Topic: earlier this week, we attended an analyst dialogue with MLP's C-level. Here are our key takeaways:
AuM strategy: having shown a 10% AuM growth CAGR (FY'20-9M'24), MLP should continue to maintain this high level of growth, due to several reasons: (1) First, steady inflows from 83k customers (eNuW) with an average monthly savings plan of € 500 currently contribute € 0.5bn annually to the now € 61bn total AuM. Especially the young customers show an above average behaviour, as 70% of young customers have a savings plan with MLP. (2) Secondly, an incoming wave of inheritamces in Germany should create demand for wealth management solutions. Here MLP is especially well positioned having a mass-affluent customer base with a largely academic background, which often also holds true for the respective testators. (3) Thirdly, a meaningful part of MLP customers are expecting payouts from expiring life insurance policies, which create a cash influx for which a suitable investment strategy is offered by MLP. On group level, MLP is well positioned to service the growing demand for wealth management with its own banking business (bank and custody accounts for savings plans), but also benefits from FERI's strong wealth management and multi-asset expertise which offers all services together with the MLP consultant.
Corporate client strategy: MLP's corporate client strategy focuses on insurance solutions for corporates, especially corporate pension schemes, health insurance and employee benefits (under the brand TPC and :pxtra) as well as corporate insurance brokerage (under RVM), the latter serving as a competence centre for highly specialized industrial insurances. Here, referrals within the MLP group (e.g. from wealth management to industrial brokerage or vice versa) seems to be working well, which was shown by 10x increase in RVM mandates diverted from within the group since 2021.
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Digitalisation: MLP continues to digitize in all areas, but we shed the light on two examples.
(1) a more digital customer experience. First, it is not designed to move away from a personal consulting through the MLP consultant, but rather to complement the consulting approach in a more digital customer experience, ultimately improving the customer satisfaction and preventing potential churn via the MLP Financial Home (client portal showcasing the client's asset structure and insurance contracts). Moreover, the incorporated gap analysis showcases the consultant as well as the client a potential underinsurance or the need for action in order to reach the personal financial goal and protection.
(2)busines automation. Secondly, the effective use of automation as well as the company internal AI assistance (similar to "ChatGPT") serves as a key enabler of more efficient procceses, but also serves as a digital database of the profound and interdisciplinary knowledge across the group. For example, the claims management for claims below € 5k at the underwriting agent DOMCURA is fully digitized and reduced the processing time by more than 90% (eNuW). Here, the "Claims-AI" (introduced in July 2024) handles incoming claims, assesses the situation, matches and cross-checks the written text with pictures attached and creates a recommendation for the clerk with a ready to send reply within seconds. All the clerk has to do is to approve it. Moreover, this has reduced the claims backlog by more than 80% within a few months.
Looking ahead, MLP will announce new mid-term (2028e) targets with FY'24 results on 13th March 2025, as the old mid-term 2025 targets will be next year's guidance. The new targets should be "no less ambitious than our previous medium-term planning" according to the CFO Reinhard Loose. Consequently the announcement should serve as a catalyst for the stock, as MLP's underlying financial performance over the last years does not match the share price development, in our view. Thus, we reiterate BUY with unchanged PT of € 12.00, based on FCFY'24e.
ISIN: DE0006569908
