Highlights
KLSE: ALLIANZ (1163)       ALLIANZ MALAYSIA BHD MAIN : Finance
Last Price Today's Change   Day's Range   Trading Volume
12.74   -0.02 (0.16%)  12.74 - 12.80  15,700
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Overview

Market Cap: 2,261 Million
NOSH: 178 Million
Avg Volume (4 weeks):34,015
4 Weeks Range:12.70 - 13.00
4 Weeks Price Volatility (%):
13.33%
52 Weeks Range:12.68 - 15.38
52 Weeks Price Volatility (%):
2.22%
Average Price Target: 16.95
Price Target Upside/Downside: +4.21

Financial Highlight

Latest Quarter | Ann. Date 31-Mar-2021 [#1]  |  19-May-2021
Next QR | Est. Ann. Date: 30-Jun-2021  |  27-Aug-2021
T4Q P/E | EY: 4.49  |  22.29%
T4Q DY | Payout %: 4.54%  |  20.35%
T4Q NAPS | P/NAPS: 22.5024  |  0.57
T4Q NP Margin | ROE: 8.31%  |  12.62%

Headlines

Date Subject
20-May-2021 Mplus Market Pulse - 20 May 2021
20-May-2021 Allianz Malaysia - Stronger top line, but dented by ALIM’s fair value losses
19-May-2021 Allianz Malaysia - In-line With Expectations; Weak 1Q21 Could be One-off
25-Feb-2021 Mplus Market Pulse - 25 Feb 2021
25-Feb-2021 Allianz Malaysia - Strong GWP growth with lower net claims
25-Feb-2021 Allianz Malaysia - Outperformed Expectations; Higher 4Q20 Net Profit
27-Nov-2020 Allianz Malaysia - Recovery in Premium Growth in 3Q20
26-Nov-2020 Allianz Malaysia - 3Q20 life insurance ANP improves on easing of MCO
09-Nov-2020 Protecting the rakyat, safeguarding the economy
01-Oct-2020 Allianz Malaysia - Attractive Valuation; Decent ROEs
28-Aug-2020 Allianz Malaysia - Reversal in Fair Value Gains Drives a Stronger 2Q20

Business Background

Allianz Malaysia Bhd is a diversified insurance company that provides life and general insurance in Malaysia. The vast majority of the company’s revenue is generated through insurance premiums, with the remainder stemming from investment income as well as fee and commission income. The company’s general insurance includes automotive, home, and personal insurance. Allianz Malaysia’s business insurance includes fire, engineering, and liability insurance. The company also offers life insurance through a variety of its products.
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  6 people like this.
 
jeffchan1901 Hi All, thanks for sharing the insights of the insurance industry. Someone was mentioning that EPF has been quietly buying up this stock. But I could not find Allianz portfolio in the March 2021 update. Am I missing anything?

https://www.kwsp.gov.my/-/list-of-top-30-equity-holdings-by-percentage-of-issued-shares-as-at-31-march-2021
16/06/2021 12:39 AM
wsb_investor that is sorted by holding%, EPF only hold 5.89% of Allianz now, cant make it to top 30
16/06/2021 9:09 AM
jeffchan1901 Thanks for clarifying wsb
16/06/2021 5:44 PM
observatory EPF holding is shown in page 113 of 2020 Annual Report. EPF owns both ordinary shares and ICPS.
17/06/2021 7:53 PM
magic01 I just realised allianz is one of the top 10 shareholder for kpower. Will this affect earning of allianz greatly in the future? Or how will it impact to allianz future growing? Someone pls answer me.
20/06/2021 11:05 AM
Papayashot Hopefully their exposure to Kpower is not too many...
20/06/2021 11:45 AM
observatory Allianz does not publish the embedded value (EV) of its life business. However every year it discloses its New Business Value (NBV).

May I know whether I can get a rough EV by adding up all the NBV announced in the past?

What additional assumptions must I apply to make the estimate more realistic?
20/06/2021 10:08 PM
observatory @magic01

I just checked. Allianz Life insurance held 2.644 million shares of KPower as of 14 Oct 2020.
After adjusting for split, KPower share price was around RM0.8 per share as of Oct 2020. We can safely assume that Allianz acquired the share at a lower cost. KPower actually rose from RM0.2 in Oct 2019 (Allianz was not in the Top 30 list then) to a height of RM2.8 in Jan 2021.

The current share price is RM1. Assuming Allianz did not top up any shares at higher price after Oct 2020, it should still sit at a paper profit.

But even if Allianz chased KPower all the way to RM2.8 (I think unlikely), the paper loss is at most at a few million RM. How does it compare to Allianz investment portfolio?

As shown in Page 18 of Annual Report, its total portfolio (including general insurance) is RM18.7 billion. Of this total only RM2.6 billion is invested in quoted equities securities and unit trust. The KPower investment is likely to be less than RM10 million. This is less than 0.5% of its equity portfolio, or 0.05% of total portfolio. Any gain or loss from KPower will be very small.

It's also not clear to me whether part of the KPower investment is actually owned by Allianz clients through ILP. That mean the impact to Allianz is even smaller?
20/06/2021 10:39 PM
wsb_investor It is mainly owned by Allianz clients, you can check it here. https://www.allianz.com.my/documents/144671/1080891/ENG+Allianz+Fund+Performance+Report+2020.pdf/f63c8a7e-7252-441b-9613-0778d0690609
21/06/2021 9:49 AM
magic01 I guess we cannot be too optimistic about this
21/06/2021 7:01 PM
observatory @wsb_investor, yes you're right. I recall limyuwei once said Allianz almost doesn't own equity in its shareholder fund. The equity holdings are for policyholders of Par, ILF and ULF.
22/06/2021 12:35 AM
wsb_investor https://www.channelnewsasia.com/news/business/france-s-axa-to-sell-malaysia-insurance-businesses-to-generali-15066432
22/06/2021 3:09 PM
wsb_investor AXA sold for 140mil euro (~690mil MYR) for 49% Life + GI, valuing AXA at ~1400mil MYR, vs Allianz MV of ~5000mil MYR (adjusted for ICPS)
22/06/2021 3:13 PM
Stock beginner For those who interest in management presentation and questions that raise during AGM
https://www.youtube.com/watch?v=_Rq69FjYFvA
23/06/2021 4:50 PM
wsb_investor 1h20m : Yes we are selling a lot of protection business which is actually very good under the 17 basis, the profit will emerge quite well.
23/06/2021 6:44 PM
unicornbird obs, thanks for intro me to this company. Do you have any info to show the market share of Allianz VS other big players?
Is there any law to protect Allianz from unfavourable law that may kick out these MNC, in favour of local insurers like Etiqa?
02/07/2021 9:07 AM
unicornbird Some will play tricks like banning roadshows, or block university recruitment fair to stop MNC from competing direct with local insurers
02/07/2021 9:10 AM
wsb_investor Allianz is now number 1 in GI, number 4 in Life (conventional). There are only 2 local conventional life insurers, HLA and Etiqa, both with foreign minority shareholder. The only unfavorable law, at least recently, is the 70% cap on foreign ownership, but seems like is being postponed again indefinitely.
02/07/2021 9:52 AM
unicornbird wsb, thanks for sharing. for 70% cap on foreign ownership, this has been a very long issue scaring away MNC. But I think Najib has scrapped it.
Many local owned companies are 100% sold for foreigners, like Sepang Aircraft maintenance is sold 100% to Airbus. Proton sold 50% to Geely.

Looks like that 70% is no longer enforced?
02/07/2021 10:22 AM
unicornbird Is Allianz kind of protected under any Malaysia EU free trade agreement?
02/07/2021 10:24 AM
wsb_investor The foreign ownership thing being brought up again in 2017, so far only one company "negotiated" and "donated" to the government to get exemption. Many others did scramble up to find a local partner, as there are only a few with big enough size and good quality local partner. https://www.nst.com.my/business/2017/11/299822/epf-kwap-eye-foreign-insurers

Supposed someone upper level eventually stop the government to proceed with this, and now is silence again. The only victim so far, is that one company.

Recently, China, India and Indonesia all slowly open up to allow higher foreign ownership. It seems unlikely government will proceed with this anymore. There is this unique position for life insurance, which it is actually much better to allow for big MNC insurance, with good governance, to come in. Local insurance typically restricted with capability and with poorer governance, and hardly survive for a long time. Back then we did have a lot more local insurers (MAA, Uniasia, MCIS, Tahan), but now only HLA and Etiqa managed to sustain.
https://www.theedgemarkets.com/article/takeover-tahan-no-surprise-industry
02/07/2021 3:33 PM
observatory I believe Allianz already complies with the 70% cap. It owns only 65% of the ordinary shares. Although it also owns 85% of ICPS, I suppose preference shares don't count since they have no voting right.

In fact I wonder if the preference share was designed with such restriction in mind. The preference share was issued in 2010 to repay a loan to Allianz SE extended to acquire a local insurer.

The non-compliance insurers are those without local listing. While Great Eastern has settled, I suppose AIA and Prudential are 100% owned by the entities listed in HK.

Just my guess.
02/07/2021 11:00 PM
wsb_investor There are many secret undertable arrangement for AIA and Prudential.

AIA
https://www.insurancebusinessmag.com/asia/news/breaking-news/foreign-insurers-want-review-of-malaysias-ownership-rules-96114.aspx
http://lib.perdana.org.my/PLF/Digital_Content/Prominent_Leaders/Mahathir/News_1968-2004/1996-1998/1998aj/equity%20ear%20grace.pdf

Prudential
https://www.theedgemarkets.com/article/high-court-rules-favour-prudential-over-stake-malaysian-licensee
03/07/2021 12:05 PM
wsb_investor https://paultan.org/2021/07/05/motor-insurance-claims-fraud-cost-rm1-billion-a-year-in-malaysia-fighting-corruption-is-a-lonely-road-allianz/
05/07/2021 11:51 AM
Pinky Another OPR cut will impact Allianz negatively again
05/07/2021 2:02 PM
Papayashot Hi Pinky, can you explain why OPR cut will affect Allianz?
06/07/2021 8:50 AM
Pinky Allianz holding a lot of MGS, Malaysian Government Securities a.k.a. bonds.

When OPR is cut, fair value of existing MGSs will fall.

I explained it in detail the reason and mechanism for this fall in this forum thread, go dig my post a few months ago and read for yourself.
06/07/2021 12:32 PM
observatory Should the fall in asset FV be partly offset by falling liabilities? But not sure about the magnitude. In the AGM they prefer rising interest rate.

No matter what, I think the interest rate change is a temporary factor. Not much effect on the long term outlook.
06/07/2021 4:49 PM
Moratorium Pinky oh Pinky... Value of a bond is inversely related to the interest rate.
When OPR is cut, fair value of existing MGSs will increase and not fall.
Finance 101
06/07/2021 5:07 PM
Pinky Eh eh eh sorry sorry sorry

Mabuk FMCO dah XD
06/07/2021 5:35 PM
Pinky The previous fair value hit to Allianz was due to rise of INTEREST RATE, not rise of OPR.

Rise of interest rate may, or may not be due to rise of OPR

Allow me to illustrate

Let's say BNM cuts OPR from 1.75% to 1.50%

HOWEVER, the MARKET may perceive that Malaysian government bonds carries a high risk (be it risk of default or risk of weak forex etc)

Hence, the market will SELL DOWN MGS, causing YIELD to go up
06/07/2021 5:38 PM
Bgt 9963 Good morning...
08/07/2021 8:49 AM
kotatatata They already knew August sales will be very bad so they keep selling ? Selling like mad everyday?-?
08/07/2021 5:57 PM
wsb_investor 1 month or even one full year of bad sales will not change anything. There is almost zero capital required to write a new business and no cost of inventory etc. The sales in fact are mostly campaign driven, and not surprised to see one month of sales can be 3x of another month.

Q1 2019 117.5
Q2 2019 167.8
Q3 2019 132.8
Q4 2019 176.7
Q1 2020 122.6
Q2 2020 90.8
Q3 2020 150.7
Q4 2020 167.7
Q1 2021 171.3
09/07/2021 9:54 AM
Pinky EPF keep acquiring yet price keep falling...really no hope for capital gain. I keep as fixed deposit-substitute now.
09/07/2021 11:07 AM
wsb_investor whole market is down, just collect if got free cash
09/07/2021 2:23 PM
Junichiro All its branches are closed for business whereas other insurance companies are still open.
09/07/2021 3:29 PM
Junichiro Posted by kotatatata > Jul 8, 2021 5:57 PM | Report Abuse

They already knew August sales will be very bad so they keep selling ? Selling like mad everyday?-?

In a sense, you are correct. All their branches are closed since 10 May 2021 till now. Some of my friends asked me if I have any idea on when they are reopening. Other insurance companies are open.
09/07/2021 3:33 PM
Papayashot All insurance companies are opened while Allianz offices are closed? Any logic behind this?
09/07/2021 4:29 PM
wsb_investor Branches don't have to open to sell new insurance policies. In fact, even to settle claims, branches dont have to open as well. I did visit insurance company branch a few times before, but mainly just to switch funds, change payment method etc.
10/07/2021 12:46 AM
Moratorium Pinky The previous fair value hit to Allianz was due to rise of INTEREST RATE, not rise of OPR.

Rise of interest rate may, or may not be due to rise of OPR

Allow me to illustrate

Let's say BNM cuts OPR from 1.75% to 1.50%

HOWEVER, the MARKET may perceive that Malaysian government bonds carries a high risk (be it risk of default or risk of weak forex etc)

Hence, the market will SELL DOWN MGS, causing YIELD to go up

To the above, I agree. And with the latest political turmoil, it will certainly affect Allianz's investments. But overall, I don't have any issue to park my money here or average down if it continues dropping as I believe Allianz is a strong company with proven track record
10/07/2021 12:10 PM
observatory The recent AGM presentation, webcast and additional Q&A have just been posted to Allianz website:
https://www.allianz.com.my/investor-updates

In the Q&A, Q19 asks "How much financing of investment-linked of new business has affected profitability of the recent quarter? Will the high growth rate such as the new business affect the future quarter’s profitably?"

The answer is "The minimum allocation rate for investment-linked products as imposed by
the regulator will create some new business strain for Allianz Life. However, the lower profitability in first quarter of 2021 was not from higher sales volume or new business strain but was mainly arising from fair value movement from the fixed income portfolio. Any changes in interest rate will create some volatility to the profit of Allianz Life."

Can anyone explain what is an "allocation rate" for an ILP?

How does the minimum allocation rate imposed by the regulator create new business strain?

Are ILPs sold at a paper loss during the first year such that the more are sold the greater are the (paper) loss?
12/07/2021 8:33 PM
Bgt 9963 Good luck.!
12/07/2021 8:51 PM
wsb_investor First year premium < units allocation/creation + first year expenses + first year commission, thus will sell at a paper loss, in first year.
13/07/2021 3:23 PM
wsb_investor https://www.sinchew.com.my/content/content_2513273.html
17/07/2021 1:46 PM
wsb_investor https://www.theedgemarkets.com/article/ammbs-51owned-unit-sells-amgeneral-insurance-rm229b-cash-and-shares-deal-liberty-mutual?fbclid=IwAR13Qll8w0ha9SM8_PKXTFKFh6-IpDd3FfmIRzfQ0qFJe3AcI-_2gmZSdOU#.YPVcR9gWL6s.facebook
19/07/2021 9:10 PM
wsb_investor AmGeneral sold @ 1.4x book value, while AXA sold @ ~1x book value, and give away life business for free
19/07/2021 9:16 PM
Bgt 9963 Good morning.
20/07/2021 8:45 AM
observatory The article says Liberty will become the largest auto insurer. Might Liberty and Generali bring better practices and technologies and pose stiffer competition?
20/07/2021 10:37 AM
wsb_investor They both already exist in Malaysia market for years, not new entrance. Currently we have 21 conventional P&C insurers, after 1 year, will consolidate to 19.
20/07/2021 3:05 PM


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