Posted by x3mg33 > 2021-02-25 14:18 | Report Abuse

@limyuwei please may I know what is the additional claims provision you mentioned?

Posted by limyuwei > 2021-02-25 14:41 | Report Abuse

From the PPT above, "The decrease was attributable to higher insurance contract liabilities arising from changes in interest rate and additional claims provision being setup during the year."

Profit for life insurance (under IFRS4) = net cashflow + change in reserve

*e.g. premium paid this year, will just convert to an increase in reverse, instead of convert to profit directly. For example, premium paid of 100 might lead to increase in reserve of 95, remaining 5 = profit.

The reserve component consist of actuarial liabilities (i.e. future claims) and incurred but not reported claims (i.e. IBNR or claims provision). It is just a provision instead of actual paid claims. Say if Allianz paid 100m lesser medical claims this year due to Covid, all else equal, the profit should increase by 100mil. However, they might don't want to recognize the full 100mil immediately this year. They can set up a higher claims provision, say 75mil higher, and only book 25mil additional profit this year. The 75mil additional provision, they can release it in the future.

Posted by Papayashot > 2021-02-25 14:55 | Report Abuse

Hi limyuwei, it is indeed surprising to see the resilience of insurance players during covid. Any possible reason?

Posted by limyuwei > 2021-02-25 15:07 | Report Abuse

Nope, it is very inline with the expectation due to lower motor claims and medical claims. You can see certain US insurers even provide additional rebate to policyholders.

New business sales (for life) is lower, but the impact will only come in in the later years.

Posted by Papayashot > 2021-02-25 15:14 | Report Abuse

Hi yuwei, ya life insurance premium decreases abt 10% yoy and luckily covered up by general insurance premium (19% higher yoy).. Is life insurance more profitable in a sense that less claim is incurred?

Posted by limyuwei > 2021-02-25 15:53 | Report Abuse

*only the premium for new business 2020 drop 10%, the overall premium (existing business + new business in 2020) still +8%

Posted by x3mg33 > 2021-02-25 16:16 | Report Abuse

@limyuwei Thanks for the good explanation, much appreciated.

If this is a provision, then it is subject to future events occurring. In this case, there may well be a future writeback/ gain.

Posted by kywoo > 2021-02-25 17:10 | Report Abuse

One may be an accountant, investment banker or financial analyst but will find it difficult to understand the mechanics of provisions and profit realization in the insurance business. We are lucky to have someone like limyuwei to explain to us. I am pretty sure she/he has a lot of accounting experience in the insurance business. So glad you are in our chat group and we appreciate your contribution to our understanding of the accounts of Allianz Malaysia.

Posted by limyuwei > 2021-02-25 17:24 | Report Abuse

Future event is covered by actuarial liabilities, the claims provision is for claims incurred in 2020 but pending paid/reported. You can google "loss triangle" to understand the concept.

Usually the claims provision will just be a x% of total paid claims in the year.
Due to the high claims paid (Allianz paid claims ~1.3bil), that x% move by 1% will be a ~13mil change in profit. Allianz can easily set a higher x% this year, to have a higher claims provision, to defer the profit (on paper).

Posted by x3mg33 > 2021-02-25 17:32 | Report Abuse

wow I'm learning new things each day. Thanks @limyuwei for the insight!

Posted by kywoo > 2021-02-25 17:38 | Report Abuse

limyuwei. I have a question to ask you. Why is it that the earnings per share for the last quarter is always understated. The other 3 quarters and the overall full year are correctly reported. There must be a reason for it.

Posted by limyuwei > 2021-02-25 17:44 | Report Abuse

I not sure what you mean, the number looks ok.

2019FY EPS RM1.42
YTD Q1 2020, RM0.23
YTD Q2 2020, RM 0.71
YTD Q3 2020, RM1.09
2020FY EPS RM1.50

Posted by kywoo > 2021-02-25 19:14 | Report Abuse

limyuwei. Sorry. It is not ok. You miss out the Q4 figure. If you click on the disclosure on top of this page and look under financial results you will get the following

2020 Ist quarter 14.8

2020 2nd quarter 72.9

2020 3rd quarter 94.8

2020 4th quarter 14.8

Total earnings per share (before diluted interest ) RM 2.27 per share

Diluted earning per share RM 1.50

This seems to reflect on every year that Q4 results shows much lower EPS but not net profit. Hope you can enlighten us. Thanks

Posted by kywoo > 2021-02-25 19:19 | Report Abuse

very sorry typo error. Should be as follows

1st Q 44.9

2nd Q 94.8

3rd Q 72.9

4th Q 14.8

Posted by JJLee33 > 2021-02-25 19:30 | Report Abuse

limyuwei thanks for your sharing, i've learned alot from you.

Just wondering how you'd know the "additional claims provision" is coming for the medical portfolio? Couldn't it be increasing adverse experience in life business as a whole? Also would you foresee increasing lapse rate in the coming months? Typically lapse increase when there's an economic recession.

Posted by JJLee33 > 2021-02-25 19:42 | Report Abuse

kywoo usually the Q4 result will deduct preference dividend, hence the drop in ordinary EPS.

Posted by limyuwei > 2021-02-25 19:56 | Report Abuse

@kywoo That is the EPS from this website, no idea how they compile it, I get the number for Allianz IR presentation.

@JJLee33 Because medical payout is > death payout. From LIAM data, entire industry, 2019 total medical claims ~5 billion, total death claims ~1.6 billion. The medical portion will be much higher for Allianz, which has relatively small old policies, but many new policies after it entered Malaysia market. Secondly, life experience is very stable, and Malaysia doesn't have a surge in death due to Covid like the US.
No idea with the lapse, but I think due to pandemic, people might reluctant to lapse their medical coverage as well.

Posted by observatory > 2021-02-26 01:42 | Report Abuse

@kywoo,
The basic EPS = Leftover profit after paying off the preference share divided by the number of ordinary shares.

Since preference share dividends are paid out in Q4, there is a lump sum deduction that only occurs in Q4. Hence the low basic EPS.

You can find the calculation in the quarterly results. It's under Part B, Note 12a, page 31.

Posted by observatory > 2021-02-26 01:45 | Report Abuse

@limyuwei,
Thanks for your explanation. I agree with kywoo. Your contribution is indeed very valuable to us who find the financial statements of insurance companies too technical.

I wonder if you follow Syarikat Takaful. The combined ratio of its general insurance business is much lower at 65% to 70% range (latest quarter 58%) as compared to Allianz at 85% to 95% (latest quarter 84%). Any idea why such a large discrepancy could persist in a competitive market?

The other question is whether we can find the embedded value of Allianz life insurance business? The latest report from RHB put the estimate at RM3 billion. But it’s unclear how they arrived the figure.

Posted by limyuwei > 2021-02-26 09:05 | Report Abuse

Shouldn't just purely look at combined ratio. You can try to look at claims ratio by product. Generally motor has a higher claims ratio, while non-motor has a lower claims ratio.
e.g. Allianz Q4 2020, overall claims ratio 55.5%, motor claims ratio = 59.6%
Given motor is about 66% of Allianz GI product mix, 0.66 * 59.6% + 0.34 * non-motor claims ratio = 55.5, you can get non-motor claims ratio is about 47.5%.

STMB (GI side), motor is approximately 45% of its business mix only, hence overall naturally will see a lower claims ratio for STMB.

Another thing about high combined ratio for Allianz GI is, you will notice, Allianz GI, despite being number 1 motor insurer, doesn't offer direct purchase. Hence, almost all motor insurance sold, will come with commission, this will also explain the higher than average commission ratio, which also part of the total combined ratio.

However, it is very important to note the key difference between Allianz (conventional) and STMB (takaful). Say if both pay 100mil lesser claims in 2020 due to Covid, Allianz can pocket the 100mil directly, but STMB, due to the takaful surplus sharing, can only pocket 20-50mil (depends on the risk sharing %).

I not sure if Allianz Life ever publicly disclosure its embedded value. It does however disclosure its new business value (i.e. embedded value for NB sold).

Posted by Papayashot > 2021-02-26 14:12 | Report Abuse

Hi Suwei, apart from the syariah-compliance investment & profit-sharing scheme in Takaful Insurance, what is the other notable difference between the business models between takaful vs conventional insurance?

And, is the market (potential customer) of takaful and conventional insurance well distinguished? For example, why certain peoples prefer to buy takaful insurance, instead of choosing the medical insurance offered by a conventional insurance player?

Posted by limyuwei > 2021-02-26 15:12 | Report Abuse

Takaful concept essentially take away the insurance risk component from the Takaful operator (hence the name operator). The source of profit for Takaful operator (e.g. STMB, Takaful Ikhlas, Etiqa), mainly from wakalah fee (more front end), rather than the risk surplus sharing (more long term), but this can vary by companies. You see, Takaful products can't be priced at the same level as conventional products, as conceptually Takaful products need to be more expensive, due to the additional risk sharing portion. However, due to market competition, Takaful products have to be priced at the same level as conventional products, coupled with risk sharing, takaful operators can't earn as much as conventional insurers from the insurance portion. So, less insurance risk, less profitable, profit usually front loaded (which will change under IFRS17).

Potential customers for takaful and conventional are obviously very different, especially for Life side. However, this actually doesn't matter much, as Takaful don't really seek to profit from underwriting profit. Product mix also varies a lot across takaful. Most of them do have ILP products, but not really selling well, except for PruBSN and Etiqa. Key products for other Takaful (e.g. STMB) are MRTA, which itself is another product with high day 1 profit (due to single premium), and will impact a lot under IFRS17.

Posted by Papayashot > 2021-02-26 22:49 | Report Abuse

Thanks YuWei. If due to IFRS17, investing in takaful counter is riskier than conventional insurance counter?

And, what are the key factors determining one to select either takaful insurance or conventional insurance, as the premium paid is about similar nowadays as u said?

Posted by limyuwei > 2021-02-27 09:13 | Report Abuse

The cashflow will still remain unchanged on any accounting basis, but profit recognition pattern will change, in particularly very significant for MRTA or any single premium/front loaded products.
In general, products that have a faster profit release in IFRS4 will see a slower profit emerging in IFRS17, and vice versa.

A typical (and super simplified) example of profit pattern for IFRS4 vs IFRS17:
http://www.actuarialpartners.com/wp-content/uploads/2018/06/1000x300-APLOS-Graphic-4.png

Posted by observatory > 2021-02-28 13:33 | Report Abuse

@limyuwei, thank you for your valuable explanation. Until you pointed out, I wasn't aware that IFRS17 has a disproportionate impact on Takaful operators. This is a very important piece of information.

To better understand, may I further clarify with a few more questions? Take your example of MRTA where the premium is paid as a lump sum upfront. Do you mean currently STMB books the profit derived from their Wakalah Fee in Year 1, however under IFRS17 the same profit will have to be apportioned over the life of the protection?

Don't conventional insurance companies also follow the same practice (of booking the profits in Year 1)?

Could it be the impact is greater for Takaful operators like STMB because they have a higher reliance on one-time premium products like MRTA? Besides MRTA, what other products also have such features of single premium for protection over a number of years?

Do you have an estimate of the level of reliance (and therefore the level of IFRS17 impacts) across different insurance companies?

Besides the above, any other factors that may cause Takaful operators to fare worse (reporting wise) under IFRS17?

Posted by observatory > 2021-02-28 18:04 | Report Abuse

@limyuwei, if you don't mind I would like to get your view on an earlier issue involving Allianz.

Earlier the Malaysian Competition Committee (MyCC) has ruled against the agreement between PIAM and the Automobile Workshop Owners' Association of Malaysia (FAWOAM) on the discount rate for motor parts prices and labour rate.

Interestingly Bank Negara Malaysia supports the agreement. The two government bodies are in open conflict over this matter. What is your view on that, especially the implication on general insurance companies?

https://www.nst.com.my/business/2020/10/628794/bank-negara-regrets-mycc-decision-over-piam-workshop-owners-deal

There is also the incident of Motor Vehicles Workshop Owners Association from 7 states calling for boycott on Allianz Malaysia. It seems that they are unhappy over Allianz General Insurance's initiative to revamp its panels.

https://www.allianz.com.my/allianz-general-revamp-allianz-authorised-repairers-panel

Is Allianz GI's initiative a direct response to MyCC's ruling? What are the effects of the boycott? Any idea what is the latest development and responses from other GI companies?

Posted by limyuwei > 2021-02-28 19:59 | Report Abuse

Currently, both conventional and takaful typically book a high year 1 profit for single premium product. For ILP, takaful typically also book higher first x years profit vs conventional (i.e. source of profit mainly coming from earlier period wakalah fee). Furthermore, takaful typical has a very high business mix in MRTA. So IFRS17 impact to takaful will be higher.

For the MyCC thing, in my view, is just MyCC being ignorant as always.
Price fixing should only illegal if it hurts normal consumers.
Workshop (and also hospital) abusing insurance claims is not a new thing, and Allianz and BNM are actually acting in best interest for us normal consumers, to curb the abusive behavior.
Not sure with latest development, I do hope things go well for Allianz, or all other GI.

Posted by observatory > 2021-02-28 23:15 | Report Abuse

Thanks YuWei.

Does it mean that, due to the higher front-loading of profits and the lack of long-term risk surplus sharing, takaful operators' profits could be more volatile from year to year? My reasoning is during the good time when there is a lot of new business, profits may soar. However during the bad time, like during the Covid-19 lockdown, new business dries up yet takaful operators cannot derive much profit from existing policies. Is this the right reasoning?

But given takaful is based on risk/ surplus sharing, can I say takaful operators face a lower risk of blow-up due to underpricing? I'm not sure whether underpricing is a problem for the Malaysian insurance sector. I recalled reading GEICO nearly went bankrupt in the 1970s as the management then underestimated risks and underpriced products. Rightly or wrongly, this story has given me the impression that insurance is a black box business. Wrong actuarial assumptions could set off a time bomb for the future. Do you think such risk is present in Malaysian life or GI?

I'm also puzzled by the large disparity in ROE among the few listed insurers. Since 2012 STMB has managed to achieve ROE above 20% every year. ROE reached 32% - 33% in 2018-19. However, Allianz Malaysia is in the range of only 11% to 15%. LPI, which only offers GI, is just a few points higher. In your view, does STMB sustain its high ROE mostly because of the heavier front-loading of profits? Are there other reasons for the seeming outperformance?

Posted by limyuwei > 2021-03-01 19:16 | Report Abuse

New business drying up will impact takaful more.

Underpriced for certain product is possible, but under-reserving is almost impossible. Malaysia is using GPV reserve, where the assumptions need to be the latest assumption. Under-reserving is usually only occurs in NPV reserve.

ROE is not meaningful due to :
1. Insurers can just choose to retain the earnings, and have a higher equity, to have a sufficient buffer to write new business.
2. Profit (IFRS4 basis) is not meaningful.

A typical ILP will have profit pattern that look like this:
https://i.imgur.com/rZ4jyaz.gif

While a single premium will have profit pattern that look like this:
http://www.actuarialpartners.com/wp-content/uploads/2018/06/1000x300-APLOS-Graphic-4.png

Posted by Pinky > 2021-03-01 20:33 | Report Abuse

Limyuwei must be an accountant!

Posted by Papayashot > 2021-03-01 22:38 | Report Abuse

Hi Yuwei, rgd. the day-1 profit for MRTA business, is it applicable only for those MRTA that was paid in one lump sum when the loan is applied?

How about when the MRTA is combined with the loan and paid by installment spreading over 10-15 years. In this case, is this still counted as day-1 profit for insurer?

And, which scenario is more common for MRTA payment (direct payment vs installment)?

Posted by Zackmeiser > 2021-03-02 01:45 | Report Abuse

hi all. I am new to this counter hence I have a few questions in my mind
1. Diluted eps for Allianz seem steep. any idea why
2. Profit margin almost stagnant despite revenue increased for the past 5 years
3. What kind of investment Allianz do with the float amount

thanks

Posted by limyuwei > 2021-03-02 08:31 | Report Abuse

MRTA combined with loan also day-1 profit, the loan is financed by the bank, not insurer.
i.e. bank borrow you money to buy insurance.

1. https://www.theedgemarkets.com/article/allianz-proposes-rights-issue-icps
2. Profit margin is irrelevant to life insurance business. And profit margin for GI is almost for sure will be stagnant. Hence, profit margin is nowhere close to a good measure to judge insurance companies.
3. Usually just some FD, bonds due to RBC. Float amount is pretty much irrelevant to Allianz.

Posted by observatory > 2021-03-02 12:44 | Report Abuse

Hi YuWei. Thank you for sharing. I learn something useful every time I visit this page!

We learn that Warren Buffett is successful not only because of his investment acumen, but also because he takes advantage of Berkshire Hathaway's free float. Could this not happen in Malaysia because the regulator is too restrictive?

I look up the Allianz analyst presentation you shared. 76.5% of the GI portfolio is in bonds and deposits. The life portfolio is even more conservative where equity accounts for just 8.6%. This seems to go against the maturity matching principle. Given that the liabilities of life policies lie far into the future, I thought there should be a higher weight of risk assets like equity. While equity is volatile in the short term, it offers better growth and inflation protection in the long term. Any idea why Allianz is so conservative (besides the need to meet the minimal regulatory requirements)?

Given that ROE might not be a reliable performance indicator, what are the say 3 to 5 key indicators that you will look at when measuring life insurers and general insurers?

Posted by limyuwei > 2021-03-02 13:33 | Report Abuse

Need to understand the on products offered. Certain insurers in China can still take a very high risk in investment due to the product nature, i.e. typically high saving, low protection product.
And yes, due to our RBC, typically no insurer will invest in equity to back the liabilities.

The 8.6% equity in Allianz Life, is very likely belongs to the Par or ULP fund (*not belong to shareholder). Life insurers typically has 0% equity holding in their shareholder/operating fund.

On that particular slide, LF = life fund, SHF = shareholder fund
On the "Investment Results by funds":
1. Par = Par fund (belong to policyholders)
2. NPAR + ILOF = NPAR and ILP operating fund (belong to shareholders)
3. ILF = investment linked fund? (not sure, amount seems small, but if yes, belong to policyholders)
4. ULF = universal life fund (belong to policyholders)
Not sure what the life fund included, but typically sure included ULP, and maybe Par.
For ULP and Par, insurers will earn the investment return, then pass back to policyholder (with some guarantees and smoothing), earn some fees in between. So it is natural to have some equities investment.

For liability matching, the assets backing liabilities should be consist of mainly bonds, not equities. So that during int up/down scenario, the surplus will be largely unchanged.
e.g. int down, liabilities go up, bond price go up

By right any amount above reserve, insurers can freely invest in equities, but then, assets typically have shorter duration vs liabilities.
i.e. insurers will need more assets, to back the liabilities, to have a neutral impact due to interest rate movement. (*concept of dollar duration)
e.g. int down, bond price up 0.5%, liabilities up 1%, so insurers will need double amount of reserve in bond, to minimize the impact to surplus.

Of course, above certain level, with super high retained earnings, insurers can freely invest in equities. However, above that level, they can also comfortably give out dividends. For insurers in Malaysia, they will just choose to give out dividends. Hence, Berkshire Hathaway concept will not work in Malaysia or any MNC insurers.

For life, you can look at embedded value, or at least NBV.
Can also look at the "Gross benefits and claims paid", management expenses, and persistency ratio.

For GI, will be the typical claims ratio and combined ratio.
Nothing fancy about GI actually, since the valuation is about there, what people tend to overlook is the life business, and its long term future cashflow.
e.g. medical repricing in 2021 for many insurers, all else equal, will be a big positive impact, despite might not reflect immediately and usually insurers will set up higher reserve for that.
However, the concept behind it will be, insurers will always aim to achieve x% of claims ratio, say for their medical business. While, yes medical inflation, and claims cost rising, but if insurers can increase the cost of insurance, and always maintain the x% claims ratio, the absolute profit will be higher in a long run.

Posted by Kon Lim Chai > 2021-03-02 20:47 | Report Abuse

Whatever good reasons or fundamentals this conuter may have, its price will go down as long as EPF continues to sell.

Posted by Kon Lim Chai > 2021-03-02 20:48 | Report Abuse

A lot of cash required by EPF to meet withdrawal.

Posted by kywoo > 2021-03-02 21:07 | Report Abuse

Dear limyuwei. I am very impressed you know so much about the operation and accounts of insurance companies. I wonder if you can enlighten us as to why the total dividend paid for 2020 is lower than 2019.( 58% in 2020 v 65% in 2019 ). Since the net profit is higher for 2020 we would have expected at least a similar payout if not higher. Is there anything in the operation or accounts that show company is a bit tight in available cash balance. All the shareholders are quite disapponted.

Posted by limyuwei > 2021-03-02 21:50 | Report Abuse

Well, I believe Allianz has capacity to pay higher dividends, but willingly choose not to. Not every companies aim to please shareholders as much as possible to have tricks like bonus issue, dual listing etc. Pros and cons, of which the cons will be no speculators to goreng the stocks. I tried to compare Allianz top 30 shareholders back then, and the name list is almost the same. Yes, it is a super boring stock, with limited analyst coverage, and limited institutional buyers, but in my view, just a star waiting to shine.

Actually it is very simple, just look at Allianz GI valuation vs LPI. Even using a super conservative assumption, Allianz GI should worth as much as LPI, which is almost the market cap right now.
i.e. the market cap for Allianz currently, completely ignored Allianz Life, which in my view, should be the focus of Allianz valuation instead, due to high recurring income.

Take a look at Allianz Life Master Equity Fund, NAV in 2007 = 27m, NAV in 2011= 93m, NAV in 2020 = 966mil
These funds typically charge policyholders 1.5% FMC and only pay the fund manager ~0.3% of expenses, i.e. Allianz will get a spread of 1.2% from the fund, i.e. 12mil from this fund alone, regardless of market performance.
What will the fund size be, after another 10 years?
If 10bil fund even possible? Prudential has a particular fund with fund size = 11bil.
What is the spread from 11bil fund? Assume same 1.2%, it will be 132mil.
That is the investment fee income on top of insurance margin.

Typically insurance margin will be at least 20%. Why? Because that is in the RBC regulation, of which 20% is the minimum stress factor (can up to 45%).
All else being equal, and actual cashflow = expected, and assume no extraordinary items etc, Allianz will get 200mil+ of insurance margin yearly (from its 1bil+ claims payout * 20%).
Furthermore, as policyholders age, or after medical repricing, cost of insurance will be higher. Hence absolutely, the profit will be increase, even without any new business sold.

Posted by Zackmeiser > 2021-03-02 22:48 | Report Abuse

If the premium is only invested in fixed market, how would allianz grow or outperform the fixed market in the long run? By means of getting more customer? Or can they reprice their product at the expense of other competitors? I like allianz i think its undervalued (probably rm20, conservatively) but i would love to know how do insurance company grow if what they ever do is investing in fixed market.

Posted by Bgt 9963 > 2021-03-02 23:12 |

Post removed.Why?

Posted by magic01 > 2021-03-03 15:00 | Report Abuse

Relax bro... I am at 14.5 oso steady only.

Posted by Papayashot > 2021-03-03 15:08 | Report Abuse

when do conversion from preference share to ordinary share, do we need to pay any exercise price? Today got 200000 + preference shares being converted..

Posted by limyuwei > 2021-03-03 17:11 | Report Abuse

no, as far as I know, you will pay nothing, maybe some postage fee and your time.

Posted by lionel messi > 2021-03-04 10:28 | Report Abuse

why want to convert? Pref shares pay more div. is there a deadline for conversion?

Posted by Snake > 2021-03-06 20:47 | Report Abuse

Buy & Keep

Posted by observatory > 2021-03-07 17:33 | Report Abuse

Hi Yu Wei. I want to continue above conversation. However, this i3 forum system does not accept my posting beyond a few sentences long. I've sent a message to your i3 Messenger. Please kindly take a look. Thanks.

Posted by observatory > 2021-03-07 17:41 | Report Abuse

I will now cut my original message down into a few summarized comments, and try post again. Basically, after reading your input, I have worked out the ratio of contract liabilities to equity for different insurers (data extracted from the Balance Sheet).

I assume contract liabilities represent size of business. I want to know how much equity will be needed to support a certain size of insurance business.

Posted by observatory > 2021-03-07 17:44 | Report Abuse

I find a large discrepancy of this ratio among the insurers.

Allianz - between 3.7 and 4.0 (2014 to 2020)
STMB - declining from 9.7 to 6.0 (2014 to 2020)
MNRB - declining from 3.6 to 2.6 (2016 to 2020)
Manulife - increasing from 4.4 to 5.0 (2015 to 2020)
LPI - between 1.0 to 1.3 (2015 to 2020)
Tune Protect - between 2.2 and 2.9 (2015 to 2020)

Posted by observatory > 2021-03-07 17:48 | Report Abuse

LPI and Tune Protect have more equity to support each dollar of contract liabilities. Do general insurers need more equity? What could be the reasons.

Besides, LPI also seems to be very conservative. RM1 of equity supports only RM1 to RM1.3 of contract liabilities. Can this mean LPI has more room to declare higher dividend payout in the future?