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?

Posted by moven00 > 2023-12-02 14:44 | Report Abuse

Lagi Sekali….. ✅💪🏻

Posted by wsb_investor > 2023-12-18 11:37 | Report Abuse

Allianz on viagra again

Posted by myongcc5 > 2023-12-29 17:05 | Report Abuse

HAPPY NEW YEAR!
Fellow ALLIANZ Holders

Posted by ongkkh > 2024-01-10 07:02 | Report Abuse

declare div d, nobody mentioned it?

Posted by troy88 > 2024-01-10 10:24 | Report Abuse

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

Posted by wsb_investor > 2024-01-10 10:50 | Report Abuse

dividend payment before CNY, huat ar

Posted by wsb_investor > 2024-01-10 10:56 | 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 > 2024-01-10 12:09 | 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 > 2024-01-10 14:15 | 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 > 2024-01-10 14:20 | 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 > 2024-01-10 16:11 | Report Abuse

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

Posted by troy88 > 2024-01-11 09:51 | Report Abuse

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

Posted by sheldon > 2024-01-12 17:04 | Report Abuse

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

Posted by yielder > 2024-01-13 13:56 | 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 > 2024-01-15 16:04 | 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 > 2024-01-15 16:13 | 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.
https://www.prudential.com.my/export/sites/prudential-pamb/.galleries/pdf/en/listing/PRUMillion-Med-COI.pdf

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 > 2024-01-15 16:16 | 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.

Posted by sheldon > 2024-01-15 22:02 | 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 > 2024-01-15 23:37 | 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.

Posted by sheldon > 2024-01-16 09:20 | 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 > 2024-01-16 09:59 | 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 wsb_investor > 2024-01-16 17:35 | Report Abuse

https://money.udn.com/money/story/123742/7696251

Posted by observatory > 2024-01-16 18:26 | 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 > 2024-01-16 20:58 | Report Abuse

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

Posted by observatory > 2024-01-17 23:29 | Report Abuse

What is the implication for AGIC if it eventually win or lose its case against MyCC?
https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3415175

Posted by yielder > 2024-01-27 20:08 | 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.

Posted by yielder > 2024-01-27 20:10 | 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 > 2024-01-28 01:07 | 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 > 2 months 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.

Posted by yielder > 2 months 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

Posted by LHT4216148 > 1 month ago | Report Abuse

sorry i just back to stock market , this stock last time suddenly goes so low now come back up .... can i go in ? Will it drop to RM14 or RM17 again ?

Posted by wsb_investor > 1 month ago | Report Abuse

There is a new guideline on medical insurance by BNM yesterday. BNM push for coinsurance (lower premium, higher margin), and mandate that future reprice premium cannot higher than initial profit margin. BNM also push for a centralized data platform for medical claims.

Posted by yielder > 1 month ago | Report Abuse

Is Allianz the largest insurer, for medical & investment linked product?

Posted by wsb_investor > 1 month ago | Report Abuse

No, should be just 4th (by NB volume), 5th by IF volume (HLA 4th). Key difference between HLA and Allianz Life is the proportion of investment linked business (most profitable) over total business.

Posted by yielder > 1 month ago | Report Abuse

Who are the top 3 for new business & also inforce?

Posted by PureBULL ... > 1 month ago | Report Abuse

ALLIANZ

ytlp is still the # 1 stock on klse now.
n is followed closely by Utdplt.
n the next up n coming could be Allianz.
its just starting anew...

https://www.tradingview.com/x/M8hpTVvd/

Posted by troy88 > 3 weeks ago | Report Abuse

Very steady. For serious investors..

Posted by observatory > 2 weeks ago | Report Abuse

@wsb_investor, good sharing on the medical and health insurance policy document.

Before this new policy, are insurers already allowed to market products with co-payment feature? However, as BNM now mandates 5% co-payment (clause 9.4) in new products, it will prevent unhealthy competitions as insurers can no longer entice customers with 100% claim products. By discouraging avoidable claims BNM hopes to lower future premiums.

Similarly, commission limits (Clause 11.1) may have the effect of preventing new insurers from gaining market shares through aggressive sales and marketing.

Therefore the regulations are beneficial to existing players as they discourage cutthroat competitions.

Is this the right understanding?

Posted by observatory > 2 weeks ago | Report Abuse

Clause 8.20(a) mentions “The loading shall not exceed 25% of the premium/takaful contribution or COI/tabarru’ rate prior to the claims”.

Does it mean if COI (cost of insurance) including expected claims, management fee, and commissions add up to RM100, the maximum chargeable premium is RM125? In other words, profit before tax margin is capped at 20%.

The effect is on one hand BNM discourage unhealthy competitions, but on the other hand it also prevents insurers from reaping excessive profit.

However, PBT margin capped at 20%, or net margin capped at 15% should be acceptable as historically ALIM PBT margin is in the range of 5% to 10% only?

Posted by observatory > 2 weeks ago | Report Abuse

Central medical claims data platform (Clause 12.2) – Does it benefit insurance IT service providers like Rexit?

Coincidentally, Rexit share price has a run-up right after the policy is published on 29-Feb.

Posted by troy88 > 2 weeks ago | Report Abuse

Allianz is the insurance king of bursa!

Posted by sheldon > 2 weeks ago | Report Abuse

The run up of the price is perhaps a nice big dividend is in the offing?