there can be multiple reinsurance arrangements. for flood, very likely the arrangement is reinsurer will absorb all losses above a certain threshold.

1. Not that many people purchase flood add-on
2. There is reinsurance/retakaful arrangement to cover scenario like this

Probably ya

https://www.enanyang.my/%E8%A6%81%E9%97%BB/%E9%A6%96%E7%9B%B8%E5%87%8F%E8%BD%BB%E4%BA%BA%E6%B0%91%E8%B4%9F%E6%8B%85-%E6%9A%82%E7%BC%93%E8%BF%98%E8%B4%B7%E5%86%8D%E5%BB%B6%E9%95%BF2%E5%B9%B4

https://www.thestar.com.my/business/business-news/2021/12/14/grab-holdings-to-acquire-malaysian-supermarket-chain-jaya-grocer

https://www.sinchew.com.my/20211206/%e8%b5%b0%e7%a7%81%e7%83%9f%e9%85%92%e5%8d%81%e4%b8%87%e7%81%ab%e6%80%a5-%e5%80%aa%e5%8f%af%e6%95%8f%ef%bc%9a%e6%af%8f%e5%b9%b4%e6%8d%9f%e5%a4%b150%e4%ba%bf/

For those that keep thinking Covid related insurance is a good idea. https://udn.com/news/story/6811/5925747

The fair value you typically saw in analyst briefing slides coming from the assets side. For core PBT, some insurers (not sure with allianz) will assume a long term interest rate/no change in interest rate when calculate the liability. The impact is generally relatively minimal.

no more loss under IFRS17

No one will care about PBT margin, that doesn't reflect anything remotely close with how life insurance operates, and hence this PBT margin will be gone in IFRS17. For core PBT, yes that will be helpful, however as mentioned before, new business sold will incur losses in early period. Say a profit pattern of -100, 20, 20, 20, 20, 20, 20...., stack up for multiple years of new business, it will be -100, -80, -60, -40, -20, 0, 20, 40, 60, 80..... Say on the year where the profit = 60, the profit coming from existing block is actually 160, but drag down to 60 due to first year acquisition cost of new business. This is still on the assumption that new business volume doesn't increase. In reality, new business typically grow with 10% a year.

Under/overstatement of EV/NBV very unlikely for MNC like AIA, Pru, Allianz.

Yup, GI book value of 3b (before multiplier), Life EV of 3.3b and Life NBV of ~300m (before multiplier), get the market average multiplier and do the math.

You still don't understand the issue. Takaful currently enjoying a unfairly high valuation due to current flawed accounting standard, which allows it to recognize big profit upfront. In Q1 2023, when analysts or normal investors look at the first IFRS17 financial statement, the valuation will be downgraded immediately.

IFRS17 only for insurance liabilities

https://www.allianz.com.my/content/dam/onemarketing/azmb/wwwallianzcommy/pdf/investor-updates/2021/2021_Q3_AMB_Analyst_Briefing.pdf

Takaful owns life and general business (90% profit from life), MNRB owns reinsurance (mainly general) + Takaful Ikhlas (50/50 life/general).

For Allianz and Maybank, even if close for new business immediately, no new policies sold, or no new loan/deposit, the existing business can still continue to generate reasonable profit (insurance margin/net interest margin) for up to 10+ years. This is not the case for STMB, where it has a very low recurring profit. Any analysts that try to compare STMB directly with Allianz or Banks are just too naïve.

No one will know the real impact unless you are the insiders in STMB. Not to mention the impact is up to management decision, they can set diff size of CSM where they deem fit (higher CSM = higher reduction in equity, in exchange for higher future profit). IFRS17 ultimately is just presentation, and will make insurance industry more comparable with other industry. STMB fundamental will not change, and will continue rely on MRTA. It is definitely way overpriced now due to recognition of large day1 profit, and its business will unavoidably fluctuate with MRTA sales, and indirectly home sales among bumis. With no more MOT next year, new home sales got limited prospect, and so is STMB profit.

Allianz never rely on online sales (they should), and typically people that renew online will buy direct (-10%) instead of through MYEG (without reduction of comm).

IFRS17/MFRS17 is finalized, there will be some details up for debates but the overall impacts will not change much. Yes, cashflow the same, business the same, EV the same. If people value STMB with EV, then valuation will not change. But too bad, no one value STMB with EV, not even sure if STMB calculate EV on their end. As long as local analysts still using traditional P/B or PE to value STMB, IFRS17 will definitely impact the valuation.

General business only ~10% of total profit. For life business, in 1H21, credit related contributions (MRTT including LPPSA MRTT and personal financing) made up a significant 75.2% of the total gross contributions for the group’s family takaful business.

is mrta, people typically buy full term. house loan typically 25-35 years, convert to average about 30y

EPF can be wrong as well, ultimately people making the call behind can be as young as just a fresh graduate. Even top analyst will not understand IFRS17 as well, and to be honest even among actuarial people, majority only have understanding of IFRS17 at preliminary level.

The 1.2bil surplus cant be touched and will just stay there forever, or to offset future losses. It will donate to charity once STMB closed down. In any circumstances, that 1.2bil will never ever belong to shareholders.

There is no cash flow impact, yes, and impact to takaful is small. The key impact on STMB is because the heavy focus on single premium policies. Reduce profit by 16%? That is so optimistic. IFRS17 requires spread of profit to entire policy term. Typically MRTA is like 30+ years, considering the reducing balance, profit allocated to Y1, at best should only be around 15%. Assume 80/20 split on day1 gain/recurring profit, the reduction in profit should be at the range of 65%+.

lol what potential tunepro has? Covid travel insurance can be a double edged sword, mandatory travel insurance wont be sustainable. Either the Covid situation improves, no more mandatory insurance, or worsen, and loss due to claims. There is like 0 scenario where tunepro can just shake leg and make money.

That cost impact is minimal. Operationally, that will depend on how you want to set the transition CSM (there are multiple approaches). You can set it to super high, normal, or super low. For STMB, since the BEL & CSM both always positive, so doesn't matter how they set CSM, confirm will be a hit to equity. For Allianz, BEL for ILPs almost always negative. Unless the CSM is set to be artificially super high (unlikely), otherwise BEL+CSM will still be a negative for Allianz, and hence higher equity value. Typically, conventional insurers aim to just be balance.

Insurance liability will change to BEL + CSM. For STMB (heavily on single premium), BEL will almost similar with existing, but additional component for CSM (can only be positive), hence downward adjustment for book Value. Basically undo day 1 gain previously, and release it over time in future. For Allianz, heavily on ILP, the contract liability currently (floored at 0) will change to negative BEL + positive CSM. It will be positive adjustment instead (release profit faster).

https://www.asiaone.com/money/integrated-shield-plan-riders-now-require-co-payment-what-you-need-know

Quite poorly written, and she seems just clueless about IFRS17. For the medical inflation and ability to reprice, yes that will be a key concern, but wont be a big issue. Insurers will just exit if not allow to reprice when combine ratio > 100%, and no one will allow this to happen. Recently, Singapore mandatory all insurers abolish cashless medical plan and that's more likely will be the approach BNM is going to take. *Premium for 5% co-pay plan can be 20-30% cheaper vs cashless plan.

EV wont change due to IFRS17. EV is EV, IFRS17 is IFRS17. "20% reduction of EV due to IFRS17" that is a wrong statement.

Where can I get a copy of that affin hwang report?

EV is not just about additional demand, but mainly additional demand during off peak period (most people charge vehicle overnight). Basically no additional cost for TNB.

typically medical repricing will only lead to higher EV, many insurers get away by saying they target a similar level of margin (in %), but withhold the information that they earning higher in absolute amount (hence higher EV).

EV is calculated by Allianz actuaries, not estimated by analysts. All else equal, then yes, Jun 2021 EV = Jun 2020 EV + NBV - profit release, including discounting effect. However, there is medical repricing going on, and will also increase the EV.

Allianz Life EV is now 3.3bil (Jun 2021), vs 2.6bil (Jun 2020) https://www.bursamarketplace.com/mkt/tools/research/ch=research&pg=research&ac=1514989&bb=1538052

tax free EV, 利好TNB

Govt to introduce excise duty on liquid, gel-based vaping e-liquids

budget mentioned vape, but my malay sucks.......

Actuaries will always ensure asset-liability matching, by dollar duration.

People always measure the value per share, with considering of the preferential share. So convert or not, doesn't matter.

EPF can be wrong too

Nope, BNM asked insurers to delay repricing in 2020, but no restriction in 2021.

repricing in 2021, absolute profit still higher no matter what

EV is based on a lot assumptions. The assumptions can be conservative or aggressive. For example, aggressive will be high earning rate with low discount rate. Allianz adopts MCEV, or in layman term, risk free earning rate + risk free discount rate. EV also relies a lot on methodology, for example lapse rate, repricing, bonus etc. Investors typically have lesser faith in China inhouse methodology, and to be fair, they are indeed not as sophisticated as MNC like Allianz, Prudential or AIA. Hence people tends to discount the EV multiple for China insurers. NB multiplier, should correlate with future sales. Typically people will assume NBV margin remains unchanged.

Another thing on VIF (part of EV) calculation, since VIF is basically PV of distributable profit, and since Allianz is heavily selling ILP medical, the VIF amount is actually depending on Allianz calculation methodology. In practice, insurers don't typically assume perpetual medical inflation in the VIF calculation, but in reality the medical inflation will be perpetual. What this means is, the absolute amount of future profit, will only be much higher (assume no interference with the medical repricing).

NB multiplier for well established companies is typically > 10. It can be super high for countries like India and lower in matured market. Even if just assumed 10, and use the YE20 Allianz Life NBV, that is additional 2bil+ on top of current valuation. Some sample number here : https://www.set.or.th/set/pdfnews.do?newsId=15289333958740&sequence=0

12MP : The M40 will be encouraged to subscribe to health and employment insurance to mitigate them from financial vulnerability. In addition, income tax relief on health and life as well as employment insurance for the M40 will be reviewed to reduce healthcare costs. These initiatives will cushion them from unforeseen circumstances due to health and work-related risks.

The Government financial burden will be reduced gradually in providing sustainable quality healthcare services. The Malaysia National Health Accounts report will be strengthened by incorporating a more detailed analysis of public health expenditure as a tool to identify cost drivers within the health system. Current healthcare charges will be reviewed so that higher income patients will be required to pay higher charges. Subsidies for healthcare services will be streamlined based on a means test.

Efforts will be undertaken to encourage the rakyat to have insurance and takaful in financing healthcare expenses.

https://www.theedgemarkets.com/article/south-africas-sanlam-planning-stake-sale-malaysian-insurer-%E2%80%94-sources

Q2 results also so so, mainly due to high claims provision and fair value from Life. https://www.allianz.com.my/documents/144671/1183195/2021_Q2_AMB_Analyst_Briefing.pdf/f1a38b87-091a-473f-82a9-119e526d0552

https://www.theedgemarkets.com/article/syarikat-takaful-ceo-mohamed-hassan-leave-march-2022