Posted by Pinky > 2021-04-20 09:33 | Report Abuse

Though I'm an accountant, I'm not too familiar with that IFRS either.

I only see growing revenue, growing profits, and growing dividends.

Maybe this is a chance for long-term investors, like EPF to collect on the cheap. Easily 5% forward dividend yield...

Posted by Pinky > 2021-04-21 17:30 | Report Abuse

See? Price keep falling, yet EPF keep accumulating...

Posted by StockisntFun > 2021-04-21 23:40 | Report Abuse

Reverse the sentences : “ because EPF/ BOSS is accumulating, the price is falling” Big boss always have advantages to accumulating in long period.

Posted by limyuwei > 2021-04-24 12:16 | Report Abuse

https://www.sinchew.com.my/content/content_2465440.html

http://www.hlfg.com.my/data/analyst-briefing/FY2020.pdf

Posted by Pinky > 2021-04-24 12:42 | Report Abuse

@limyuwei why are u posting HLFG stuff here?

Posted by observatory > 2021-04-26 22:12 | Report Abuse

@limyuwei, thanks for sharing HLA business performance.

Slide #16 shows the EV, which is an information not provided by Allianz. Do you have any comment on the EV and NBEV by HLA? In your view how does HLA perform vis-à-vis other insurers?

Slide #17 mentions HLA focuses on no-par and investment-linked products as they have higher NBEV margin. Can you explain why such products have higher margin? What is the situation at Allianz?

Posted by limyuwei > 2021-04-26 22:57 | Report Abuse

Allianz EV is not available publicly, but I doubt it will lower than HLA.
*There are multiple type of EV, Allianz is using MCEV, for HLA I think should be TEV.

Product type NBEV margin is generally consistent across every insurers, of which protection products will have higher margin, while saving products will have lower margin. As far as I know, Allianz's protection portion is much higher than HLA's protection portion.
*Allianz has been heavily focusing on ILP since early 2010, while HLA previously heavily focusing on selling par products.

Posted by limyuwei > 2021-04-26 22:59 | Report Abuse

btw sharing HLFG just because surprisingly this local holding company disclosure more information vs Allianz.

Posted by limyuwei > 2021-04-29 14:25 | Report Abuse

https://www.sinchew.com.my/content/content_2468433.html

Posted by Redsea > 2021-04-30 19:28 | Report Abuse

I added some at 13.20 today.

Posted by Papayashot > 2021-04-30 23:02 | Report Abuse

allianz is only for those institutional players and serious investors like us. If no normal retailers come in, allianz hardly move. Normal retailers would rather chase those steel, glove and hot counters. My 2 cents..

Posted by Pinky > 2021-05-03 11:31 | Report Abuse

Keep on creeping lower and lower and lower...

Really testing patience.

Posted by observatory > 2021-05-05 19:46 | Report Abuse

Just an side note.

Ping An Insurance (HKEX stock code 2318) diluted EPS for past 4 quarters is CNY 8.11, or HKD 9.73. The closing price today is HKD82.1, translating into a TTM PE of only 8.4 times. This is commonly viewed as the best managed insurance company in China -- impressive growth (although growth has flattened during pandemic; ROE ~20%.

The situation of Malaysia and China may not be comparable. However I wonder for an international investor would Ping An be relatively more attractive?

Any comment yuwei?

Posted by limyuwei > 2021-05-10 21:23 | Report Abuse

https://www.nst.com.my/news/nation/2021/05/689286/report-hike-premium-medical-insurance-policies

Posted by Redsea > 2021-05-14 12:52 | Report Abuse

Allianz SE results superps...

Allianz starts 2021 with strong first
quarter results
• Total revenues of 41.4 billion euros, adjusted for currency and consolidation effects, flat
compared to prior year level
• 1Q 2021 operating profit up 44.8 percent to 3.3 billion euros
• 1Q 2021 net income attributable to shareholders increased 83.4 percent to 2.6 billion euros
• Solvency II capitalization ratio of 210 percent1
• 2021 operating profit target confirmed at 12.0 billion euros, plus or minus 1 billion euros

Posted by stteck > 2021-05-14 18:40 | Report Abuse

is financial result of Allianz Malaysia consolidated under SE?

Posted by Redsea > 2021-05-15 10:19 | Report Abuse

Yes, but relatively small contribution.

Posted by Redsea > 2021-05-19 17:26 | Report Abuse

Allianz result so so only

Posted by Pinky > 2021-05-19 17:37 | Report Abuse

https://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=213908&name=EA_FR_ATTACHMENTS

Okay la, respectable

Posted by Papayashot > 2021-05-19 18:26 | Report Abuse

The life segment loss this quarter is due to higher fair value losses on
investments arising from higher interest rate.

can I check with you all what is fair value loss on investment due to higher interest rate?

Posted by limyuwei > 2021-05-19 18:34 | Report Abuse

Interest up, bond price fall. For insurance, what matter is the net position, not just the fair value loss on investment (asset side). Interest up, bond price fall, liability (PV of future cash flows) also fall. The surplus can instead increase, depending on the dollar duration of assets/liability.

Posted by Papayashot > 2021-05-19 18:54 | Report Abuse

Hi yuwei, I don't quite understand on the interest up. I thought the interest rate is low currently? And, rgd the fair value loss, do you have any idea what type of investment Allianz is referring to?

Also, what you mean by net position that matters the most?

Posted by untong > 2021-05-19 22:41 | Report Abuse

https://tradingeconomics.com/malaysia/government-bond-yield

here are some indications on MGS interest rate.

Posted by Papayashot > 2021-05-19 22:48 | Report Abuse

Thanks Untong.

By the way, are you aware on why Life Segment makes an investment income of +146.5M this quarter, but PBT -20M? How exactly to work out the PBT?

Posted by Pinky > 2021-05-19 23:25 | Report Abuse

Yea that's what I wanna say too.

"Rising interest rate" is also another way of expressing "drop in bond market value/price".

BNM may maintain rates low.

BUT Mr Market may not buy it i.e. they may dump MGS to effectively make bond yield rise.

Posted by Jarklp > 2021-05-20 00:00 | Report Abuse

That 146.5 million investment income is coming from coupon and dividends as explained in note 4, the losses in life segment is due to fair value changes (note 6). The result could be worse if not because of realization of investments (note 5) of 49 million.

What is not clear to me is why they incurred a loss when yield went up. I thought life insurance companies have a long liability duration which should benefit from higher yield.

Posted by observatory > 2021-05-20 01:13 | Report Abuse

Slide 7 shows the core profit before tax (which strips out the effects of fair value loss). For the past 5 quarters, the core PBTs are
1Q2021, RM130.7m
4Q2020, RM192.2m
3Q2020, RM176.0m
2Q2020, RM206.5m
1Q2020, RM116.2m

While core PBT increased 12% YoY, it declined 34% QoQ. Is this good or bad? I wonder if insurance business has strong seasonality effect, where results tend to be stronger towards the year end?

Market share for General Insurance is maintained at 13.3% (No 1). Life increase from 7.7% to 8.8% (but position dropped from 5th to 6th)

On the life side, Annualized New Premium continues to grow. ANP for the past 5 quarters:
1Q2021, RM171.3m
4Q2020, RM167.7m
3Q2020, RM150.7m
2Q2020, RM90.8m
1Q2020, RM122.6m

However I don't understand how to relate the new business value of RM82.6m to the ANP of RM171.3m. Appreciate if anyone can explain.

Posted by Papayashot > 2021-05-20 08:40 | Report Abuse

I noticed there is an item:
1Q2021 1Q2020
Gross change in contract liabilities (203,333) 125,688

what could be the reason in having a negative contract liabilities? Appreciate advice from you all.

Posted by Bgt 9963 > 2021-05-20 08:46 |

Post removed.Why?

Posted by Pinky > 2021-05-20 09:04 | Report Abuse

Seems like market don't like this result...

Posted by limyuwei > 2021-05-20 09:22 | Report Abuse

Just top up again.

ANP is annual premium, NBV is future profit. For example you buy insurance with annual premium 2000, contributed 2000 to ANP, and Allianz expected to generate 1500 PV future profit from you, the 1500 is the NBV.

For Q1, ANP up 39.7%, NBV up 64.9%, which are good signs, indicate the products sold now, is more profitable.

Posted by Papayashot > 2021-05-20 09:25 | Report Abuse

Hi yuwei, may I know how to get NBV from quarter/annual report?

Posted by Pinky > 2021-05-20 09:38 | Report Abuse

So, market is overreacting to the loss without analysing the results details? Hmm...

Posted by Papayashot > 2021-05-20 09:43 | Report Abuse

Actually I am confused on the term "fair value gain/loss for investment", is it something like "paper profit/loss in investment"? --? Pls correct me if I'm wrong.

And, appreciate if anyone could advise on how to get NBV for Allianz.

Posted by limyuwei > 2021-05-20 09:48 | Report Abuse

NBV is in the analyst presentation.
https://www.allianz.com.my/documents/144671/1115544/2021_Q1_AMB_Analyst_Briefing.pdf/6b1a982f-56bd-4675-ad60-df19c9b87f89

Fair value gain/loss for investment need to be see together with change in contract liabilities.
Usually, for example Q1 2020, there is positive change in contract liabilities and negative fair value gain/loss, when interest rate rising.
In Q1 2020 however, both are negative change, suspect there might be other changes (e.g. change in assumption).

Anyhow, what to bear in mind is, IFRS4 profit is never reflective for insurance, hence the new changes (IFRS17) is coming. Should focus more on NBV, core profit etc.

Posted by Pinky > 2021-05-20 09:49 | Report Abuse

@Papayashot

Accounting is always based on fair value.

Give u an illustrated example.

Let's say u invest RM100,000 in a bond
It is a perpetual bond i.e. no maturity, every year it keeps paying interest
The bond promises you coupon@interest at 2.0% p.a. i.e. RM2,000 annually
There is no risk on default

BUT, in the bond market, similar bonds are yielding 3.0%

So, if you go out there and try to sell the bond at RM100,000, no one will buy it from you. Instead, they will only buy at RM66,666.67

RM66,666.67 is calculated by taking RM2,000 ÷ 3%
RM2,000 being the interest
3.0% being the market yield

Of course in the real world there are a lot more factors and variables

But this is the principle of YIELD vs FAIR VALUE

Posted by limyuwei > 2021-05-20 09:50 | Report Abuse

https://www.freemalaysiatoday.com/category/nation/2021/05/19/motorists-share-struggles-dealing-with-auto-insurers-bank-negara/

Posted by Pinky > 2021-05-20 09:53 | Report Abuse

In other words, when you have a RM100,000 investment in a 2.0% bond

When market yield is 3.0%

U will take a FAIR VALUE LOSS hit of RM100,000 minus RM66,667 = RM33,333

It's a paper loss@accounting loss

If u keep holding it, every year u still get your RM2,000 interest income

Posted by Papayashot > 2021-05-20 10:30 | Report Abuse

Thanks Pinky for your detailed explanation.

I believe this is the 1st time Allianz Life is having negative PBT, which is claimed to be due to fair value loss (high interest rate).

But, the bond interest rate in few years back is still higher than the current rate? Allianz Life still manage to record +ve PBT that time.

Sorry,I am new to bond market.

Posted by Pinky > 2021-05-20 10:36 | Report Abuse

@Papayashot u see that MGS chart someone shared a while back

Example:
Year 1 MGS yield 4.5% <<< Allianz buy its bonds here/at this point of time
Year 2 MGS yield 3.8%
Year 3 MGS yield 2.8%
Year 4 MGS yield 3.3%

When a bond holder like Allianz do his accounts at end of Year 2, he will have FAIR VALUE GAIN.

When a bond holder like Allianz do his accounts at end of Year 3, he will have FAIR VALUE GAIN.

When a bond holder like Allianz do his accounts at end of Year 4, he will have FAIR VALUE LOSS.

Get the "feel"?

I.e. u buy a bond with 4.5% interest
When the market WANTS 3.8% yield, the 4.5% bond that u have is highly sought after.

BUT, if u buy a bond with 3.0%
And market WANTS 3.5% yield, your 3.0% bond is unwanted.

Posted by Pinky > 2021-05-20 10:36 | Report Abuse

The above is only example ar, I just want to illustrate the principle.

Posted by Pinky > 2021-05-20 10:41 | Report Abuse

Fair Value gain/(loss) arises from the MOVEMENT of interest rate/bond yield.

Assuming you buy your bond at Year 1
Year 1 to Year 2 - yield rose = fair value drop
Year 2 to Year 3 - yield drop = fair value go up

Key - MOVEMENT

Posted by Papayashot > 2021-05-20 12:52 | Report Abuse

icic, thanks Pinky for your detailed explanation.

Can I ask you, for insurance company, what is contract liability in layman term? Contract liability is treated as a part of Net Benefit & Claim under its Income Statement.

Posted by limyuwei > 2021-05-20 13:05 | Report Abuse

Pv future net cashflow, positive = a liability, negative = a future profit. Except single premium, usually liability will be a negative, then regulation require to zeroise those negative liability, to be conservative.

in short, ifrs4 is not reflective for life insurance, don't need obsessed with the profit/loss number.

Posted by limyuwei > 2021-05-20 13:07 | Report Abuse

*in the new ifrs17, there is no zeroised liability

Posted by Pinky > 2021-05-20 13:13 | Report Abuse

@limyuwei +100

<<Pv future net cashflow, positive = a liability, negative = a future profit>>

To add...

An insurer has both assets and liabilities

Assets = its investments in bonds, shares, money market instruments etc
Liability = its liability/commitment to its policyholders

When Liability > Assets = Contract Liability
When Liability < Assets = Contract Asset

E.g. present fair value of its investments RM100m
Present value of its commitments RM115m

Net liability = RM15m

Posted by Pinky > 2021-05-20 13:14 | Report Abuse

An insurer takes the $$$ from its policyholders <<< liability

Then invest those $$$ to generate a return <<< asset

Posted by Pinky > 2021-05-20 13:15 | Report Abuse

I'm not so technical as limyuwei, he's an industry insider I think.

Whereas I'm a simple accountant, I prefer to explain in more simple accounting terms :)

Posted by Papayashot > 2021-05-20 13:44 | Report Abuse

Thanks Pinky.

Am I right to interpret that Asset always larger than liability as Asset = Equity + Liability?
Therefore, why contract liability exists when you said Liability > Assets = Contract Liability?

Posted by Pinky > 2021-05-20 13:50 | Report Abuse

err...in a way, a simple way of looking at it, yes you are correct.

E.g.

I receive lump sum RM10,000 from you today
2022, 2023, 2024 and 2025 I'm supposed to pay you RMx,xxx

If the present value of RMx,xxx x 4 years is >RM10,000, it's a Contract Liability

If the present value of RMx,xxx x 4 years is <RM10,000, it's a Contract Asset