Restated YE22 profit higher 31% under IFRS17 basis (life only), total company level, higher 24%.

Yes, just present value of distributable profit + net asset

Release future profit because already accounted for in equity.
Imagine equity now = 0, PV profit = 1000.
Next year release 100 profit, PV profit = 900, equity increase to 100.

expected return on EV = profit release

MCEV/TEV logic actually can trace back to option pricing (i.e. the famous Black–Scholes model). Under TEV/real-world, you are expecting to earn bond spread/illiquidity premium/credit spread/equity risk premium etc, and discount with a weighted average rates that reflect your risk. It is very hard to do it right, to explain and also to compare. For example, Prudential might use 10% equity return, but AIA might use 9% equity return, yet both might use same discount rate. It will get super complex real fast when you have much more assets type, especially the non-traditional assets, across multiple currency/countries etc. MCEV/risk-neutral/market-consistent will resolve it to revert both earn/discount rate to risk free/risk free + IP/MA etc.

PBT is IFRS4 basis, not EV basis. Closing EV = Opening EV + NBV - profit released + unwind impact (discounting). You also need to consider discounting impact.

Example:
Profit 100 yearly, 10% discount rate, 5 years.
PV profit (Y0) = 100/1.1 + 100/1.1^2 + ... 100/1.1^5 = 379
PV profit (Y1) = 100/1.1 + 100/1.1^2 + ... 100/1.1^4 = 317
Cashflow release = 100
A simple closing EV (317) will not same as opening EV (379) - profit release (100).
In this case, the discounting impact is 37.9, i.e. opening EV 379 * 10%.

In theory and conceptually, market consistent and real world should yield the same results.

It is not just the profit that being discounted, but all future cashflows. You cannot assume that all cashflows are same sign (i.e. profit). On top of that, the earning rate is different as well, where for market consistent, you will also use risk free earning rate, which will give you lower absolute amount, before discounting.

For ILP business, due to compounding effect, Allianz's MCEV is more conservative than AIA's TEV.

Imagine your unit value, growing 4% yearly in Allianz, vs AIA 10%. At 10th year, AIA project unit value will be 175% of Allianz (before other lapse/death assumptions). Fund management charge, which is a key source of income for ILP, will different greatly between AIA and Allianz (in absolute amount). Insurance margin will be the same, assuming same sustainability. However, sustainability will not be the same as well. In Allianz projection, policies more likely assumed to be lapse (due to negative unit fund) before age 70, while AIA projection, policies are more likely to sustain to age 100.

It depends on product type and other assumptions, transition CSM with fair value approach ("FVA"), the shortcut, or full retrospective approach ("FRA") can have very big difference, even up to 1000% (10x, yes). FVA is just formula based, with optional adjustments, while FRA has a strict process to follow (assuming IFRS17 always exists).

Yes, CSM + RA will roughly similar with EV. EV has additional component (e.g. cost of capital) to be more reflective of actual business, to represent cost of holding reserve/capital, this is not applicable under IFRS17. EV is designed for life insurance, while IFRS17 is for all insurance. Another key difference is the assumptions used. IFRS17 must use market consistent (i.e. risk free rates) for all cashflows projection, while EV (in Asia, but not Allianz) typically will use a real world return (and discounting) for cashflows projection.

For old block of business before 2023, you will need to calculate a one-off CSM, assuming IFRS17 always exists. This part got many rooms to play with the number. e.g. some companies will calculate a proper way, go back 10+ years to calculate CSM, or you can just take a shortcut and report a lower CSM.

For Manulife:
"For calculating the contractual service margin (“CSM”), the fair value approach is used for all in-force policies sold before 2021, and the full retrospective approach is used for all policies sold in 2021 onwards."

For this transition CSM (opening balance), it is unrelated to RA.

On your second question, both CSM and RA represent future unearned profit, difference being CSM = 75th percentile, while CSM + RA = best estimate (50th percentile). So it should be 320mil (market cap), vs 241 CSM + 232 RA = 473 gross tax, or 360 net tax.

Manulife also "intentionally" set a low CSM, but might also due on its business nature (not sure what's it saving/protection mix). If Allianz (primary protection business) didn't intentionally set a low CSM, spike in operating profit should be very substantial (much higher than Manulife 11.6%)

Manulife disclosed its CSM = 241mil, RA = 232mil, net tax ~ 360mil, vs its market cap of 420mil (inclusive of asset management business).

Globally Manulife mainly focus on HNW saving products (e.g. Manulife SG is top 3 ranked by APE), and indeed Manulife also has a HNW subsidiary in Malaysia (one of its kind), but Manulife itself quite limited branding in Malaysia, with poor agency channel and banca channel (Alliance bank).

Tuneprotect also released its IFRS17 Q1 result, but nothing to see there, since minimal change to General insurance.

IFRS17 impacts the most on conventional life. Maybank has multiple subsidiaries (conventional/takaful x life/general). By product type, IFRS17 also has different impacts on regular premium/single premium (e.g. STMB), and protection / saving.

Allianz Life has relatively minimal saving products, but this is not the case for Etiqa Life.

Q1 result confirm bad, I will guess at least a -50% impact to profit (exclude any fair value related)

Great Eastern Holdings G07 0.00% , a member of the OCBC Group, reported earnings of $244.0 million for the 1QFY2023 ended March 31, 10.9% higher than the earnings of $220.0 million in the 1QFY2022.

For the current quarter, the earnings were reported on the SFRS(I) 17 insurance contracts basis while the earnings for the 1QFY2022 were reported based on SFRS(I) 4 insurance contracts principles. The impact of the new method of reporting will be disclosed in the group’s 1HFY2023 results.

*NBEV - 11%, but ifrs17 profit higher 10%

pg164 AR2022:

1. The combined effect on the Group’s consolidated statement of financial position on transition to MFRS 9 and MFRS 17 as at 1 January 2022 is to improve total equity measured under MFRS 17 by approximately 8%

100% Eq @ YE22 = 4.2bil, 8% = 336 mil

2. For insurance contracts issued, the Group intends to adopt the standard using the full retrospective approach for all currently modelled products in annual cohorts 2014 or later. (Generally longer FRA period = higher transition CSM = more future profit)

AIA FY2022 report:
Overall expected positive impact of IFRS 9 and IFRS 17 compared with IAS 39 and IFRS 4

Under IFRS 4, mark-to-market movements on derivative financial instruments are reflected in net profit but these are not fully offset by the corresponding change in the value of the liabilities. The adoption of IFRS 17 will eliminate this non-economic accounting mismatch that is created between assets and liabilities in the Group’s consolidated financial statements under IFRS 4. Non-operating movements on derivative financial instruments for participating business was negative US$2,003 million in 2022 as shown below. For clarity, this figure would have been zero under IFRS 17. Including this effect, net profit will be at least US$2 billion higher than net profit under IFRS 4.

https://pulsenews.co.kr/view.php?year=2023&no=160281

same same speech this budget 2.0

YE2022, PBT +12.6%, PAT -1.2% due to Prosperity Tax. Life core profit for past 4 years = 273, 270, 267, 325; GI profit for past 4 years = 362, 432, 437, 462.

https://www.allianz.com.my/content/dam/onemarketing/azmb/wwwallianzcommy/pdf/investor-updates/2022/2022_Q4_AMB_Analyst_Briefing.pdf

Aaron Fryer, Regional Chief Financial Officer, Allianz Asia Pacific, said: “In a year of uncertainty and amid a turbulent global economy, our core businesses have displayed resilience and performed in line with expectations, achieving a 17 percent increase in operating profits in Asia in FY2022.

“The Life & Health (L/H) business saw robust growth, with operating profit up 20 per cent to EUR 532 million, primarily due to profit increases in Taiwan, Malaysia, and China.

“The Property & Casualty (P/C) business in the region showed continuous growth, with operating profit up 8 per cent to EUR 141 million, while total revenues rose 17 per cent to EUR 1.7 billion, driven particularly by strong growth in China, Malaysia, Singapore, and Thailand (including the acquisition of Aetna Thailand).

https://fintechnews.my/34207/insurtech-malaysia/fwd-to-snap-up-majority-stake-in-gibraltar-bsn-life-plans-for-rebrand/

close at all time high now, despite EPF stop buying

For me, I foresee a spike in earning & share price in HY23 (August 23), and then YE23 (Feb 24), then will enter a stabilize phase, unless any major change in market share.

Allianz Life MY should already have internal projection readily available, just whether if they will disclosure it. Don't be surprised by a 50-100%, or even 200% spike in earning on the Life side.

Actually pan-Asia insurance stock all rise to xx-weeks high now, e.g. PRU (HKSE).

Almost all time high now

Vincent Tan used to say that Prudential and Digi were the most tragic divestment for him. I supposed this partly the reason he get into MCIS Life now (VT already owns U-mobile). Life insurance is a great business, if done right. However, typically local insurer, without foreign insurer support, usually will fail to perform well, as selling insurance contract is not like selling a house or a car, it is much more complex than every other things. MCIS also has a rather unique demographic (e.g. some said Pru and AIA only serve the rich), MCIS has a lead in certain demographic as well, but is not an attractive one. Overall, I dont think BCORP taking over MCIS is a good idea. If I were VT, I will rather take over AXA Affin Life (now Generali), or AmMetlife (to be sold to either Zurich or GE).

据传，成功集团（BJCORP,3395,主板工业产品服务组）有意向南非桑勒姆集团收购MCIS寿险（MCIS Life）的51%控制股权。
https://www.sinchew.com.my/20230107/%E6%88%90%E5%8A%9F%E9%9B%86%E5%9B%A2-3/

EPF disposed for the first time

Suspect Vincent Tan new target is also a life insurance company. That means, it will be third life insurance that change owner in recent 1 year.

Ammetlife recently rumoured to be sold at 400mil USD, roughly the size of Bcorp. If the target is a life insurance company, it will be smaller/equal size than Ammetlife, and is not Zurich.

because it is not listed? no one mentioned that the new entity is listed.

market cap 1.8bil, should be a small size insurance company, not bank.

Over the past 10 years, Allianz (life) is still on rapid growing phase, where capital required is much more intensive, vs its yearly profit. Obviously as of now, as the 4th largest life insurer, it will no longer have this issue. AFAIK, Pru and AIA will pay maximum amount of dividend that is allowed under RBC framework yearly.

*Dividend is not depending on IFRS17 profit, even though profit is expected to spike under IFRS17, dividend will still still be in similar range, 85sen + 10-20% growth yearly.
**IFRS17 implementation cost is expensive (easily >10mil/year, over ~200mil PBT), but it will go away in 2023.

Zurich Insurance Group AG has emerged as the frontrunner to buy a majority stake in the Malaysian insurance business of US insurer MetLife Inc and Kuala Lumpur-listed AMMB Holdings Bhd, according to people with knowledge of the matter.

A deal could value AmMetLife Insurance Bhd at about US$400 million and would need approval from the Malaysian central bank, said the people, who asked not to be identified as the process is private. Singaporean insurer Great Eastern Holdings Ltd also remains interested in buying the roughly 70% stake, the people said.


Allianz size (from financial statement) is ~3x-4x of AmMetLife, but reputation wise and future new business sales are much more promising vs AmMetLife. 1.7bil MYR * 3 is already higher than Allianz market cap (with GI).

1 year ago FBMKLCI 1514, Allianz RM12, today KLCI 1478, Allianz RM13.74, with RM0.79 dividend.

NBV cannot compare with 2021 (sales in Q12021 very high because sales in 2020 very low). NBV 9M22 vs 9M19 +25.6%, annualized ~8%.

AmInvest report: The group’s stronger focus in investment-linked (IL) products with protection riders will put its life insurance business to be less significantly impacted by FRS 17, which will be implemented on 1 Jan 2023.
(wrong statement, IL is positively impacted under IFRS17)

Upon the adoption of FRS 17, the negative revaluation on the group’s life insurance investments, which has dampened the group’s net profit in FY21 and FY22, will no longer have any P&L impact from FY23F
(correct, to some extent)

Allianz (Global) IFRS17 presentation, similar level of operating profit vs current IFRS. But not very representative, Prudential & AIA (Asia focus, more on protection) IFRS17 presentation will be more representative vs Malaysia business.

https://www.allianz.com/content/dam/onemarketing/azcom/Allianz_com/investor-relations/en/conferences/ifrs/221122-ifrs9-17-allianz.pdf

Takaful limit up tomorrow?

https://www.lowyat.net/2022/289084/daixin-airasia-hack-databreach/

BAT limit up on Monday

#AIAGroup (Hong Kong) Update on #IFRS17 Adoption
"...the adoption of these accounting standards does not affect the underlying economics of our business with no material changes expected to the Group’s VONB, embedded value, solvency, capital, cash generation and the established prudent, sustainable and progressive dividend policy.

Operating profit after tax (OPAT) and shareholders’ allocated equity will remain the Group’s key IFRS performance indicators following adoption of the new standards. Our preparation for adoption is on track and we intend to provide a further update on the 2022 full year position in our annual results and the Group’s full restated consolidated financial statements for 2022 in the second quarter of 2023, prior to announcing the 2023 interim results.

For clarity, the adoption of IFRS 17 will resolve a large part of the non-economic accounting mismatch that is created between assets and liabilities in the Group’s consolidated financial statements under IFRS 4. In particular, the adoption of IFRS 9 and 17 will eliminate US$1.4 billion of the US$1.552 billion negative non-economic fair value movements on interest rate derivative financial instruments included within the net profit reported in the 2022 interim results. The Group uses these derivative financial instruments for risk management purposes. "

KUALA LUMPUR (Oct 31): Tune Protect Bhd said its wholly-owned subsidiary Tune Protect Ventures Sdn Bhd (TPV) has received conditional approval from Bank Negara Malaysia (BNM) to participate in the Financial Technology Regulatory Sandbox.

This will allow TPV to test a digital life insurance business for the Malaysian market in the Sandbox for a period of 12 months from the date of meeting certain conditions set out by BNM, the group said.

The Sandbox environment, it said, will allow TPV to innovate and offer a differentiated value proposition to the unserved and underserved communities, in line with its aspiration of providing simple and affordable pure life and health protection, particularly for this market segment.

TPV will leverage technology to simplify the process of buying, self-service and claims for customers, and is expected to introduce its first proposition in the coming weeks, upon meeting BNM’s conditions, said Tune Protect in a statement.

Its chief executive officer Rohit Nambiar said the group had 18 months ago, set in motion a plan to establish a bolt-on business that leverages the strong engagement it had with Gen Z, millennials and small and medium enterprise (SME) customers.

“This business idea stems from our fundamental belief that these segments are under-penetrated, under-insured and traditional forms of distribution has not worked to reach them. We believe they are now more open to buying simple life protection solutions, above and beyond their lifestyle; health, and SME package solutions from us.

“As a Malaysian homegrown digital insurer, we believe we can target them with a digital-first approach on a Sandbox mode (Test and Learn), where one can buy all day-to-day retail insurance solutions, service or claim through an app or website. The next few weeks will be exciting for us, as we will be rolling out our solutions and we can’t wait to show you what and how,” Rohit said.

TPV principal officer Koot Chiew Ling said the company is going back to the fundamentals of insurance, focusing on pure life and health protection.

“We are excited to showcase our flagship product, which will be a first of its kind on our shores. Our first proposition will be for SMEs and their employees. Being a startup and new, we will also be bringing about new technology and end-to-end digitisation,” Koot added.

Tune Protect’s share price closed up half a sen or 1.89% at 27 sen on Monday (Oct 31), giving the group a market capitalisation of RM203 million.

Tunepro has free cashflows, but fail to generate much profit from it. It is just so doomed.

Same shit speech about illicit cigarettes this year in budget

April 2020: 5.32%
Nov 2020: 5.539%
Dec 2021: 6.46%
Sep 2022: 7.25%
~2% increase in holding, total value ~47mil (is relatively nothing if comparing with EPF size)

52 weeks high now, despite a poor market sentiment, thanks to EPF.