company in 2022 is as follows:

> Improved momentum in its commercial activity, particularly in Life (+6%) thanks to the planned launch of unit-linked products.

> A reduction in its equity investments, which should guarantee stability and less volatility in its portfolio.

> A positive impact should emanate from the creation of a joint venture between the Sanlam and Allianz groups, through the realization of economies of scale and the proposal of new diversified and innovative products.

Slight improvement in AtlantaSanad results

AtlantaSanad’s consolidated turnover stood at 3,143 MDH on 1er half of 2022, up 2.4% compared to the first half of 2021. For its part, the consolidated result shows an increase of 4.2% to 229 million dirhams.

BKGR recommends accumulating the AtlantaSanad title for a target price of 145 dirhams (against a price of 135 dirhams, observed this Friday), i.e. a 7.4% upside potential. The research company’s recommendation takes into account the expected improvement in its sector positioning, thanks to an aggressive commercial strategy and financial strength resulting in a very comfortable solvency margin of 220% in 2021.

Added to this is effective financial management that should lead to good growth in financial income, the expected development of the Bancassurance business following the acquisition scheduled before the end of 2022 of 12.8% of CDM’s capital, as well as a generous in terms of dividend distribution (a 2021 D/Y of 4.3%).

Double-digit growth in Afma’s business

The group Afma achieved a consolidated turnover of 134.5 MDH against 117.1 MDH during the same period in 2021, an increase of 15%. This performance is explained by the completion of new business in 2022, and the integration of the revenue of the subsidiaries acquired and entered into the scope of consolidation since the second half of 2021.

Agma has yet to publish its achievements as of the end of June 2022.

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