Affin Bank Berhad | Annual Report 2020

87 2020 OPERATIONAL REVIEW AXA AFFIN Life Insurance Berhad (“AALI”) maintained its position as the leading digital insurer in Malaysia, with a 66% market share within Digital for Life Insurance, attributable to our offering of Insurtech thought leadership, which focuses on offering low-barrier entry to e- medical cards targeted at millennials and young families. In 2020, AALI was awarded the Digital Insurance Initiative of the Year and Health Insurance Company of the Year. The company has a strong team with a significantly lower attrition rate compared to 2019 and a great AXA culture, as evident in the significant employee net promoter score for the year. AALI continued to make strides in digital development, implementing more than 60 Robotic Process Automation (“RPA”) to improve operational efficiency and innovation enhancement. 2020 FINANCIAL REVIEW In FY2020, AALI recorded a lower loss after tax of RM0.8 million for FY2020, as compared to a loss after tax of RM7.6 million in the previous financial year, attributable to better asset-liability matching and realisation of gains. There was an improvement in New Business Value (NBV) to RM36.4 million in FY2020 from RM34.9 million previously. RISKS AND OPPORTUNITIES Life insurance market saw an overall growth of 0% in 2020. The top five players have been dominating the market since 2009 with more than 75% of APE. The COVID-19 pandemic is seen as a game-changer for the industry as it reinforced several trends that had existed prior to the outbreak, accelerating digitalisation efforts. With restrictions on face-to-face contact, other avenues for sales meetings with clients were explored (online meetings, calls, etc.) Volatility in the global and domestic markets has had an adverse impact on business and consumer spending. However, the increase in usage of digital technology and a renewed interest in health and medical security led to a growing interest in insurance and a larger take-up rate. Malaysia is on a fast track to digitalisation due to its economic growth and advanced technology infrastructure. The Malaysia Digital Economy Corporation (MDEC) projected that e-commerce contributions would rise to as high as RM170 billion by 2020, while Internet banking and mobile banking penetration rates are increasing. Malaysia ranked first in e-wallet use in Southeast Asia, according to a study done by Mastercard. The on-going pandemic has brought some new changes as follows:- • Increased health awareness and digital usage in Malaysia. 76% have used online services (e.g. payment, shopping, and food delivery) and 66% rely more on social media for news. • Existing policyholders showed more interest in insurance and had plans to increase their protection. • Weakened competitiveness among start-ups and Small and Medium Enterprises (SMEs) due to the lack of preparation for unexpected disruptions and challenges. Only 61% of SMEs had employee and accident insurance, while 51% had key main insurance. Lower life insurance take up rate of 55% compared to the country target of 75% by 2020 Economic Transformation Plan and 90% are considered underinsured according to the Life Insurance Association of Malaysia (LIAM). The government is likely to revise the national target to 75% from the present target of 55%. • Increased core business capabilities are moving into cloud systems while carriers continue pursuing legacy system modernisation. • The on-going efforts to contain the spread of the virus resulted in volatility in the financial markets, which had an adverse impact on the economy. The emergence of new and traditional players has spurred us to quickly innovate and embrace technological advancement such as adopting Artificial Intelligence (AI) and meeting the needs of the more sophisticated and informed consumer base. Effective 1st January 2023, the IFRS/MFRS will change the way insurance companies manage their revenues and profits. MANAGEMENT DISCUSSION & ANALYSIS AFFIN BANK BERHAD 197501003274 (25046-T) | ANNUAL REPORT 2020