（吉隆坡28日讯）据知情人士透露，美国联邦航空管理局（FAA）将把大马的航空安全恢复为第一级；预计美国当局将在月杪前就此事发表声明。

（吉隆坡28日讯）据知情人士透露，美国联邦航空管理局（FAA）将把大马的航空安全恢复为第一级；预计美国当局将在月杪前就此事发表声明。

Japan and Taiwan province reopen soon. Good for AAX, but even better for KLIA2.

That is a very general statement. Under IFRS17, there are 2 key measurement models (VFA/GMM). Assets hold can also further split into "assets backing liabilities" and surplus assets (excess assets above liabilities, mainly to support required capital). Only assets backing VFA liabilities will have 0 P&L impact on change in fair value. GMM business and surplus assets will still subject to the usual change in fair value impact.

The 2.1b deposit, 1bil in Family takaful, 0.6bil in General takaful, both doesnt belong to Takaful at all, only 0.5b in operator fund, and even that portion, is to back a portion of liabilities.

It is very true that Tune Protect has no direction. PreCovid TunePro wanted to move away from travel insurance, then during Covid, back top focus on travel insurance, and now wants to focus on health? "lifestyle" insurance that underwrite by TunePro, real cost of 40, markup to 100 to sell to policyholders, where a big portion of profit go to those "fintech" intermediaries. And what? How many of those "fintech" will survive next 3 years?

Taiwan:COVID-related claim payouts total more than 14 times premium income received
https://www.asiainsurancereview.com/News/View-NewsLetter-Article/id/82191/Type/eDaily/Taiwan-COVID-related-claim-payouts-total-more-than-14-times-premium-income-received

Sunlife IFRS17 investor education:
1. Traditional insurance business has higher impact driven by deferral of new business gains.
2. Higher expected profit recorded in early years for VUL products in Asia. (VUL here not exactly ILP, but ILP is much more profitable vs VUL)


https://www.sunlife.com/content/dam/sunlife/regional/global-marketing/documents/com/sun-life-may-31-ifrs-17-education-final.pdf

In general, profit will be slower, that is super general. Allianz Life has a very special concentration on ILP. This is from the AGM.

The Group do not provide forecast/estimates for financial results. It is observed that retained earnings would be higher under MRFS 17 as compared to the current MFRS 4 mainly contributed by faster profit emergence for investment-linked products, and deferral of acquisition cost.

Products measured under VFA will have minimal impact from investment fair value gain loss. Most of the products sold by Allianz will be under VFA.

exclude one off impact, higher interest rate always better for Insurer.

Most of the liability measure with latest interest rate assumption, except a particular block of business. Another issue is that, there are reserve that floored to 0, so in comparison, less sensitive to interest rate movement. e.g. bond value drop, but reserve still floor to zero.

All these will be gone under IFRS17.

594 should be assets side impact only, whereas 69 is net position. Interest rate up will reduce bond MV and reduce liability concurrently.

General liability shorter term, life liability longer term.

ALLIANZ-PA 1 year high now, albeit mainly due to thinly traded

Exclude one off fair value impact, interest rate hike is good for insurance industry.

In 2011, ING Malaysia, with TEV of 952mil USD, VNB of 48mil USD, sold to AIA at 1.73bil USD. Allianz Life now with MCEV of 3.5bil MYR, VNB 275mil MYR, but Allianz market cap (with GI) = 4.47 bil MYR.

GE donated the 2bil in a smart way, that's why you don't see a P/L impact of -2bil for GE, and why they opt for this donation. However, the same way is not possible for AIA and Pru. There is no way they will just donate anything. JV is more likely than IPO. Previously in 2018, Pru was exploring JV with KWAP. In term of big GLC, we still got KWSP and PNB. Khazanah already own Sunlife, not sure if will still keen to have a bigger stake.

AIA and Pru are more well established and have been constantly paying dividend, IPO is still OK option. Tokio Marine is much smaller size, and Zurich is still loss making, which make it hardest to fulfill the new regulation.

If you only looking at ILP, then yes is discounted with risk free rate, but if you looking at conventional products, at the second half of the policy term, outgo will > income, using risk free discount rate, it is actually more conservative. Another point to add is, for ILP, Allianz also project the fund return with risk free rate, whereas AIA (using TEV basis) project the fund return with high return (much higher than 8.56%). Overall, Allianz's MCEV basis is more conversative, not aggressive.

There are reason why GE and Pru appear to be cheap. For Pru, there are a couple reasons:
1. The EEV tripled in past 3 years (Asia business), but share price didn't catch up
2. There are many corporate activities recently, e.g. spinoff US/UK business, the investor base might change.
3. IFRS profit is on downwards trend for Pru. This shouldn't be a concern due to the flaw of existing IFRS, but again most investors with limited knowledge and only look at IFRS profit.

AIA/Prudential/Tokio Marine/Zurich might force to IPO/local JV/donation. For some reasons, donation is very unlikely. Regardless if IPO or local JV, there will be public disclosure of price/EV of the transaction (it will be more than 100% for MY market). Hope by then public can notice how deeply undervalue Allianz is.

Embedded Value for Allianz Life as at 31 December 2021 was at the range of RM3.5 billion. Embedded value is calculated based on the best estimate assumptions (i.e mortality, persistency, morbidity etc) discounted at risk free rate. https://www.allianz.com.my/content/dam/onemarketing/azmb/wwwallianzcommy/pdf/investor-updates/2022/OTHER_48TH_AGM_QA.pdf

The Group do not provide forecast/estimates for financial results. It is observed that retained earnings would be higher under MRFS 17 as compared to the current MFRS 4 mainly contributed by faster profit emergence for investment-linked products, and deferral of acquisition cost. https://www.allianz.com.my/content/dam/onemarketing/azmb/wwwallianzcommy/pdf/investor-updates/2022/ANNEXURE_2_48TH_AGM_QA.pdf

https://www.theedgemarkets.com/article/malaysia-said-set-2023-cutoff-foreign-insurer-stake-sales

Not very familiar with GI business, but AmG/Liberty or AXA/Generali, only AXA is slightly reputable due to online presence, the rest are more or less like local company (Liberty = ex-Uniasia, Generali = ex-MPHB/Magnum) instead of real MNC. Combined entity should have cost saving advantage, but that will take years to materialize. Not foreseeing more competition due to lack of awareness of both Liberty & Generali branding in Malaysia. I aslo don't think UW loss will ever happen again.

AIA 283m is in USD.

AIA uses TEV basis (more aggressive assumptions), Allianz uses MCEV basis. Also, Allianz prices its ILP to age 70 only, to get bigger market share, so lower premium and lower profit, whereas AIA (at least used to, not sure about now) prices its ILP up to 100.

Yes you are right. Not sure how those data are being compiled.

Some in force block, you might have products that stop paying premium, especially saving products. Hence can't just look at annual premium. Furthermore saving products with bigger premium size but much lower margin whereas traditional protection products with lower premium size but much higher margin. E.g. HLA is well known for selling saving plans. Its ordinary life maybe is 33% of total, but probably generate less than 10% or even 5% of total profit.

Dont think the classification of whole life/endowment is very straight forward. ILP can be both, and for Allianz, its product strategy previously was to design ILP that only last until age 70 (hence lower price), vs other competitors that design ILP that can last until age 100. Of course right now, regulation changed again and product strategy is slightly different. You can see from ISM yearbook, page 99, AIA ILP almost all classified as whole life, while Allianz ILP almost all classified as endowment.

Not sure where you see Etiqa sold higher proportion of ILP than Allianz. My impression is that Allianz has the highest proportion of ILP (within its inforce policies) among all insurers in Malaysia. Other insurers due to legacy issue, has a big block of traditional business (within inforce business), especially GE and AIA, despite trying to sell more ILP now.

In general IFRS17 will make profit emerging more stable and less volatile, but there might be exceptional case on certain product type. Yes, profit over the lifetime will be the same, just timing.

Distributors depend on the commission for living, so say if Allianz stop selling less profitable saving product (despite lower comm%, but bigger premium size, and higher absolute commission), agents will not happy. There are a couple of time where agents in Malaysia protested against the insurance companies due to commission related issue. In some extreme cases, some CEOs stepped down due to this.

There are products that might appear to be loss making under IFRS17 reporting (risk neutral basis), but profitable under real world basis. For example NPAR endowment, Participating products (or in general, saving products).

Certain products will also have high profit recognition in earlier years, despite negative net cashflows, for example investment linked products. There are also products with slow profit recognition, but high positive net cashflows, e.g. MRTA.

It is obviously not easy to maintain a good mix (even pre IFRS17), and to meet distributors' requirements, market competitiveness etc. It is just going to get harder and more complex.

There are many ways to present results nicely under IFRS17 due to the principle based nature. There are also ways to design products, that is beneficial under IFRS17. Of course it won't be the CFO that do these ground works, but a CFO that can really understand, will always lean towards a better, actuarial sound decision.

Not interested on Sean, but the CFO lineup is really interesting. Did some checks, and apparently right now, GE, AIA, Prudential, Allianz and HLA, all CFO are qualified actuaries. The ex Allianz CFO (now Allianz Life CEO) is just a rather normal accountant.

The new CFO is an actuary with very strong technical skill and involved in IFRS17 previously. Impressive and surprised why this angmo suddenly relocating to KL.

Thailand will abolish Thai Pass on 1st July

AirAsia X Bhd (AAX) has reported a net profit of RM33.62 billion for the third quarter ended March 31, 2022 (3QFY22) after writing a similar amount back to profit as the group completed its debt restructuring.

Q4 always come with great promotion for all insurers to hit their kpi + Q1 is also Cny period.

Q1 always a slow period for insurance sales, with exception of Q1 2021 due to 2020 lockdown.

The cloud thing is nothing. BNM has restriction that financial institutions cant store customers data outside Malaysia. For Tunepro, it is merely the first to do so, in a so-called local cloud. In fact, actually smaller company easier to achieve this due to small business size.

Just received a survey from Tuneprotect on the motor insurance. Seems like they might want to focus back on motor insurance?

AIA and Prudential last more than 100 years in Malaysia, survived the Japanese occupation

US life insurers mostly are annuities (more towards saving/investment type of product, think saving plan offer by Malaysia insurers), rising interest rate will reduce chance of any guarantee biting of annuities. Takaful is mainly MRTA, beneficial slightly under interest up scenario.

There are personal insurance and group insurance. Group insurance is like, Tunepro sold PA to Selangkah Vax, or Tunepro sapu all complimentary travel insurance by AirArabia. You can easily get a big block of business, but of course much lower margin. And of course, if people stop the renewal, e.g. when Selangkah Vax is rolling off, or when AirArabia stop the complimentary travel insurance, you will see a big drop in premium and hence losses due to non renewal.

From the presentation, travel premium in FY2021 = 101mil, 93% mix in middle east (pg7), total count of policies = 6.73mil (pg31), per policy (travel insurance in middle east) = RM14. The quotation that you get yourself is like retail customers, naturally come with higher margin, whereas Tunepro negotiated a deal with Air Arabia, all Air Arabia (low cost airline) customers automatically get insurance coverage.

"When you book your Air Arabia flight, you will be covered for 31 days from the first day of your travel. You can book via our website, mobile application, sales shop, travel agent or third party websites selling our tickets."
https://www.airarabia.com/en/covid-19-global-assistance-cover

Tunepro reliance on Air Asia has been reduced significantly is solely just because of minimal international flights by AA. In fact despite effort to move away from travel insurance, its travel insurance mix (% of premium) is only getting higher and higher. Travel insurance as a % premium: 16% (2018), 14%, 17%, 25%（2021).

Looking back at Tunepro strategy, pre-covid era, Tunepro wanted to reduce its motor business, understandable, since margin is slim and many operational costs involved. Motor mix reduces from 41% (2018) to 20% (2021). In early 2021, when Covid hit hard, Tunepro changed its strategy to focus on health/lifestyle. That has failed miserably, basically no new take up at all, health business mix reduces from 6% (2018) to 4% (2021) instead. Branch out to health insurance is a good and sustainable idea (there are big insurers that solely focus on health in Sg and US), but sadly no customers trust Tunepro.

Back to Tunepro current business mix, it is still pretty much same as any traditional general insurer, traditional block of business is still >50%. Whereas for the travel insurance, pre-covid yes, fat margin from there, but during covid-era, might not be. The current mandatory travel insurance for international tourists to middle east will not last forever, can expect a big drop once government drop the mandate. Not to mention the premium size is damn pathetic, ~RM16 per policy.

Tunepro is just selling dream la. Rohit's previous plan was to focus on health insurance but seems like fail miserably. Who you know in Malaysia will buy health insurance from Tunepro? Ended up until now still heavily focus on travel insurance. Yes, in the next 1 year, pretty much everyone that travel internationally will buy travel insurance, Tunepro likely will pocket a sexy margin (assume no new variant), but travel demand wont rebound immediately. When travel demand rebound to pre-covid era, it means that it is so safe to travel and travel insurance is not necessary anymore. All those fintech related partnership will not come cheap. In FT21, overall commission ratio increases from 12% to 16.7%, which is damn pathetic considering Tunepro combined ratio of near 100%. Yes, there are many M&A ongoing, there might be economic of scale in the future, but that is too far to tell. There are many better alternatives even if you believe this fintech dream that Tony/Rohit trying to sell.

why need to care if equity is higher or not? equity higher = lower future profit, equity lower = higher future profit. only thing that certain is, IFRS profit (life) 100% will be much higher vs right now.

EV is EV, IFRS is IFRS, unrelated. Equity (under IFRS) will change, but will not be right to look at ROE anyways, due to new CSM component.

Just PV of EV profit, with a defined earned rate and discount rate (assumptions used can be diff with IFRS profit). In layman term, can just generalized to see as PV future profit.

Up to Q3 2021, the NBV margin is 44%, but in Q4 2021 itself, NBV margin drops to 30.6%. Full year NBV margin is 40%. Seems like a big campaign in Q4, but is typically for all insurers.

In slide 21, ANP increased 32.9% but in slide 23, ANP increased 29.2%. NBV increased 15.1%, lower than ANP, implying lower margin, but in slide 21, Allianz still mentioned higher margin. ILP sales in Q4 2021 (and overall 2021) is definitely great sign. Profit from this portion will only slowly emerge in later years.