Posted by wsb_investor > 2023-05-29 10:33 | Report Abuse

Yes, just present value of distributable profit + net asset

Posted by wsb_investor > 2023-05-29 17:01 | Report Abuse

Restated YE22 profit higher 31% under IFRS17 basis (life only), total company level, higher 24%.

Posted by wsb_investor > 2023-05-29 17:09 | Report Abuse

For life, profit before tax lower to 96.5 from 131.5 (IFRS17 basis), Q1 2022 IFRS4 PBT = 67.7 (core profit = 100.7). No more core profit now under IFRS17.

Posted by wsb_investor > 2023-05-29 17:13 | Report Abuse

For insurance contracts issued, the Group has adopted the standard using the full retrospective approach for all currently modelled products in annual cohorts 2014 or later. For modelled products in annual cohorts prior to 2014, the modified retrospective approach will be applied.

Unlike Manulife, Allianz doesn't go for shortcut!

Posted by wsb_investor > 2023-05-29 17:16 | Report Abuse

Q1 CSM amortization (key source of profit) = 95mil, full year should be ~400mil. i.e. FY2023 number will be much higher than FY2022 (377.5 IFRS17 basis or 287.2 IFRS4 basis)

Posted by wsb_investor > 2023-05-29 17:26 | Report Abuse

Market share increases, but NBV drop due to paying more commission. PBT lower vs Q1 2022, it said due to claims, suspect is due to the release in claims reserve (set up during covid to defer profit) in 2022.

Posted by wsb_investor > 2023-05-29 17:29 | Report Abuse

CSM release rate, annualized 12.4%, much higher than what I expected, but spike in profit is lower than my expectation, was expecting +50%.

Now can wait for STMB's Q1 and its poor result due to focus on single premium product.

Posted by observatory > 2023-05-29 22:36 | Report Abuse

The new standard is quite a steep learning curve for me. Not just new concepts, but also have to learn how to compare against past standard!

Refer analyst presentation slide #7. Value of New Business (NBV) under MRFS4 is RM275m. Under MRFS 9/17 is RM300m.
I'm confused by the explanation "MFRS 9/17 view is before tax". So is the NBV of RM300m before or after tax?

Posted by wsb_investor > 2023-05-29 22:42 | Report Abuse

I believe the NBV previous is based on MCEV (post tax), and NBV now directly take from IFRS17 CSM (gross tax). However, RA is also source of profit.

NBV previously is on best estimate basis, but now is on 75th percentile. More accurate way is to compare NBV with NB CSM + RA.

Posted by observatory > 2023-05-29 22:45 | Report Abuse

Slide #9 shows, based on MRFS17, NBV declined YoY from RM77.6m (3M22) to RM70.1m (3M23)
However, slide #26 shows that ANP increased YoY from RM147.1m (3M22) to RM163.4m (3M23)
NBV margin has declined. Slide #24 explains it's "due mainly to increase in acquisition expenses."

However, slide #27 shows that ILP has grown by 18.5%, whereas traditional products contracted at -23.5%.
Given ILP is said to have higher margin, rightfully margin should have expanded isn't it? The acquistion expenses must have increased quite substantially?

Before the result, I was expecting an increase in NBV since GE Malaysia and AIA Malaysia both registered NBV growth in 1Q23.

Posted by observatory > 2023-05-29 22:49 | Report Abuse

Just to be clear, you mean the NBV presented now is CSM, which is gross tax?

And to get the old NBV definition, we have to sum up New Business CSM + New Business RA, and deduct the tax?

Where can we get the NB CSM and RA info?

Posted by observatory > 2023-05-29 22:54 | Report Abuse

But one bright spot is they annouce DPS of 31.5sen (37.8 sen for ICPS). Didn't expect that in first quarter.
Earlier management mentions positive dividend trajectory in the annual report.
While it takes time to learn all these new concepts, one thing very simple and real is dividend.
I just hope that higher dividend does not mean NBV stops growing.

Posted by wsb_investor > 2023-05-29 22:54 | Report Abuse

Yup, acq exp definitely increases.

Wait for HY23 financial statement for details breakdown.

Posted by observatory > 2023-05-29 23:00 | Report Abuse

For 3M23, Group PBT is RM232.3m, where GI contributes RM139.8m, and life contributes RM96.5m (slide #9).
CSM release for 3M23 is RM95m (slide 13)
Given that CSM is pre-tax, it should be compared against (IFRS17) PBT right?

Of the RM95m CSM release, any idea how much is from life, and how much is from GI?
What are the other sources of PBT? Investment return?

Posted by observatory > 2023-05-29 23:07 | Report Abuse

OK, slide 29 shows that for life, CSM release is RM95m. So CSM release is purely for life?

Posted by observatory > 2023-05-30 11:12 | Report Abuse

Why are there no more core profits under IFRS17? Are all fair value gains/ losses reported under OCI now?

Posted by wsb_investor > 2023-05-30 11:39 | Report Abuse

Core profit exists previously because market movement will impact P/L a lot under IFRS4. Now it will not impact that much (partly will absorb by CSM, for VFA business), and anyone can easily split out the impact (insurance service results/investment service results) to exclude any market movement impact.

Posted by observatory > 2023-05-30 22:02 | Report Abuse

In the latest report, RHB put the valuation at 0.9X P/B for general insurance + 0.9X EV for life.
RHB quoted RM3.6b for EV based on management guidance, and put the GI equity value at RM2,405m.
Divided by 346mil shares on fully diluted basis.

Kenanga values it at 0.7X P/B for GI + 0.8X for EV.
Kenanga assigns RM3,516.2m to EV (not sure how it could be so precise), and GI book value is RM3404.9m (which is very different from RHB)

Posted by wsb_investor > 2023-05-30 22:31 | Report Abuse

EV calculation will not be a catalyst to Allianz, since EV doesn't change under IFRS17 (some impacts from IFRS9 but is not significant). EV also been there for a long time, and no one seems to care or understand.

Immediate catalyst will be Takaful shareholder run away and invest in Allianz (hopefully), and if someone noticed Allianz growing dividend. Immediate threat will be upcoming RBC2 in 2024 (another regulatory change, unknown impact).

Allianz products are still selling very well, despite lower NBV. Not sure with their medical portfolio now, hopefully another round of repricing to bump up the EV / future profit.

Posted by observatory > 2023-05-30 23:20 | Report Abuse

I agree changes in EV will not be a share price driver. GE is also priced below EV.
From the past experience of AIA, NBV growth is. I hope it can regain NBV growth.

I'm not sure how much Takaful's profit decline under IFRS17 has been priced in given the share price has almost halved from 2019 peak.
Besides, Takaful revenue growth has been impressive, including its general takaful. Allianz presentaiton shows that while in 3M23 AGIC GWP grew at 4.5%, the Takaful industry grew at 19.9%. While life insurance may be safe from takaful, I wonder whether it has become a trend in GI where Muslim clients switching to takaful.
The profile of Takaful retail shareholders could also be different from Allianz. But EPF is important shareholders in both. I'm puzzled why PEF started to dispose Allianz as recently as last week.

In my view, increased dividend is certainly an attraction for Allianz, and it has been flagged so in the annual report. It provides greater certainly to investors who value stable income over capital appreciation.

Posted by observatory > 2023-05-31 16:51 | Report Abuse

Share price continued to inch up today. All analyst reports are positive. My guess is the dividend in Q1 has contributed to buying interest. It would be interesting to see if EPF will buy again.

Posted by observatory > 2023-05-31 17:30 | Report Abuse

Refer Takaful QR.
Shareholders' equity as of 2022 was RM1,986m under MFRS4, restated to RM1,347m under MRFS 17, i.e. 32% decline.
However, by 31 Mar 2023, shareholders' equity has increased to RM1,469m. A 9% increase in one quarter! The growth is impressive.

Posted by troy88 > 2023-06-01 10:23 | Report Abuse

Steady and resilient in a bear market

Posted by wsb_investor > 2023-06-01 10:46 | Report Abuse

almost all time high again

Posted by kk7198 > 2023-06-03 10:08 | Report Abuse

Good share to keep in the vault

Posted by unicornbird > 2023-06-04 14:31 | Report Abuse

Anyone can share analyst report, that compare the competitors of Allianz? I want to buy more, but worried about the growth potential of allianz, as it's a foreign company

Posted by speakup > 2023-06-04 15:17 | Report Abuse

Yeah cos foreign funds love to sell sell sell

Posted by wsb_investor > 2023-06-04 16:20 | Report Abuse

Growth potential of insurance depends on regulation and economic growth. Malaysia economic growth is almost non existent since 2018, but we have great regulation on insurance.

Posted by observatory > 2023-06-05 00:59 | Report Abuse

The takaful industry has been growing faster than conventional insurance. I believe takaful players will continue to grow faster in the next few years. Allianz does not have a takaful license.
However Allianz is a good company with growing dividend and valuation not expensive. Being a foreign controlled company also has the advantage that parent in Germany has the same interest as us minorities to repatriate excess cash for better opportunities elsewhere through dividends.

Posted by unicornbird > 2023-06-05 08:45 | Report Abuse

obs, could you please share why takaful has growth potential? is it because most people are not insured?

Posted by observatory > 2023-06-05 10:28 | Report Abuse

The government promotes Islamic finance. The growth potential can be inferred from historical growth rate. Allianz quarterly presentations contain general insurance vs general takaful growth data.

Posted by observatory > 2023-06-05 10:30 | Report Abuse

Some Muslim customers prefer Syariah compliant products

Posted by unicornbird > 2023-06-05 12:37 | Report Abuse

would you buy Takaful more, or Allianz?

Posted by speakup > 2023-06-05 13:15 | Report Abuse

FF suka orang puteh shares like Nestle, Allianz, United Plantation. FF ingat orang putih better management than locals

Posted by speakup > 2023-06-05 13:15 | Report Abuse

Orang putih shares in bursa all big premium in bursa

Posted by unicornbird > 2023-06-05 14:11 | Report Abuse

FF themselves are orang putih

Posted by speakup > 2023-06-05 14:12 | Report Abuse

Exactly

Posted by unicornbird > 2023-06-06 08:11 | Report Abuse

orang putih print money. their rate of return at their home is low. so they can use their printed money to buy our thing here

Posted by unicornbird > 2023-06-06 08:12 | Report Abuse

the fact is their management is really better than ours. we remain at the friend-friend thinking. too much personal relationship in business

Posted by unicornbird > 2023-06-06 08:13 | Report Abuse

Is Allianz popular? I seldom see their ads in malaysia. Mostly see great eastern & prudential. Do they sell to common people? or mainly target the corporate side?

Posted by speakup > 2023-06-06 09:37 | Report Abuse

Only popular with FF

Posted by wsb_investor > 2023-06-06 09:45 | Report Abuse

Allianz ILP is popular (and cheaper, on purpose to gain market share previously). In fact, if just look at ILP alone, top 3 players should be AIA, Prudential, Allianz. You can actually get a sense of the "size" of ILP business by summing up all their ILP fund size, is public info.

Posted by wsb_investor > 2023-06-06 10:01 | Report Abuse

AIA EQUITY PLUS FUND - 3004mil
PRULink Equity Fund - 7612mil
Allianz Life Master Equity Fund - 1237mil

Posted by wsb_investor > 2023-06-06 10:07 | Report Abuse

Etiqa GROWTH FUND - 384mil
GROWTH FUND - 1004.5mil

Previously, there will always be a default fund (typically local equity), which agent will just set to 100% for any new customers. Only recently, choices of funds increased, with more "fancy" funds to select, especially for Pru and AIA.

Posted by wsb_investor > 2023-06-06 10:15 | Report Abuse

Insurance management is very unlike banking. For banking, local players can shine easily, and foreign banks are not anyhow better than local banks in Malaysia. Insurance is very different. Many local insurers failed 20 years ago, many Indo/Vietnam/India insurers still fail today, even local GI insurer in Taiwan province almost bankrupt due to covid insurance.

Of course not all foreign insurers are equal, it depends on whether the regional office has any intention to really invest in Malaysia market. You can guess it from the parent company report. E.g. in AIA/Pru, Malaysia is always being mentioned. Allianz occasionally will report Malaysia market. Some other Switzerland/Canada/US/Japan based insurers, Malaysia is never really their focus.

Posted by unicornbird > 2023-06-06 16:56 | Report Abuse

wsb, can share where you get the fund size data?
how about GE?

Posted by wsb_investor > 2023-06-06 17:56 | Report Abuse

Actually can look for "Net asset value attributable to unitholders" in financial statement
Prudential YE2022, 22.0bil, up from 21.1bil (+0.9bil, +4.3%)
GE YE2022, 12.6bil, up from 11.7bil (+0.9bil, +7.2%)
AIA HY2022, 12.5bil, up from 12.5bil (no change)
HLA HY2022, 4.83bil, up from 4.35bil (+0.5bil, +11%)
Allianz YE2022, 3.2bil, up from 2.7bil (+0.5bil, +18.5%)
Etiqa YE2022, 2.44bil, up from 2.37bil (+0.07bil, +2.95%)

Surprised, thought GE is half dead on ILP and AIA is promising, but seems like reverse.
Also thought Etiqa is faster growing vs HLA, but it is reverse as well.
But clear winner (growth) is still Allianz.

Posted by wsb_investor > 2023-06-06 18:05 | Report Abuse

Anyways, need to have basic understanding on ILP to judge Allianz ILP fund size.
ILP fund size subject to market movement, if equity price up 10%, then fund size will +10% as well.
Policyholder can withdraw from ILP fund.
Policyholder can stop paying premium for ILP policies.
Allocation into ILP is very low in early years, and increasing after that. (e.g. only ~60% of premium paid will invest into unit funds in Y1, but 100% premium will invest into unit funds in Y11), can google for minimum allocation rate (MAR).
In reality, you will still have COI deduction (and other deduction), after the allocation, say if COI is ~30% premium at Y1, and ~40% premium at Y11 (COI is increasing yearly), net growth in unit fund is ~30% premium in Y1 and ~60% premium in Y11).
Investment margin on unit fund is ~1%-1.2% (Insurers charge policyholder ~1.5% management fee, but net incurred cost is ~0.3%). 3.2bil unit fund converts to 32mil investment margin yearly (and growing).

Posted by wsb_investor > 2023-06-06 18:19 | Report Abuse

On the other hands, despite near 220mil profit from investment margin, Prudential annual profit is only 448mil (2022), 739mil (2021), 545mil (2020). Insurance margin (say average of 3 years, minus 220mil = 357mil) for Prudential is barely as much as Allianz (core profit 325mil in 2022, 267mil in 2021), despite much bigger block of business.

Posted by wsb_investor > 2023-06-06 18:20 | Report Abuse

Of course, again IFRS4 profit is quite meaningless, since you cant see the breakdown.