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1,388 comment(s). Last comment by yielder 3 weeks ago

Posted by observatory > 2023-09-02 11:00 | Report Abuse

I look up Allianz's notes. It explains that VFA (Variable Fee Approach) is a mandatory modification of the General Measurement Model regarding treatment of CSM, in order to accommodate direct participating contracts.

As I understand, Takaful concept is risk sharing. So by default should be participating, right? So should adopt VFA.

Are you saying that STMB's higher investment return (even after netting off profit expenses) may not fully belong to shareholders?
If that is the case, the financial statement will be quite misleading. The excess reported profit will have to be deducted in the future, but how?

Posted by wsb_investor > 2023-09-02 12:03 | Report Abuse

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.

Posted by observatory > 2023-09-02 13:52 | Report Abuse

Under IFRS17, compare 1H23 to 1H22, there is still a substantial increase in net investment income (RM252m vs RM126m)

Setting aside fluctuating FV changes, impairment and so on, the main increase has come from investment income on financial assets not measured through profit or loss (RM231m vs RM184m. I wonder if it benefits from interest rate rise)

Most of STMB's investment is in relatively low risk fixed income instruments. As long as the interest rate and economic condition remain stable for next few quarters, the investment income will probably be above RM100m per quarter. This could offset the decline in insurance service results (which might also be temporary?)

Posted by wsb_investor > 2023-09-13 16:58 | Report Abuse

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

Posted by wsb_investor > 2023-10-03 10:13 | Report Abuse

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.

Posted by wsb_investor > 2023-10-20 22:40 | Report Abuse

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


5,709 posts

Posted by ahbah > 2023-10-13 09:41 | Report Abuse

I onli got capital loss from the mkt, like that got to pay capital loss tax ?

Posted by wsb_investor > 2023-11-20 12:22 | Report Abuse

all time high now


698 posts

Posted by moven00 > 2023-11-20 19:15 | Report Abuse

Higher Pls….LOL

Posted by wsb_investor > 2023-11-23 10:39 | Report Abuse

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.


371 posts

Posted by Papayashot > 2023-11-23 13:44 | Report Abuse

ALLIANZ almost as expensive as its preference share ALLIANZ-PA..


3,857 posts

Posted by kk7198 > 2023-11-23 20:38 | Report Abuse

Wow! could achieve eps for whole yr close to RM 4.00, a new record. RM20.00 soon.

Posted by wsb_investor > 2023-11-23 20:52 | Report Abuse

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

Posted by observatory > 2023-11-24 10:51 | Report Abuse

Another very good quarter.
It's especially good to see that growth is picking up at Allianz Life. ANP grew at 18.5% outpacing the industry. Now market share has exceeded 10%.
For the first time, the company has also provided agent recruitment info (slide 22). The CEO Program was also mentioned in the Annual Report.

Slide 3 shows 9M CSM grows at an impressive 11.5%, but NBV only grows at 3.1%. I wonder why is CSM growing much faster than NBV, given NBV is an important contributor to CSM.
I worked out the quarterly increases. 3Q CSM increases by 3,156m - 2,993m = RM163m. 3Q NBV increases by 236m - 147m = RM89m. The difference is about RM74m.
Does CSM increase faster mainly because no dividend has been paid in Q3 this year? (Allianz Group paid RM323m of dividends in FY22, contributed by both life and GI)
Or most likely due to some assumption changes?
I wonder, over the next few years, could Allianz life business grows at a high single digit. That could support a higher valuation.

Posted by wsb_investor > 2023-11-24 11:13 | Report Abuse

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

Posted by wsb_investor > 2023-11-24 11:25 | Report Abuse

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

Posted by observatory > 2023-11-24 22:49 | Report Abuse

Thanks for pointing out. I actually missed slide #7 while trying to find answer in the quarterly report!
Note 1 explains RM69m increase in CSM due to "non-financial assumptions update".
However, note 2 also mentions "higher CSM release due to non-financial assumption update", which is -RM321.4m
Does it mean the assumption changes somehow cancel out one another?

In the same slide #7, "expected growth" contributes RM163.8m.
What is "expected growth"? Does it refer to the expected return from investments, say 7% yield from equity portfolio?
Or does it refer to the extra return expected from investments, example by revising assumed future return from 7% to 8%?
If it's the former, the contribution will be recurring. But if it's the latter, the increase is only a one-time contribution that could be reversed in the future.

Posted by observatory > 2023-11-24 22:49 | Report Abuse

Yeah, rightfully life insurance valuation = Embedded Value + VNB * multiplier
In practice, some life insurers are valued at below 1X EV.
For Allianz Malaysia, both RHB and Maybank value it at 1X PE, but no premium is given, i.e. VNB multiplier is zero.

Posted by wsb_investor > 2023-11-25 07:52 | Report Abuse

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.

Posted by observatory > 2023-11-25 11:17 | Report Abuse

Thanks for explaining. It's not easy to estimate future growth based on quarter to quarter CSM number. Is NBV still the best indicator of growth?


698 posts

Posted by moven00 > 2 months ago | Report Abuse

Lagi Sekali….. ✅💪🏻

Posted by wsb_investor > 2 months ago | Report Abuse

Allianz on viagra again


708 posts

Posted by myongcc5 > 1 month ago | Report Abuse

Fellow ALLIANZ Holders


219 posts

Posted by ongkkh > 1 month ago | Report Abuse

declare div d, nobody mentioned it?


2,483 posts

Posted by troy88 > 1 month ago | Report Abuse

Good fundamental stock that is low profile and held mainly by long term holders..

Posted by wsb_investor > 1 month ago | Report Abuse

dividend payment before CNY, huat ar

Posted by wsb_investor > 1 month ago | Report Abuse

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.

Posted by observatory > 1 month ago | Report Abuse

@wsb, how big is the medical business contribution in terms of premium and profit? How might MOH policies affect it?

Posted by wsb_investor > 1 month ago | Report Abuse

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.

Posted by wsb_investor > 1 month ago | Report Abuse

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.

Posted by observatory > 1 month ago | Report Abuse

Thanks for the explanation. Your point that medical inflation is not projected by actuaries and not reflected in CSM is important one.


2,483 posts

Posted by troy88 > 1 month ago | Report Abuse

this underrated stock should enter the RM20+ region eventually..


1,376 posts

Posted by sheldon > 1 month ago | Report Abuse

Any reason why the preference and ordinary share price is converging?


6 posts

Posted by yielder > 1 month ago | Report Abuse

medical insurance should be a loss leader for insurer? they might not make any money from medical insurance. but to use it as a lead generator, to sell high margin investment linked products

Posted by wsb_investor > 1 month ago | Report Abuse

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.

Posted by wsb_investor > 1 month ago | Report Abuse

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.

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.

Posted by wsb_investor > 1 month ago | Report Abuse

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.


1,376 posts

Posted by sheldon > 1 month ago | Report Abuse

My 2 sen take - The medical insurance industry is a rip-off. Not much actuarial science in it because the insured bears the risk if the insurance co has not enough funds to meet their promised cumulative coverage.

Mine is a case in point. I bought cumulative lifetime coverage of up to 660k for a monthly premium of 250. Several years later, they tell me that my 250 per month may not be sufficient to cover the 660k and advised that I increase it. My argument is that I'm not asking for an increased cumulative cover. It seems that my insurer has a right to the effect of withdrawing my coverage if I don't increase my premium. Wow! This is such a wonderful deal for insurers.

Posted by wsb_investor > 1 month ago | Report Abuse

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.


1,376 posts

Posted by sheldon > 1 month ago | Report Abuse

wsb_investor - Tq for your response but I beg to disagree.

The 660k is not adjusted upward for inflation hence logically in all fairness my 250 premium should correspondingly remain. If I seek to increase my cumulative coverage, then by all means I welcome an increase in premium.

Posted by wsb_investor > 1 month ago | Report Abuse

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.

Posted by observatory > 1 month ago | Report Abuse

Good sharing. As a principle, a person should not be able to claim more than his actual expenses from his medical insurance policies. Any extra benefits should come from other types like critical illness policies. Isn't that how it should work?

Posted by wsb_investor > 1 month ago | Report Abuse

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

Posted by observatory > 1 month ago | Report Abuse

What is the implication for AGIC if it eventually win or lose its case against MyCC?


6 posts

Posted by yielder > 3 weeks ago | Report Abuse

based on chatgpt's analysis below, allianz is safe
The announcement is about Allianz Malaysia and its insurance subsidiary, AGIC. There was a legal issue with a competition commission (MyCC) accusing them of wrongdoing, but a higher court recently decided in favor of Allianz and other insurers. This means that the legal challenge against them was not successful, and they won the case. So, based on this legal matter, Allianz appears to be in a stable position.


6 posts

Posted by yielder > 3 weeks ago | Report Abuse

Is there any policy Bank negara do to prevent Allianz from getting exposed to junk financial products, that caused AIG to collapse during to Lehman crisis?

Posted by observatory > 3 weeks ago | Report Abuse

AIG got into trouble because it recklessly sold “insurance” to other hedge funds betting against the housing market. Such situation does not exist in Malaysia.

Check the types of investments owned by Allianz Malaysia in Note 8 of Annual Report.

Posted by wsb_investor > 3 weeks ago | Report Abuse

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.


6 posts

Posted by yielder > 3 weeks ago | Report Abuse

government cannot stop medical repricing. Allianz is owned by EU, which has overwhelming negotiation power. Malaysia has greatly benefited from huge EU investment into semi con and aerospace, etc. So repricing is a small price to pay

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