Posted by Papayashot > 2021-05-20 13:55 | Report Abuse

ic Pinky, as a layman like me to understand contract liability, increasing contract liability means bad for insurance company, as they would need to pay more than they're getting..?

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

hahaha ya ya

U are really asking a lot XD

Posted by Zackmeiser > 2021-05-21 07:15 | Report Abuse

Fundamental is solid. But bond market is not helping. Probably gonna have a few ‘loss’ quarters

Posted by woodtiger > 2021-05-21 21:26 | Report Abuse

1. this share is catches investor attention
2. for investor who considering this share to invest , read the latest quarterly report.


spend some time , you will get some idea how the company doing.

Posted by Zackmeiser > 2021-05-21 22:20 | Report Abuse

Epf secretly been buying for months. And not selling.

Posted by limyuwei > 2021-05-21 23:26 | Report Abuse

but total is barely ~8mil MYR thou...

Posted by Zackmeiser > 2021-05-22 00:36 | Report Abuse

With the ifrs17 will that means allianz ‘profit’ more in new accounting terms?

Posted by limyuwei > 2021-05-22 18:57 | Report Abuse

Profit recognition will vary by products, but Allianz is selling a lot ILP, of which the profit recognition is very slow under IFRS4, so in general, can expect to see faster release in profit under IFRS17.

*IFRS17 will also lead to more stable profit release due to the buffer mechanism.

Posted by stteck > 2021-05-23 19:56 | Report Abuse

I do enjoy reading the posts here to understand Allianz biz. Much attentions of profits performance were relating to accounting standards. That really gave me a different ankle of aspect to understand deeper about its financial statements.

I do have a question is when I gauge about the biz performance of Allianz, shall I look into its biz prospect , market share of its insurance industry if believe it is one of the leader in the market , or the accounting standards that affect the timing of its profit recognition - which one should come first ?

Posted by limyuwei > 2021-05-23 22:30 | Report Abuse

For Allianz GI, well, nothing much, just look at the book value, as long as the annual growth is acceptable.

Allianz Life is the hidden gems. For life insurance, the valuation should be embedded value (i.e. future profits, ~cash basis for existing business) + NB multiplier * NB value (for future business). Right now, all these is not cater for Allianz valuation. Investors, in general, still using the most traditional PE ratio to value Allianz Malaysia, of which the profit now under IFRS4 is just paper profit. Even the profit under IFRS17 is paper profit, but the good thing is, this IFRS17 paper profit is generally expected to be much higher vs current IFRS4 basis.

Profit under IFRS4 for ILP = unallocated premium + FMC + COI - commission - expenses - claims, since the reserve for ILP is minimal. The key issue here is, COI in this year is low, but COI in the future can be very high, and COI is usually set to be x% of expected claims.

For example, say if average policyholders now is age 40, on average paying age 40 COI, say RM1000. 10 years later, say average policyholders (for the same block), is now age 50, paying RM2000 COI. Assume same margin, the profit for the same block of business will almost double after sometimes, but of course subject to some lapses.

For comparison, profit under IFRS17, simplified = amortization of all future expected profit + variance of cash flow.

Posted by stteck > 2021-05-24 14:01 | Report Abuse

Thank you Yuwei for your well explanation

Posted by Papayashot > 2021-05-24 20:19 | Report Abuse

Hi yuwei, how to know whether the increase in net earned premium as reported in LIFE segment is due to increase in the number of policies underwritten OR increase in the premium payment?

Posted by limyuwei > 2021-05-24 20:59 | Report Abuse

Net earned premium is not meaningful for life insurance, so under IFRS17, there is no such information.

Posted by Papayashot > 2021-05-24 21:37 | Report Abuse

In fact, during covid, I wonder people will buy more insurance policy, as their spending power would be lower?

Posted by limyuwei > 2021-05-24 23:30 | Report Abuse

You can compare Q1 2021 vs Q1 2020 vs Q1 2019, you will be surprised

Posted by observatory > 2021-05-25 00:43 | Report Abuse

How important are agencies like NPG to the growth of Allianz life insurance? I ask because the agency glamorous image, while helping recruitment, is at odd with the conservative & reliable insurance image projected to customers.

Could there be some inherent risk?

Posted by Keith Ng > 2021-05-25 07:52 | Report Abuse

Good day, good price.

I think government is considering private hospital vaccinations program as industries leaders voiced concerns.

This will further improve Allianz standing if their healthcare coverage subsidize for this, given that this THE major health concern of people around the globe.

Hope the Product Development team and underwriter read this posts.. ;-)

Posted by willc48 > 2021-05-25 09:19 | Report Abuse

LRT incident..heard Allianz insured. any possible impact?

Posted by limyuwei > 2021-05-25 09:52 | Report Abuse

Wont be a very big impact, Allianz is well managed to not have such a high concentrated risk. Usually a big risk like this will get spread across via reinsurance.

Posted by Papayashot > 2021-05-25 16:12 | Report Abuse

Hi yuwei:


Papayashot In fact, during covid, I wonder people will buy more insurance policy, as their spending power would be lower?
24/05/2021 9:37 PM

limyuwei You can compare Q1 2021 vs Q1 2020 vs Q1 2019, you will be surprised
24/05/2021 11:30 PM



May I know which item in the report to compare? Can you advise?

Thanks.

Posted by limyuwei > 2021-05-25 17:03 | Report Abuse

NBV

Posted by Pinky > 2021-05-27 11:43 | Report Abuse

Just finished reading both analysts' report. I also positive, just topped up today.

Posted by limyuwei > 2021-05-28 23:09 | Report Abuse

FMCO, so continue low claims for GI and Life..

Posted by Papayashot > 2021-05-30 22:35 | Report Abuse

Hi yuwei, I aware that you said ILP would be beneficial as the profit in IFRS17 (although is paper profit) can be recognized faster as compared to IFRS4.

May I know why ILP segment profit can be recognized faster under IFRS17? What is the mechanism behind this? I think the premium received in ILP will also be smoothed out throughout the period?

Posted by limyuwei > 2021-05-30 22:59 | Report Abuse

Due to relatively non-existent reserve for ILP, profit for ILP is more or less like on a cash basis, under IFRS4. First year will usually always be a loss due to acquisition cost.

Under IFRS17, profit will be recognized as services provided. First year profit will never be a loss anymore.

For subsequent year, IFRS4 will continue on a cash basis, but IFRS17 is not. Expected profit will be release systematically under IFRS17. Hence, profit will be recognized faster for ILP under IFRS17. For NPAR, especially single premium NPAR (i.e. MRTA), it will be the reverse.

Of course there are many other products in Malaysia market, but ILP + NPAR are the most significant portion.

Posted by observatory > 2021-06-01 19:47 | Report Abuse

Now more people are interested in IFRS17 after a round of education by limyuwei. Several related questions were raised at STMB AGM today, including one by MSWG.

Posted by jeffchan1901 > 2021-06-16 00:39 | Report Abuse

Hi All, thanks for sharing the insights of the insurance industry. Someone was mentioning that EPF has been quietly buying up this stock. But I could not find Allianz portfolio in the March 2021 update. Am I missing anything?

https://www.kwsp.gov.my/-/list-of-top-30-equity-holdings-by-percentage-of-issued-shares-as-at-31-march-2021

Posted by wsb_investor > 2021-06-16 09:09 | Report Abuse

that is sorted by holding%, EPF only hold 5.89% of Allianz now, cant make it to top 30

Posted by jeffchan1901 > 2021-06-16 17:44 | Report Abuse

Thanks for clarifying wsb

Posted by observatory > 2021-06-17 19:53 | Report Abuse

EPF holding is shown in page 113 of 2020 Annual Report. EPF owns both ordinary shares and ICPS.

Posted by magic01 > 2021-06-20 11:05 | Report Abuse

I just realised allianz is one of the top 10 shareholder for kpower. Will this affect earning of allianz greatly in the future? Or how will it impact to allianz future growing? Someone pls answer me.

Posted by Papayashot > 2021-06-20 11:45 | Report Abuse

Hopefully their exposure to Kpower is not too many...

Posted by observatory > 2021-06-20 22:08 | Report Abuse

Allianz does not publish the embedded value (EV) of its life business. However every year it discloses its New Business Value (NBV).

May I know whether I can get a rough EV by adding up all the NBV announced in the past?

What additional assumptions must I apply to make the estimate more realistic?

Posted by observatory > 2021-06-20 22:39 | Report Abuse

@magic01

I just checked. Allianz Life insurance held 2.644 million shares of KPower as of 14 Oct 2020.
After adjusting for split, KPower share price was around RM0.8 per share as of Oct 2020. We can safely assume that Allianz acquired the share at a lower cost. KPower actually rose from RM0.2 in Oct 2019 (Allianz was not in the Top 30 list then) to a height of RM2.8 in Jan 2021.

The current share price is RM1. Assuming Allianz did not top up any shares at higher price after Oct 2020, it should still sit at a paper profit.

But even if Allianz chased KPower all the way to RM2.8 (I think unlikely), the paper loss is at most at a few million RM. How does it compare to Allianz investment portfolio?

As shown in Page 18 of Annual Report, its total portfolio (including general insurance) is RM18.7 billion. Of this total only RM2.6 billion is invested in quoted equities securities and unit trust. The KPower investment is likely to be less than RM10 million. This is less than 0.5% of its equity portfolio, or 0.05% of total portfolio. Any gain or loss from KPower will be very small.

It's also not clear to me whether part of the KPower investment is actually owned by Allianz clients through ILP. That mean the impact to Allianz is even smaller?

Posted by wsb_investor > 2021-06-21 09:49 | Report Abuse

It is mainly owned by Allianz clients, you can check it here. https://www.allianz.com.my/documents/144671/1080891/ENG+Allianz+Fund+Performance+Report+2020.pdf/f63c8a7e-7252-441b-9613-0778d0690609

Posted by magic01 > 2021-06-21 19:01 | Report Abuse

I guess we cannot be too optimistic about this

Posted by observatory > 2021-06-22 00:35 | Report Abuse

@wsb_investor, yes you're right. I recall limyuwei once said Allianz almost doesn't own equity in its shareholder fund. The equity holdings are for policyholders of Par, ILF and ULF.

Posted by wsb_investor > 2021-06-22 15:09 | Report Abuse

https://www.channelnewsasia.com/news/business/france-s-axa-to-sell-malaysia-insurance-businesses-to-generali-15066432

Posted by wsb_investor > 2021-06-22 15:13 | Report Abuse

AXA sold for 140mil euro (~690mil MYR) for 49% Life + GI, valuing AXA at ~1400mil MYR, vs Allianz MV of ~5000mil MYR (adjusted for ICPS)

Posted by Stock beginner > 2021-06-23 16:50 | Report Abuse

For those who interest in management presentation and questions that raise during AGM
https://www.youtube.com/watch?v=_Rq69FjYFvA

Posted by wsb_investor > 2021-06-23 18:44 | Report Abuse

1h20m : Yes we are selling a lot of protection business which is actually very good under the 17 basis, the profit will emerge quite well.

Posted by unicornbird > 2021-07-02 09:07 | Report Abuse

obs, thanks for intro me to this company. Do you have any info to show the market share of Allianz VS other big players?
Is there any law to protect Allianz from unfavourable law that may kick out these MNC, in favour of local insurers like Etiqa?

Posted by unicornbird > 2021-07-02 09:10 | Report Abuse

Some will play tricks like banning roadshows, or block university recruitment fair to stop MNC from competing direct with local insurers

Posted by wsb_investor > 2021-07-02 09:52 | Report Abuse

Allianz is now number 1 in GI, number 4 in Life (conventional). There are only 2 local conventional life insurers, HLA and Etiqa, both with foreign minority shareholder. The only unfavorable law, at least recently, is the 70% cap on foreign ownership, but seems like is being postponed again indefinitely.

Posted by unicornbird > 2021-07-02 10:22 | Report Abuse

wsb, thanks for sharing. for 70% cap on foreign ownership, this has been a very long issue scaring away MNC. But I think Najib has scrapped it.
Many local owned companies are 100% sold for foreigners, like Sepang Aircraft maintenance is sold 100% to Airbus. Proton sold 50% to Geely.

Looks like that 70% is no longer enforced?

Posted by unicornbird > 2021-07-02 10:24 | Report Abuse

Is Allianz kind of protected under any Malaysia EU free trade agreement?

Posted by wsb_investor > 2021-07-02 15:33 | Report Abuse

The foreign ownership thing being brought up again in 2017, so far only one company "negotiated" and "donated" to the government to get exemption. Many others did scramble up to find a local partner, as there are only a few with big enough size and good quality local partner. https://www.nst.com.my/business/2017/11/299822/epf-kwap-eye-foreign-insurers

Supposed someone upper level eventually stop the government to proceed with this, and now is silence again. The only victim so far, is that one company.

Recently, China, India and Indonesia all slowly open up to allow higher foreign ownership. It seems unlikely government will proceed with this anymore. There is this unique position for life insurance, which it is actually much better to allow for big MNC insurance, with good governance, to come in. Local insurance typically restricted with capability and with poorer governance, and hardly survive for a long time. Back then we did have a lot more local insurers (MAA, Uniasia, MCIS, Tahan), but now only HLA and Etiqa managed to sustain.
https://www.theedgemarkets.com/article/takeover-tahan-no-surprise-industry

Posted by observatory > 2021-07-02 23:00 | Report Abuse

I believe Allianz already complies with the 70% cap. It owns only 65% of the ordinary shares. Although it also owns 85% of ICPS, I suppose preference shares don't count since they have no voting right.

In fact I wonder if the preference share was designed with such restriction in mind. The preference share was issued in 2010 to repay a loan to Allianz SE extended to acquire a local insurer.

The non-compliance insurers are those without local listing. While Great Eastern has settled, I suppose AIA and Prudential are 100% owned by the entities listed in HK.

Just my guess.

Posted by wsb_investor > 2021-07-03 12:05 | Report Abuse

There are many secret undertable arrangement for AIA and Prudential.

AIA
https://www.insurancebusinessmag.com/asia/news/breaking-news/foreign-insurers-want-review-of-malaysias-ownership-rules-96114.aspx
http://lib.perdana.org.my/PLF/Digital_Content/Prominent_Leaders/Mahathir/News_1968-2004/1996-1998/1998aj/equity%20ear%20grace.pdf

Prudential
https://www.theedgemarkets.com/article/high-court-rules-favour-prudential-over-stake-malaysian-licensee

Posted by wsb_investor > 2021-07-05 11:51 | Report Abuse

https://paultan.org/2021/07/05/motor-insurance-claims-fraud-cost-rm1-billion-a-year-in-malaysia-fighting-corruption-is-a-lonely-road-allianz/