If my understanding is correct, Allianz will loan out its internal staff (under a single entity), as shared service to other BUs, and get to profit from it. A more common way is, shared service will operate as a separated entity (might or might not under local BU, typically not under local BU, but directly under Group).

Allianz already has some existing shared service in Malaysia, but in a very weird arrangement.

Allianz has announced a pre-conditional voluntary cash general offer to acquire at least 51% of the shares of Income Insurance, subject to regulatory approval. Allianz intends to offer $40.58 per share for a total transaction value of approximately $2.2 billion (approximately EUR 1.5 billion) for 51% of the shares in Income Insurance. The offer price represents a premium over Income's NAV of $29.55 per share of 37.3%.

For many white collar office job, you (and maybe your family) already covered by your employer's group insurance. There is no real need for you to have a cashless medical insurance.

Many hoo-ha with co-payment medical insurance recently. Insurers are already moving away from cashless, yet some doctor association/consumer group jump out and said, cashless is better. Many people don't see the point that, the saving in premium, will higher than the deductible in just 2-3 years time. You might need to fork out RM500 or RM1000 for admission, but you save back premium (and hidden commission) in 2-3 years. There is no free lunch, for everyone, but dropping the cashless feature, will introduce a great saving immediately.

New RBC framework just out yesterday, effectively 2027, but will have immediate impact on product mix starting next year.

Income Insurance, Allianz in talks on tie-up, seeking regulatory approval

just a hypothetical number, could be 3x 5x, could also just be 2x.

In fact, in a way yes, for single premium product, there is 0 capital upfront. For ILP (regardless if conventional or takaful), there will be a strain, and a limit of how much can sell at a point.

So, in theory, say if we got 1.4bil population, STMB can immediately sell 45x of MRTA, but Allianz probably can only sell 3x of ILP before being restricted by the capital.

However, this is not meaningful at all. And similarly focus on ROE is not meaningful as well. MRTA is good, profitable business, but in the end, still restricted by how many new house loan by your bank partner.

No right or wrong. But need to know product strategy and maximise bancassurance channel. Etiqa as example, become top 6 purely with bancassurance, but another Tokio Marine, struggle to have meaningful market share with RHB bancassurance. HLA got mix of agency and banca, not sure with the split.

Yes, but less volatile vs pre IFRS17.

Short term, negative impact to capital, might reduce ability to pay dividend etc. Long term, higher yield will have positive impact to future profit.

Diluted NTA is just RM14.85.
While it is possible to reach RM30, probably won't happen in 3 years time. RM25 probably max for this year.

If not mistaken, great eastern adopts a very aggressive method to calculate future profit from medical business, something like always reprice 10% annually hence the Pv profit can become very unrealistic (in my view). However, not sure how the normal retail shareholders view it, since they won't have such info.

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OCBC takes Great Eastern private @ S$25.60 per share, last traded price of S$18.70, embedded value per share = S$36.59.

Exact % varies by product, but in most case, you will not able to get back any commission paid, and some expenses incurred (typically relatively negligible, except for small ticket size policy).

It could be true that maybe 20% people lapse the contract in first year (in this year), and probably get back less than half of initial premium paid. I don't think it will over 50%, even the most lousy tier 3 insurers also have better persistency. And no, insurers do not profit from this. BNM actually prohibits insurers to profit in this manner. Agents that "profit" from it, even if a whole life ILP only lasts for one year, the first year ~40% commission still need to pay to agents.

technically, yes, you can do that too, but most of the time, after repricing, your total premium will increase, say to 1200 (400 to life, 800 to medical), then to 1600 (400 to life, 1200 to medical) and so on.

Medical insurance by itself (either standalone or rider) is not that profitable (in %) vs other line, e.g. personal accident, life, waiver, CI etc. However, it contributes to the largest absolute amount. e.g. if you have a breakdown of the premium for each components of your investment-linked plan, medical will be > 50% of the total premium.

Unique for medical insurance is the ability to reprice, and higher future profit. Your ILP now could be 40% premium to life (fixed, say 400) and 60% premium to medical. After 10 years, say 3 rounds of repricing, the breakdown could be 400 to life, 1000 to medical. The ability to reprice, essentially also meant, insurers are guaranteed never lost any money in this block of business over the long term.

Essentially, for protection business, insurers will earn a x% of total claims payment. And for Malaysia, medical claims are a lot higher than life claims.

No, there are other loading for commission and expense. Usually commission is fine, since you will incur as you sold, not much variance there, except for outperformance related. Expenses then a different story. Your expense loading might (and usually) insufficient to meet actual expenses. And the 25% margin for medical, is just expected. Medical service will rise by inflation, rapidly. It might be 25% now, then erode to 15% by year end.

The 25% is only cost of insurance, over paid claims. Not including any expenses. Any previous IFRS4 / IFRS17 profit margin is not meaningful.

No, should be just 4th (by NB volume), 5th by IF volume (HLA 4th). Key difference between HLA and Allianz Life is the proportion of investment linked business (most profitable) over total business.

There is a new guideline on medical insurance by BNM yesterday. BNM push for coinsurance (lower premium, higher margin), and mandate that future reprice premium cannot higher than initial profit margin. BNM also push for a centralized data platform for medical claims.

Malaysia don't have rubbish financial products like the US, but we have rubbish politicians. The only remotely possible way Allianz will bankrupt in near future is government/BNM doesn't allow medical repricing. It took the industry quite a while to make general public and BNM understand that repricing is inevitable, but then I don't think Malaysia politicians will really honor what the previous government has agreed upon and can just u-turn anytime, doing anything for the sake of vote. Looking back past 10 years, insurance companies have been force to donate to mysalam, 70% ownership, delay repricing during covid, donation during covid etc, on top of a general prosperity tax in 2022.

you cant fake death or fake critical illness, but very easy to fake hospital admission.

https://money.udn.com/money/story/123742/7696251

660k is your annual limit. 99% of the claims, the amount will not exceed 100k, but the average claims amount will keep increasing. 660k annual limit, or unlimited limit medical card, the actual coverage policyholders entitle for in next 10 years, will have minimal difference.

Nowhere on earth that medical insurance rate is fixed, simply because you will not able to price in all future inflation, hence naturally it will only be short term basis, and will require frequent repricing. Medical insurance margin, in % is actually one of the lowest, and it is a lot harder to manage it vs say death claims.

The first real round of medical repricing started in ~2015/2016. Prior to that, yes, many life insurance operate at a loss on their medical business. Because of that, previously there is no fancy million dollar limit / unlimited coverage, sort of like limit the coverage in order to minimize losses.
After 2015/2016, BNM is more "open" to actuarially sounded medical repricing, and then we started to see fancy medical coverage.

A sense of how medical COI rates exponentially increasing as we age, age 50 COI = 153% of age 40 COI, age 60 COI = 180% of age 50 COI, age 70 COI = 233% of age 60 COI, and all these before medical inflation.
https://www.prudential.com.my/export/sites/prudential-pamb/.galleries/pdf/en/listing/PRUMillion-Med-COI.pdf

Current average age of policyholder for big4 should be ~age40.
Under IFRS4, future margin doesn't include in profit calculation, under IFRS17, a portion of future margin is included in profit calculation.

break 20 tomorrow?
maybe 22 when YE23 results out.

Medical business might be a loss if there is no reprice for a while, but usually will have 20-30% margin upon repricing (reflecting next 2-3 years inflation). e.g. first year after repricing 30% margin, second year 20% margin, third year 10% margin, then another round of repricing again. Margin on medical insurance is the key source of profit for big4 players.

Cost of insurance for medical, will increase over time, as policyholder ages, and due to medical inflation. Assuming nothing will change, the yearly absolute margin from medical business will grow at at least 2x of inflation rate.

Some might say, CSM (PV profit) should already capture all these and current reporting should already reflecting all these, but actually is no. Actuaries will not project medical inflation (~8% p.a.) until end of policy term, as it will give very extremely high number that very hard to explain.

No idea with Allianz, but can easily guess from Prudential and GE. Prudential with 73% claims from medical and GE with 55% claims from medical.

Total claims paid by Allianz Life = ~1.7bil in 2022, medical claims estimated to be ~0.9bil-1.2bil.
Margin usually in the range of 20%, i.e. 0.3bil (cost of insurance for medical - claims paid), depending on the repricing cycle, will be more profitable when it is just "freshly" reprice, will be least profitable when the last reprice is long time ago.
vs IFRS17 full year profit of 0.4bil.

If BNM delay repricing approval for one year, assuming 10% inflation, it will wipe out ~120mil profit for Allianz.

Nobody will happy with medical inflation, people will eventually drop coverage when it is not supportable. The key issue is because customers like cashless admission, not knowing the consequences of it. Singapore has already mandatory all medical insurance to have coinsurance/deductible. Suspect Malaysia will soon follow, if BNM/MOH is smart. However, changing to coinsurance/deductible, while will make medical business more sustainable, it will have immediate short term effect where the COI collected will reduce, and impact the short term profit.

Another key change is the rumor that government will end the RM1 treatment for government hospital, and will launch something like Singapore medishield/social insurance/社保.
This will change the landscape dramatically. e.g. can people with private medical insurance opt-out? (if can, then this social insurance will be a failure with substandard life)
If cannot opt out, then majority will have 2 insurances (or 3 if included insurance from employer).
People might drop out from the private medical insurance as well.
Regardless, personally I dont think social insurance (in any form) in Malaysia will success, especially under leadership of Anwar.

I foresee there will be another small bump in share price when YE23 result is out. Then throughout entire 2024 will be rather stable.

Future spike will depend on medical business management (how often Allianz will do the repricing), medical inflation, MOH policies, and new business market share.

dividend payment before CNY, huat ar

Allianz on viagra again

It will not fully cancel out another. Actually in fact, 69mil as impact of assumption change is very immaterial.
CSM release % from 6% (HY23) to 9.2% (Q3) also not a material change.

Expected growth in the CSM is coming from the discount rate (risk free).
Imagine you will earn 100 in Dec 2023.
Initially in Dec 2022, you will PV for one full year, say PV(m0)
Then in Jun 2023, you will PV for half year, say PV(m6) , and this number will bigger than PV(m0).
That is the expected growth.
This will present as a cost actually in P/L, and to be offset with actual investment return, for GMM.
For VFA, this will be slightly difference.

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AmIB directly use CSM to value Allianz Life.
A couple of issue:
1. 3.3bil CSM is gross RI, gross tax
2. net CSM is much lower at 2bil
3. future profit is actually CSM + RA. RA is estimated around 15% of CSM for Allianz.
4. VNB should be included

increase in CSM due to assumption change. Page7, note1, Increase in CSM is driven by the change in non-financial assumptions mainly due to revision for persistency and mortality assumption

9M2022 PBT (Life), IFRS4 = 142.4, IFRS17 = 307.8. Even look at other basis, e.g. market share, NBV, dividend growth, all currently positive.

Break 18 tomorrow? expecting Q3 result to announce today, but apparently still no.
Anyways, positive catalyst from IFRS17 will last until Feb 24 (when full year IFRS17 is available, and much clearer and concrete).

Next potential positive is the medical repricing, another round of mass medical repricing is coming, which will increase absolute profit.

all time high now

capital gain tax 10%, SST for insurance > 8%

Codeblue reported many health reform initiatives by Anwar, supposedly effective next year.

If success, a significant health cost will transfer to M40/T20, great demand for health insurance. Only 7.5% of health financing currently from insurance, 46% from gov, 34% from private out-of-pocket.

If fail, like the recent lack of manpower in government hospital, government will have to transfer patients to private hospital (New Madani Medical Scheme), good for KPJ/IHH. And if the chaos persists, heath insurance demand might also increase.

Honestly, personally opinion, any form of heath reform going to be a chaos, like in many other countries.

if based on forward looking PE (10x), the fair value is RM2

Many news related to inflation today, which actually good for running medical insurance, since insurance profit is on a fixed margin% (long term view).

Vet through all the takaful companies H1 report, only STMB and another recorded a drop in equity upon transition. Looking at the number, STMB probably has the economic of scale vs many others Takaful (not conventional) , but its profit confirm will on downwards trend over the next 3 years.

There are some Takaful products, where the policyholders do not participate in risk sharing. Surplus in risk fund will be shared between shareholders and charity. This is the type of products that very hard to fulfill VFA requirements.