KUALA LUMPUR (Thomson Financial) - RHB Research has maintained its 'neutral' call on the insurance sector as the Employees Provident Fund's (EPF) move to allow contributors to withdraw their savings to buy critical illness insurance policies beginning June 2008 is unlikely to have a significant impact on insurers' earnings in the near term.
According to the pension fund's announcement yesterday, contributors can only buy the policies for themselves and not for family members and policies must be taken from insurance companies endorsed by the EPF.
'We expect the liberalisation of the EPF's withdrawal scheme to contribute positively to the growth of medical insurance,' RHB analyst Peck Boon Soon said in a note to clients, adding that however, the positive impact will be limited.
Medical insurance policies for the general insurance industry grew by 13.0 percent in 2006 and it is likely to be one of the main drivers of premium growth for the industry, of which it currently accounts for about 11.3 percent of gross premiums underwritten by general insurance companies, Peck said.
He has maintained his 'outperform' call on insurer Malaysian National Reinsurance Bhd (MNRB) due to its attractive dividend yield.
MAA Holdings remains as 'underperform' as 'we are cautious on MAA's investments and lending operations', Peck said.
Kurnia Asia is maintained at 'market perform' as its earnings upside is likely to be capped by modest new car sales and softer car prices.
At 10.00 am, MNRB dropped five sen or 0.9 percent to 5.65 ringgit, while MAA gained one sen or 0.5 percent to 2.06 ringgit and Kurnia Asia was up one sen or 0.4 percent at 2.56 ringgit.
(1 US dollar= 3.42 ringgit)
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