ops..

Due to relatively non-existent reserve for ILP, profit for ILP is more or less like on a cash basis, under IFRS4. First year will usually always be a loss due to acquisition cost.

Under IFRS17, profit will be recognized as services provided. First year profit will never be a loss anymore.

For subsequent year, IFRS4 will continue on a cash basis, but IFRS17 is not. Expected profit will be release systematically under IFRS17. Hence, profit will be recognized faster for ILP under IFRS17. For NPAR, especially single premium NPAR (i.e. MRTA), it will be the reverse.

Of course there are many other products in Malaysia market, but ILP + NPAR are the most significant portion.

FMCO, so continue low claims for GI and Life..

Happy FMCO！

NBV

AirAsia's data breach? : Hey BIG Fam, there's been a spate of data breaches taking place recently. To continue keeping your account safe, we encourage you to change your password regularly.

Wont be a very big impact, Allianz is well managed to not have such a high concentrated risk. Usually a big risk like this will get spread across via reinsurance.

You can compare Q1 2021 vs Q1 2020 vs Q1 2019, you will be surprised

Net earned premium is not meaningful for life insurance, so under IFRS17, there is no such information.

In Taiwan recently, the overall electricity consumption increased (and then overcapacity and hence blackout) after the lockdown.

For Allianz GI, well, nothing much, just look at the book value, as long as the annual growth is acceptable.

Allianz Life is the hidden gems. For life insurance, the valuation should be embedded value (i.e. future profits, ~cash basis for existing business) + NB multiplier * NB value (for future business). Right now, all these is not cater for Allianz valuation. Investors, in general, still using the most traditional PE ratio to value Allianz Malaysia, of which the profit now under IFRS4 is just paper profit. Even the profit under IFRS17 is paper profit, but the good thing is, this IFRS17 paper profit is generally expected to be much higher vs current IFRS4 basis.

Profit under IFRS4 for ILP = unallocated premium + FMC + COI - commission - expenses - claims, since the reserve for ILP is minimal. The key issue here is, COI in this year is low, but COI in the future can be very high, and COI is usually set to be x% of expected claims.

For example, say if average policyholders now is age 40, on average paying age 40 COI, say RM1000. 10 years later, say average policyholders (for the same block), is now age 50, paying RM2000 COI. Assume same margin, the profit for the same block of business will almost double after sometimes, but of course subject to some lapses.

For comparison, profit under IFRS17, simplified = amortization of all future expected profit + variance of cash flow.

Profit recognition will vary by products, but Allianz is selling a lot ILP, of which the profit recognition is very slow under IFRS4, so in general, can expect to see faster release in profit under IFRS17.

*IFRS17 will also lead to more stable profit release due to the buffer mechanism.

but total is barely ~8mil MYR thou...

*in the new ifrs17, there is no zeroised liability

Pv future net cashflow, positive = a liability, negative = a future profit. Except single premium, usually liability will be a negative, then regulation require to zeroise those negative liability, to be conservative.

in short, ifrs4 is not reflective for life insurance, don't need obsessed with the profit/loss number.

https://www.freemalaysiatoday.com/category/nation/2021/05/19/motorists-share-struggles-dealing-with-auto-insurers-bank-negara/

NBV is in the analyst presentation.
https://www.allianz.com.my/documents/144671/1115544/2021_Q1_AMB_Analyst_Briefing.pdf/6b1a982f-56bd-4675-ad60-df19c9b87f89

Fair value gain/loss for investment need to be see together with change in contract liabilities.
Usually, for example Q1 2020, there is positive change in contract liabilities and negative fair value gain/loss, when interest rate rising.
In Q1 2020 however, both are negative change, suspect there might be other changes (e.g. change in assumption).

Anyhow, what to bear in mind is, IFRS4 profit is never reflective for insurance, hence the new changes (IFRS17) is coming. Should focus more on NBV, core profit etc.

Just top up again.

ANP is annual premium, NBV is future profit. For example you buy insurance with annual premium 2000, contributed 2000 to ANP, and Allianz expected to generate 1500 PV future profit from you, the 1500 is the NBV.

For Q1, ANP up 39.7%, NBV up 64.9%, which are good signs, indicate the products sold now, is more profitable.

Interest up, bond price fall. For insurance, what matter is the net position, not just the fair value loss on investment (asset side). Interest up, bond price fall, liability (PV of future cash flows) also fall. The surplus can instead increase, depending on the dollar duration of assets/liability.

https://www.nst.com.my/news/nation/2021/05/689286/report-hike-premium-medical-insurance-policies

https://www.sinchew.com.my/content/content_2468433.html

btw sharing HLFG just because surprisingly this local holding company disclosure more information vs Allianz.

Allianz EV is not available publicly, but I doubt it will lower than HLA.
*There are multiple type of EV, Allianz is using MCEV, for HLA I think should be TEV.

Product type NBEV margin is generally consistent across every insurers, of which protection products will have higher margin, while saving products will have lower margin. As far as I know, Allianz's protection portion is much higher than HLA's protection portion.
*Allianz has been heavily focusing on ILP since early 2010, while HLA previously heavily focusing on selling par products.

https://www.sinchew.com.my/content/content_2465440.html

http://www.hlfg.com.my/data/analyst-briefing/FY2020.pdf

Well, not many people know insurance, and many that do, are not those that invest in stock market.

The current IFRS4 alone, almost no analysts can truly understand it, let alone the upcoming IFRS17. Insurance in Malaysia (e.g. Allianz) is rather unique, as it is heavily on ILP, whereas other listed life insurance in HK or SG are not.

BAT to the moon

https://www.theedgemarkets.com/article/generali-talks-buy-axa-assets-malaysia-sources-say

nope, not holding Takaful.

Bigpay launched insurance, partner with Allianz. https://www.bigpayme.com/post/bigpay-all-in-one-lifestyle-insurance

Got pro and cons, but in the earlier years, yes, EPS gonna be a nosedive.

Yes you are right, revenue is not important anyways, it is more for the profit. It will not be a simple divide by 20 years also, the earlier years will have higher weightage.

Q3 2020, Allianz GI book value 2400mil, OS share including ICPS = 346 mil.
Assume lowest of 1.6x PB for GI, Allianz GI is worth 11 per share.
Assume 1.9x PB for GI, Allianz GI is worth 13 per share.

So yea, current valuation for Allianz completely ignore the Allianz life business, which should worth much more than Allianz GI.

even the lowest PB of 1.6x for GI alone > current Allianz market cap.
https://klse.i3investor.com/servlets/staticfile/416102.jsp

ifrs17

wait 2023

Volume is on par with LPI and Takaful thou

https://www.theedgemarkets.com/article/aminvestment-bank-research-starts-coverage-takaful-fv-rm620

STM CEO talked in a webinar this morning.
https://www.linkedin.com/in/hassan-scott-odierno/recent-activity/

Sadly, insurance agents acting atas behavior is not unique to Malaysia.

Well, despite branded as HNW product, 500k sum assured is not really a lot. Rule of thumb is 10x annual income, and 50k annual income is definitely nowhere close to high income.

But it does fill a particular protection gap that gone unnoticed for years.
Mass market ILP typically focus on rider attachment, and don't usually allow high sum assured.
This product is hot selling for big 3 players.
It is not anyhow expensive, you can get ILP with 50k SA + medical, or ILP with 500k SA, with almost the same price. Life expectancy is more predictable and hence the high margin.

https://www.theedgemarkets.com/article/general-insurers-look-forward-working-bnm-anticipation-further-liberalisation

^Sing Re to be delisted with offer price = 0.8x book value.

now we know why MNRB suddenly shot up. https://www.reinsurancene.ws/fairfax-looks-to-take-singapore-re-fully-private-under-100-ownership/

^ Allianz launched a new high net worth (HNW) life insurance, big 3 in Malaysia also have similar products. This HNW and also high sum assured products are very profitable, and are actually are very good products for consumers as well.

https://www.thestar.com.my/business/business-news/2021/03/22/allianz-life-launches-new-insurance-plan-primecover

over here : https://www.allianz.com.my/investor-updates

While MNRB is indeed undervalued, his article is quite bullshit.

While some analysts point out that AMMB’s settlement has raised the possibility of a merger, with RHB Bank Bhd cited as the most probable partner, others feel that any M&A that takes place will likely not be at the banking level but at a subsidiary such as insurance or asset management.

https://www.theedgemarkets.com/article/cover-story-will-there-be-merger-proposals-ammb

Some GI do write MRTA, but for LPI, it only has Mortgage Reducing Personal Accident. Public Bank's MRTA partner is AIA. LPI business is usually short term in nature and minimal impact under IFRS17.


The Group underwrites various general insurance contracts, which are mostly on an annual coverage and annual premium basis, with the exception of short-term policies such as Marine Cargo which covers the duration in which the cargo is being transported.
Some of the policies are guaranteed renewable, such as the Medical products which are subject to a pricing review once in every three or five years. The Group also underwrites some non-annual policies with coverage period more than one year such as Mortgage Reducing Personal Accident, Contractor’s All Risk and Engineering, Bonds and Workmen Compensation.

Only MRTA is day 1 profit, ILP is not day 1 profit. Conventional insurer which heavily on ILP will benefit a lot, to see their profit shoot up, under IFRS17.

Company A sold life insurance, premium 2000 per year, for 40 years.
The policy is expected to generate NBV of 3000 over the lifetime (factor in possibility of surrender).
The NBV 3000 will be recognized as profit over 40 years (but not evenly, due to possibility of surrender), so profit recognition will be a lot higher in early years.
*NBV is on present value basis.