Profit (on paper) will be higher for Allianz under IFRS17, potentially much higher, depends on their management decision, as it will be principal based. Analysts that solely rely on PE ratio, will feel that it will be a good buy, despite nothing fundamentally changed.

Well, in my view still a good investment, just don't expect a 100% flip in few months time.
Should be no problem gaining 10% a year for the next 3 years.
Will need something big to trigger it to achieve a fairer value, e.g. a new M&A, IFRS17, RBC2, higher dividend etc.

Profitable yes, but small premium size, travel insurance is never a significant portion of tune protect thou, despite many feel so

Najib just commented on insurance.

Well, ease of application, Axa and Etiqa also pure online, ease of claims, Tunepro definitely worse off, due to non existence CS, and younger generation that have the mindset to purchase insurance online, will also compare Axa, Etiqa before sign up for Tunepro.

https://www.islamicfinancenews.com/ifrs-17-a-mountain-too-high-for-takaful.html?access-key=819f46e52c25763a55cc642422644317

For investment-linked products, profit recognition will be smoothened over a period of time and by doing this, it will help ease the strain current accounting standards have on a new business.

In contrast, for mortgage-backed business, lower profit will be shown in the first year which could negatively affect a company's overall profit, especially during the IFRS17 transition period.

All AA related stocks now become goreng stock already.

Comparing Tunepro new medical, Plan 100 vs Axa, Tunepro is almost more expensive at each ages.
Age 21 : 597 / 593
Age 26 : 597 / 593
Age 31 : 653 / 627
Age 36 : 857 / 638
Age 41 : 1100 / 775

Well, FWD aim big on online channel, but still not successful. For online medical, currently we also have Axa (which quite price competitive as well) and Etiqa.

Tunepro medical is actually not cheap.

Should stop obsess with Berkshire Hathaway/GEICO, the model that used to work, will not work in modern era due to tighter regulation.

Why should any insurance company want to take unnecessary risk, when they can just continue to grow the business steadily and pocket the insurance margin with minimal risk?

Motor insurance used to be standard across GI. Gov mandated to charge same rate, but now abolish that already.

Many other GI tried to be innovative and competitive, except Allianz. Allianz finally has online portal to purchase motor insurance, but still will incur 10% commission, quite a shame to be largest GI in the country.

Apple to apple comparison, you can see Allianz typically tends to overquote the market value of vehicle, and also charge higher rate per market value, vs Etiqa/Axa which more price competitive.

MNRB to the moon?

what just happened?

Tunepro launched its first online medical insurance
https://www.tuneprotect.com/products/pro-health-medical/

Cant just read the headline. Allianz motor insurance is notoriously expensive, and customer base of Pos Malaysia is usually not T20. Furthermore, Allianz will need to pay for that exclusive right, it is not a free meal.

APE is the annual premium, NBV is the future profit.
e.g. Allianz APE is 530mil in 2020, and NBV = 239mil.

If everything as expected, the new business sold in 2020, with total APE 530mil, will generate PV of 239mil profit for Allianz. ILP currently usually sold with term 70, and assume average entry age = 30, you can understand as 239mil profit, over average of 40 years. (of course in reality, the profit will be negative in certain year).
The 239mil is in PV basis and including expected surrender. What this means is, the first 10 years profit, can easily be 20mil a year.

i.e. if nothing change, the profit next year will be higher by 20mil (due to NB in 2020), and profit the next 2 year will be higher by 40mil (due to NB in 2020 & 2021).

Of course by then, IFRS17 will kick in, and profit recognition will change again, but same concept still hold.

*life insurance new business market share shrink (-10%), not the life insurance business shrink.
**new business market share shrink doesn't mean lesser current profit, or lesser future profit
***NBV is more meaningful (-7.7%)
****APE is not representative, as anyone can just sell a big saving product, with high premium but low NBV

That is the uniqueness long term nature of life insurance. e.g. even if the big 3 right now stop selling new business now, it will take years for Allianz to catch up.

Yes, acq cost will spread over policy term.

Embedded value already factored in expected surrender in the calculation, but yes about that RM2.3 per share thing.

130% is min CAR at all scenarios, usually company will have much higher internal CAR (e.g. 170% - 200%)

There are many things in the contract liabilities, not a good way to compare equity vs contract liabilities, even for GI vs GI. You are now comparing GI vs GI+Life, and GI vs GI+Life(takaful), wont show you meaningful thing.

@untong
2. While life (death) usually fixed sum assured, it is not the case for medical. For Life insurers in Malaysia, medical component is the largest, and is behaving just the same way like motor claims.
3. This is comparing low frequency high severity, vs high frequency low severity. That impacts RI the most, than GI (mainly fire, but usually GI will get RI support on that, motor claim is high frequency low severity), then Life.
4. IBNR also exist for medical claims, but usually shorter duration (e.g. less than 2 years)

In my view, GI will just be limited upside in the future, unless they branch into health. However, consumers typically prefer a bundled ILP in Malaysia.
Life however, still many upsides due to low insurance penetration.
Some small tier insurers (especially takaful) will still struggle to reach a sustainable scale, but for those that already hit the critical mass, they will have a very good future.

Concept of new business strain mainly on the Life side only, and especially ILP, after the recent Minimum Allocation Rate, MAR.

To recap, this is profit release for regular premium NPAR/ILP:
https://i.imgur.com/rZ4jyaz.gif

Selling more new business, will cause a loss in early year. The loss here is actual negative cashflows, rather than loss on paper.

i.e. imagine you buy a ILP, 2000 annual premium, in the first year, 60% allocation, insurer only take 40% of that, 800 as income, but at the sometimes, need to pay out other expenses (e.g. underwriting cost, printing cost, campaign cost) and commission, say 1200. For this APE 2000 ILP sold, there will have a negative cashflow of 400 in the first year.
For GI, while NBS also exists, but on a calendar year basis, a policy sold will only contribute to a net positive cashflows.

CAR ratio will determine how much new business insurers can write. When insurers sell too many, the CAR ratio will drop to below the target ratio. Hence if insurers just remain the minimum CAR ratio, e.g. by paying out dividend, there is limited room for them to write new business. However, if insurers have a higher buffer, then they can more comfortably write more new business. Allianz has a 250% growth in NBV in 2019 vs 2015.

no, as far as I know, you will pay nothing, maybe some postage fee and your time.

queue @ 2.22

Well, I believe Allianz has capacity to pay higher dividends, but willingly choose not to. Not every companies aim to please shareholders as much as possible to have tricks like bonus issue, dual listing etc. Pros and cons, of which the cons will be no speculators to goreng the stocks. I tried to compare Allianz top 30 shareholders back then, and the name list is almost the same. Yes, it is a super boring stock, with limited analyst coverage, and limited institutional buyers, but in my view, just a star waiting to shine.

Actually it is very simple, just look at Allianz GI valuation vs LPI. Even using a super conservative assumption, Allianz GI should worth as much as LPI, which is almost the market cap right now.
i.e. the market cap for Allianz currently, completely ignored Allianz Life, which in my view, should be the focus of Allianz valuation instead, due to high recurring income.

Take a look at Allianz Life Master Equity Fund, NAV in 2007 = 27m, NAV in 2011= 93m, NAV in 2020 = 966mil
These funds typically charge policyholders 1.5% FMC and only pay the fund manager ~0.3% of expenses, i.e. Allianz will get a spread of 1.2% from the fund, i.e. 12mil from this fund alone, regardless of market performance.
What will the fund size be, after another 10 years?
If 10bil fund even possible? Prudential has a particular fund with fund size = 11bil.
What is the spread from 11bil fund? Assume same 1.2%, it will be 132mil.
That is the investment fee income on top of insurance margin.

Typically insurance margin will be at least 20%. Why? Because that is in the RBC regulation, of which 20% is the minimum stress factor (can up to 45%).
All else being equal, and actual cashflow = expected, and assume no extraordinary items etc, Allianz will get 200mil+ of insurance margin yearly (from its 1bil+ claims payout * 20%).
Furthermore, as policyholders age, or after medical repricing, cost of insurance will be higher. Hence absolutely, the profit will be increase, even without any new business sold.

Need to understand the on products offered. Certain insurers in China can still take a very high risk in investment due to the product nature, i.e. typically high saving, low protection product.
And yes, due to our RBC, typically no insurer will invest in equity to back the liabilities.

The 8.6% equity in Allianz Life, is very likely belongs to the Par or ULP fund (*not belong to shareholder). Life insurers typically has 0% equity holding in their shareholder/operating fund.

On that particular slide, LF = life fund, SHF = shareholder fund
On the "Investment Results by funds":
1. Par = Par fund (belong to policyholders)
2. NPAR + ILOF = NPAR and ILP operating fund (belong to shareholders)
3. ILF = investment linked fund? (not sure, amount seems small, but if yes, belong to policyholders)
4. ULF = universal life fund (belong to policyholders)
Not sure what the life fund included, but typically sure included ULP, and maybe Par.
For ULP and Par, insurers will earn the investment return, then pass back to policyholder (with some guarantees and smoothing), earn some fees in between. So it is natural to have some equities investment.

For liability matching, the assets backing liabilities should be consist of mainly bonds, not equities. So that during int up/down scenario, the surplus will be largely unchanged.
e.g. int down, liabilities go up, bond price go up

By right any amount above reserve, insurers can freely invest in equities, but then, assets typically have shorter duration vs liabilities.
i.e. insurers will need more assets, to back the liabilities, to have a neutral impact due to interest rate movement. (*concept of dollar duration)
e.g. int down, bond price up 0.5%, liabilities up 1%, so insurers will need double amount of reserve in bond, to minimize the impact to surplus.

Of course, above certain level, with super high retained earnings, insurers can freely invest in equities. However, above that level, they can also comfortably give out dividends. For insurers in Malaysia, they will just choose to give out dividends. Hence, Berkshire Hathaway concept will not work in Malaysia or any MNC insurers.

For life, you can look at embedded value, or at least NBV.
Can also look at the "Gross benefits and claims paid", management expenses, and persistency ratio.

For GI, will be the typical claims ratio and combined ratio.
Nothing fancy about GI actually, since the valuation is about there, what people tend to overlook is the life business, and its long term future cashflow.
e.g. medical repricing in 2021 for many insurers, all else equal, will be a big positive impact, despite might not reflect immediately and usually insurers will set up higher reserve for that.
However, the concept behind it will be, insurers will always aim to achieve x% of claims ratio, say for their medical business. While, yes medical inflation, and claims cost rising, but if insurers can increase the cost of insurance, and always maintain the x% claims ratio, the absolute profit will be higher in a long run.

MRTA combined with loan also day-1 profit, the loan is financed by the bank, not insurer.
i.e. bank borrow you money to buy insurance.

1. https://www.theedgemarkets.com/article/allianz-proposes-rights-issue-icps
2. Profit margin is irrelevant to life insurance business. And profit margin for GI is almost for sure will be stagnant. Hence, profit margin is nowhere close to a good measure to judge insurance companies.
3. Usually just some FD, bonds due to RBC. Float amount is pretty much irrelevant to Allianz.

New business drying up will impact takaful more.

Underpriced for certain product is possible, but under-reserving is almost impossible. Malaysia is using GPV reserve, where the assumptions need to be the latest assumption. Under-reserving is usually only occurs in NPV reserve.

ROE is not meaningful due to :
1. Insurers can just choose to retain the earnings, and have a higher equity, to have a sufficient buffer to write new business.
2. Profit (IFRS4 basis) is not meaningful.

A typical ILP will have profit pattern that look like this:
https://i.imgur.com/rZ4jyaz.gif

While a single premium will have profit pattern that look like this:
http://www.actuarialpartners.com/wp-content/uploads/2018/06/1000x300-APLOS-Graphic-4.png

Currently, both conventional and takaful typically book a high year 1 profit for single premium product. For ILP, takaful typically also book higher first x years profit vs conventional (i.e. source of profit mainly coming from earlier period wakalah fee). Furthermore, takaful typical has a very high business mix in MRTA. So IFRS17 impact to takaful will be higher.

For the MyCC thing, in my view, is just MyCC being ignorant as always.
Price fixing should only illegal if it hurts normal consumers.
Workshop (and also hospital) abusing insurance claims is not a new thing, and Allianz and BNM are actually acting in best interest for us normal consumers, to curb the abusive behavior.
Not sure with latest development, I do hope things go well for Allianz, or all other GI.

The cashflow will still remain unchanged on any accounting basis, but profit recognition pattern will change, in particularly very significant for MRTA or any single premium/front loaded products.
In general, products that have a faster profit release in IFRS4 will see a slower profit emerging in IFRS17, and vice versa.

A typical (and super simplified) example of profit pattern for IFRS4 vs IFRS17:
http://www.actuarialpartners.com/wp-content/uploads/2018/06/1000x300-APLOS-Graphic-4.png

Takaful concept essentially take away the insurance risk component from the Takaful operator (hence the name operator). The source of profit for Takaful operator (e.g. STMB, Takaful Ikhlas, Etiqa), mainly from wakalah fee (more front end), rather than the risk surplus sharing (more long term), but this can vary by companies. You see, Takaful products can't be priced at the same level as conventional products, as conceptually Takaful products need to be more expensive, due to the additional risk sharing portion. However, due to market competition, Takaful products have to be priced at the same level as conventional products, coupled with risk sharing, takaful operators can't earn as much as conventional insurers from the insurance portion. So, less insurance risk, less profitable, profit usually front loaded (which will change under IFRS17).

Potential customers for takaful and conventional are obviously very different, especially for Life side. However, this actually doesn't matter much, as Takaful don't really seek to profit from underwriting profit. Product mix also varies a lot across takaful. Most of them do have ILP products, but not really selling well, except for PruBSN and Etiqa. Key products for other Takaful (e.g. STMB) are MRTA, which itself is another product with high day 1 profit (due to single premium), and will impact a lot under IFRS17.

Shouldn't just purely look at combined ratio. You can try to look at claims ratio by product. Generally motor has a higher claims ratio, while non-motor has a lower claims ratio.
e.g. Allianz Q4 2020, overall claims ratio 55.5%, motor claims ratio = 59.6%
Given motor is about 66% of Allianz GI product mix, 0.66 * 59.6% + 0.34 * non-motor claims ratio = 55.5, you can get non-motor claims ratio is about 47.5%.

STMB (GI side), motor is approximately 45% of its business mix only, hence overall naturally will see a lower claims ratio for STMB.

Another thing about high combined ratio for Allianz GI is, you will notice, Allianz GI, despite being number 1 motor insurer, doesn't offer direct purchase. Hence, almost all motor insurance sold, will come with commission, this will also explain the higher than average commission ratio, which also part of the total combined ratio.

However, it is very important to note the key difference between Allianz (conventional) and STMB (takaful). Say if both pay 100mil lesser claims in 2020 due to Covid, Allianz can pocket the 100mil directly, but STMB, due to the takaful surplus sharing, can only pocket 20-50mil (depends on the risk sharing %).

I not sure if Allianz Life ever publicly disclosure its embedded value. It does however disclosure its new business value (i.e. embedded value for NB sold).

@kywoo That is the EPS from this website, no idea how they compile it, I get the number for Allianz IR presentation.

@JJLee33 Because medical payout is > death payout. From LIAM data, entire industry, 2019 total medical claims ~5 billion, total death claims ~1.6 billion. The medical portion will be much higher for Allianz, which has relatively small old policies, but many new policies after it entered Malaysia market. Secondly, life experience is very stable, and Malaysia doesn't have a surge in death due to Covid like the US.
No idea with the lapse, but I think due to pandemic, people might reluctant to lapse their medical coverage as well.

I not sure what you mean, the number looks ok.

2019FY EPS RM1.42
YTD Q1 2020, RM0.23
YTD Q2 2020, RM 0.71
YTD Q3 2020, RM1.09
2020FY EPS RM1.50

Future event is covered by actuarial liabilities, the claims provision is for claims incurred in 2020 but pending paid/reported. You can google "loss triangle" to understand the concept.

Usually the claims provision will just be a x% of total paid claims in the year.
Due to the high claims paid (Allianz paid claims ~1.3bil), that x% move by 1% will be a ~13mil change in profit. Allianz can easily set a higher x% this year, to have a higher claims provision, to defer the profit (on paper).

*only the premium for new business 2020 drop 10%, the overall premium (existing business + new business in 2020) still +8%

Nope, it is very inline with the expectation due to lower motor claims and medical claims. You can see certain US insurers even provide additional rebate to policyholders.

New business sales (for life) is lower, but the impact will only come in in the later years.

From the PPT above, "The decrease was attributable to higher insurance contract liabilities arising from changes in interest rate and additional claims provision being setup during the year."

Profit for life insurance (under IFRS4) = net cashflow + change in reserve

*e.g. premium paid this year, will just convert to an increase in reverse, instead of convert to profit directly. For example, premium paid of 100 might lead to increase in reserve of 95, remaining 5 = profit.

The reserve component consist of actuarial liabilities (i.e. future claims) and incurred but not reported claims (i.e. IBNR or claims provision). It is just a provision instead of actual paid claims. Say if Allianz paid 100m lesser medical claims this year due to Covid, all else equal, the profit should increase by 100mil. However, they might don't want to recognize the full 100mil immediately this year. They can set up a higher claims provision, say 75mil higher, and only book 25mil additional profit this year. The 75mil additional provision, they can release it in the future.

Not as good as expected, thought easily 100-200mil saving from medical claims this year and will reflect in profit (life side), but they set up an additional claims provision, maybe to smooth out this additional profit.

https://www.allianz.com.my/documents/144671/1046244/2020_Q4_AMB_Analyst_Briefing+Slides.pdf/cb7f1c56-b585-4b47-99b3-03a96df274b4

Aaron Fryer, Regional CFO, Allianz Asia Pacific, shares further details on the business’s financial performance: “Despite the uncertainty of last year, our Life & Health (L/H) business delivered excellent results, with operating profits increasing 11.4 percent to EUR 431 million, driven mostly by strong performance in Malaysia and Indonesia.

“Total revenues in our Property & Casualty (P/C) business rose by 12.5 percent to EUR 1.3 billion. Nearly all markets contributed positively in the region, with particularly strong growth in China and Malaysia. P/C operating profit in the region increased 32.6 percent to EUR 120 million, driven by good performance in Malaysia, Sri Lanka, China, Thailand, and notwithstanding our investment in a new Singapore entity.

AAX to the moon

https://www.thestar.com.my/business/business-news/2021/02/19/kpj-earnings-dragged-down-by-fewer-patients?fbclid=IwAR3WdrT-F6neVRGgltwMnoNDR6ftVjWi_xn-Mv3vmv4i5X9eFSqqtwMjWWg#.YC8j3bc_CTw.facebook

Half of the profit of MNRB coming from its takaful business anyways.

However, currently the takaful business can post high day 1 gain for its long term business. It can no longer do that after IFRS17 in 2023.

https://www.allianz.com/content/dam/onemarketing/azcom/Allianz_com/investor-relations/en/results/2020-fy/en-analyst-presentation-fy-2020.pdf

Asia Pacific – double-digit growth (Operating profit)
Main drivers are Indonesia, Malaysia and the Philippines.

Aviva Singapore recently sold at 18.7x PE or 1.9x book value, for the life business.

AmInvestment Bank value Allianz GI @ 15.6 (2x book value) and Allianz Life @ 7.51 (1x book value), then another 25% holding company discount to 17.4.

Update the Allianz Life valuation and remove the 25% holding company discount, you will see RM30 valuation for Allianz.

*Life insurance is generally more profitable in Malaysia than Singapore

already ex dividend la, next 3 days payment day

In short is, people is greedy, view energy sector as a no longer sexy sector, and prefer to pump money in tech

^ Doesn't matter anyways, I think Tony himself is driving Tune Protect direction rather than the CEO.

might not give dividends if they plan to expand, like what they said in investor day

~20% life/general (including takaful) are loss making. Government has always been ignorant about healthcare cost, and lead to exorbitant increase in medical cost, cause insurers losses. Before 2020, majority of the health business in Malaysia operate at a loss.

I will say it is understandable that they refuse to foot the bill. Especially for pandemic, where there might be no ending to it. Who knows if it will last more than another year?

https://www.malaysiakini.com/news/561322

i think is CMCO after 4 weeks of MCO, not 4 Feb 2021 (which is ~ 3 weeks MCO).

why people still buying AAX?