ALLIANZ MALAYSIA BHD

KLSE (MYR): ALLIANZ (1163)

You're accessing 15 mins delay data. Turn on live stream now to enjoy real-time data!

Last Price

12.88

Today's Change

+0.02 (0.16%)

Day's Change

12.80 - 12.88

Trading Volume

1,900

Price Target

A price target is an analyst's projection of a share's future price. 

Average Target Price, Price Call and Upside/Downside here are derived from Price Targets in the past 6 months.

Last Price

12.88

Avg Target Price

17.83

Upside/Downside

+4.95 (38.43%)

Price Call

0

SELL

0

HOLD

5

BUY

Date Open Price Target Price Upside/Downside Price Call Firm View Action
Discussions
7 people like this. Showing 50 of 1,075 comments

observatory

@wsb_investor, it's the estimate from TA Securities.

https://www.thestar.com.my/business/business-news/2022/01/14/ta-securi...

2022-01-24 17:06

gemfinder

Sold 13.06 today open. Add back 58 sen n 63sen dividen. Stil gain rm200. Consider lucky

2022-01-27 21:57

wsb_investor

Media reports in India have projected LIC's (India's largest insurer) market valuation at around four times the embedded value. https://www.reuters.com/world/india/exclusive-india-lics-embedded-valu...

2022-02-06 20:26

observatory

Foreign investors love India. Sensex was below 3,000 in 1998 after Asian Financial Crisis. By 2008, just before the GFC, it breached 20k. Later from a low of 9k in 2009 it went over 60k late last year. Current PE ratio is 30 times.

While the Indian state owned insurer may be sold at 4 times Imbedded Value, the other state owned insurer China Life's price to EV is less than 0.3 time (EV per share HKD48.7, share price HKD13.9)

Chinese insurers' net worth may be doubtful. But are the Indian insurer so much better?

2022-02-06 22:57

observatory

Besides the concern about asset quality and exposure to property sector, Chinese life insurers have been undergoing a painful process of streamlining their agents. The industry has cut the number of agents from over 9 million to current 4 million.

During the boom time, insurers enjoyed new policies bought by new agents, and their families and close friends who support them. But the quality was poor. Now the cycle has gone into reverse.

The situation is probably not very different from Malaysia. In the past many bought insurance to "support" good friends or relatives.

I recall ALIM drastically cut its agency size a few years ago.

Is this a typical cycle for insurers, from unchecked growth and cut them down later?

2022-02-06 23:02

observatory

Don't be taken aback by the 4Q basic EPS of only 15.3 sen.

The basic EPS is derived after deducting the once a year preference dividend (refer Note 12a). Basic EPS always appears low during 4Q.

https://www.bursamalaysia.com/market_information/announcements/company...

2022-02-22 20:09

observatory

The flood related claims seem to have limited impact on the General Insurance business. GI profit before tax in 4Q21 is RM114.5m (4Q20 RM130.5m, 3Q21 RM115.1m)

Earlier an analyst put the flood gross and net exposure at RM300m and RM50m respectively. Perhaps the impact was much smaller than expected.

For life, ANP resumes its growth (slide 23). There is a heavy concentration of investment linked policies with protection riders (slide 24, 25), which is said to be more profitable. But I have no idea how profitable it is.

Slide 21 mentions "ANP increased by 32.9% ... out pacing industry growth of 13.1%. Market share 12M2021 increased to 9.0% (12M2020: 7.7%)"

12M 21 NBV is RM275.2m (12M 20 RM239m). It has been increasing at a rate of about RM60m to RM80m every quarter for the past 6 quarters.

2022-02-22 20:25

Papayashot

It seems that NBV has been hovering around 60 mil for 3 quarters already. Q1 2021 NBV ~ 83 mil.. Wondering how to calculate NBV, is it an indicator on the profit margin of the policy sold?

2022-02-22 22:45

observatory

I got this from Internet:

In life insurance, new business value is the present value of the future profits associated with new business written during the year.

It's calculated by the insurer. I have no idea how it's worked out. I just take their numbers.

2022-02-22 23:03

wsb_investor

In slide 21, ANP increased 32.9% but in slide 23, ANP increased 29.2%. NBV increased 15.1%, lower than ANP, implying lower margin, but in slide 21, Allianz still mentioned higher margin. ILP sales in Q4 2021 (and overall 2021) is definitely great sign. Profit from this portion will only slowly emerge in later years.

2022-02-23 09:13

wsb_investor

Up to Q3 2021, the NBV margin is 44%, but in Q4 2021 itself, NBV margin drops to 30.6%. Full year NBV margin is 40%. Seems like a big campaign in Q4, but is typically for all insurers.

2022-02-23 09:24

Papayashot

Hi web_investor, may I know how to calculate NBV margin?

2022-02-23 09:50

wsb_investor

Just PV of EV profit, with a defined earned rate and discount rate (assumptions used can be diff with IFRS profit). In layman term, can just generalized to see as PV future profit.

2022-02-23 10:04

observatory

@wsb_investor,

This is from Affin

"SOTP valuation of 1x P/BV on the General operations’ 2023E BV and assuming a 20% reduction in the EV of RM3bn of its Life business (with transition to MFRS 17)."

May I confirm that while MFRS 17 may shuffle annual profits to earlier/ later years, it should not have any impact on EV, which is the present value of all future profits?

Unless the underlying assumptions to calculate the EV has changed...

2022-02-23 16:35

wsb_investor

EV is EV, IFRS is IFRS, unrelated. Equity (under IFRS) will change, but will not be right to look at ROE anyways, due to new CSM component.

2022-02-23 17:58

Papayashot

Hi wsb_investor, under ifrs17, will the reported equity will be higher for Allianz, due to the massive ILP products?

2022-02-23 18:30

wsb_investor

why need to care if equity is higher or not? equity higher = lower future profit, equity lower = higher future profit. only thing that certain is, IFRS profit (life) 100% will be much higher vs right now.

2022-02-23 18:50

Papayashot

Hi wsb_investor, did you mean the key is to have more liability (less equity) so that more profit can be generated? Something to do with contract liability?

2022-02-23 23:27

DickyMe3

"wsb_investor

why need to care if equity is higher or not? equity higher = lower future profit, equity lower = higher future profit. only thing that certain is, IFRS profit (life) 100% will be much higher vs right now.

1 week ago"
=============================

School boy analysis.

2022-03-08 16:32

sheldon

Less equity means less mouths to feed. Imagine siblings dropping dead. The survivors will have a bigger slice of the inherited property pie haha

2022-03-17 10:40

unicornbird

is Allianz the best insurer to buy for long term? i have bought LPI already. looking to add another one

2022-03-25 10:24

Kitty Kitty

Insurance business generally are stable as their business always considered a form of necessity nowadays .. unlike the old days ..

2 months ago

observatory

India's LIC IPO is priced at 1.1 times EV, significantly less than the 4 times EV mentioned by media earlier.

https://www.reuters.com/business/insurance-giant-lics-27-bln-ipo-india...

2 months ago

DickyMe

Post removed.Why?

2 months ago

Kitty Kitty

EPF has been buying non stop since the first MCO back in March 2020. I wonder how much has EPF raised their stake now and what's the agenda behind.

1 month ago

observatory

According to 1Q22 presentation,
Group Operating Revenue +6.3%
Group Gross Written Premium +9.5%
Group core profit before tax RM184.8m (versus RM130.7m in 3M21)

Both GI and life have recorded increases.

While the numbers look good, there are areas of concern in Life business.
New business value was RM59.1 million, decreased by 28.5%
This was mainly due to lower sales from agency, where agency ANP has decreased by 26.9%.

While current year profit has increased, it's the growth in NBV that will deliver the growth of future profits for life.

Is the decline in agency sales a temporary setback?

What is your view on the results?

https://www.allianz.com.my/content/dam/onemarketing/azmb/wwwallianzcom...

1 month ago

unicornbird

obs, do you have friends in insurance industry to check on? sometimes competitor launch promo, which will eat up Allianz new sales.

1 month ago

observatory

It's an industry wide decline. In fact, according to the presentation, "Market share 3M 2022 increased to 9.3% (3M 2021: 8.8%)."

I'm not sure why the industry is not doing well despite face to face meetings are returning to normal.

1 month ago

wsb_investor

Q1 always a slow period for insurance sales, with exception of Q1 2021 due to 2020 lockdown.

1 month ago

observatory

@wsb_investor, thanks for the explanation.

By the way did you read last week weekend edition of The Edge? There was an article about Great Eastern. According to Bloomberg data it quoted, currently market prices this leading life insurer at only 0.53 times price to EV. Price to book is slightly below 1x.

Do other life insurers in this region also suffer from low valuation? What might be the reason?

1 month ago

unicornbird

wsb, could you please share why Q1 is low sales? is it because agents are on holiday mood, so cannot perform after Xmas holiday

1 month ago

wsb_investor

Q4 always come with great promotion for all insurers to hit their kpi + Q1 is also Cny period.

1 month ago

unicornbird

thanks wsb for sharing the good info

1 month ago

meowmiao

why Allianz good results but price stays? wondering why... and good dividend too

1 month ago

PunTatBerSiul

Post removed.Why?

1 month ago

patrico8

Interim dividend so good.

1 week ago

wsb_investor

The new CFO is an actuary with very strong technical skill and involved in IFRS17 previously. Impressive and surprised why this angmo suddenly relocating to KL.

3 days ago

observatory

@wsb_investor, thanks for sharing . The top posts at Allianz Malaysia have undergone rotation recently, typical of MNCs. What's your view on the new leadership under Zakri, Sean and Charles?

3 days ago

wsb_investor

Not interested on Sean, but the CFO lineup is really interesting. Did some checks, and apparently right now, GE, AIA, Prudential, Allianz and HLA, all CFO are qualified actuaries. The ex Allianz CFO (now Allianz Life CEO) is just a rather normal accountant.

2 days ago

observatory

Does it really make a difference in the business? Wouldn't an accountant who has been working in the insurance sector for many years would have picked up sufficient actuarial knowledge?

2 days ago

wsb_investor

There are many ways to present results nicely under IFRS17 due to the principle based nature. There are also ways to design products, that is beneficial under IFRS17. Of course it won't be the CFO that do these ground works, but a CFO that can really understand, will always lean towards a better, actuarial sound decision.

2 days ago

observatory

What do you mean by product design that is beneficial under IFRS17?
By benefit do you mean greater recognition of profits in the earlier years, but at the expense of lesser profit recognition in the later years? That is more like a matter of presentation.
Any example?

2 days ago

wsb_investor

There are products that might appear to be loss making under IFRS17 reporting (risk neutral basis), but profitable under real world basis. For example NPAR endowment, Participating products (or in general, saving products).

Certain products will also have high profit recognition in earlier years, despite negative net cashflows, for example investment linked products. There are also products with slow profit recognition, but high positive net cashflows, e.g. MRTA.

It is obviously not easy to maintain a good mix (even pre IFRS17), and to meet distributors' requirements, market competitiveness etc. It is just going to get harder and more complex.

2 days ago

observatory

Am I right that from shareholders stand point, whether profits are recognized in early or later years does not change the overall profitability? The only challenge is year to year reported profit could be more volatile and obscure, making it difficult if shareholders who value the shares based on reported profit (since Allianz doesn't disclose its EV)

In what way are distributors affected? Isn't profit recognition concern only Allianz and its shareholders, and maybe the tax authorities? Do you mean the distributors are incentivized based on the Allianz's reported annual profit, such that distributors' incentives could be affected if profit recognitions are pushed out to the later years?

1 day ago

wsb_investor

In general IFRS17 will make profit emerging more stable and less volatile, but there might be exceptional case on certain product type. Yes, profit over the lifetime will be the same, just timing.

Distributors depend on the commission for living, so say if Allianz stop selling less profitable saving product (despite lower comm%, but bigger premium size, and higher absolute commission), agents will not happy. There are a couple of time where agents in Malaysia protested against the insurance companies due to commission related issue. In some extreme cases, some CEOs stepped down due to this.

1 day ago

observatory

I see. There seems to be a lot more considerations than profit alone when insurance companies push their products.

After reading you comment, I checked out the ISM yearbook for new policies issued in 2021. I found Allianz underwrote a lot of endowment policies than whole life policies. However the market leader Great Eastern has slightly more whole life than endowment. Is there a reason for their different emphasis?

The other point is, as you've mentioned in the past, Allianz sells a lot of investment-linked products which offers better margin. This seems to be a common industry practice. For the entire industry, the premium for new ILP was RM6.6 billion versus RM2.2 billion for traditional products.

In fact companies like AIA, Prudential and even Etiqa sold a much higher proportion of ILP. What is holding Allianz back from selling even more high margin ILPs like its peers? Does it have to do with agent commission factor too?

23 hours ago

wsb_investor

Dont think the classification of whole life/endowment is very straight forward. ILP can be both, and for Allianz, its product strategy previously was to design ILP that only last until age 70 (hence lower price), vs other competitors that design ILP that can last until age 100. Of course right now, regulation changed again and product strategy is slightly different. You can see from ISM yearbook, page 99, AIA ILP almost all classified as whole life, while Allianz ILP almost all classified as endowment.

Not sure where you see Etiqa sold higher proportion of ILP than Allianz. My impression is that Allianz has the highest proportion of ILP (within its inforce policies) among all insurers in Malaysia. Other insurers due to legacy issue, has a big block of traditional business (within inforce business), especially GE and AIA, despite trying to sell more ILP now.

2 hours ago

observatory

Yeah you're right. Almost all of AIA ILP is classified under whole life, whereas Allianz is under endowment. With your explanation it makes sense now.

When I mentioned Etiqa Life has a high proportion of ILP, I refer to page 98-99 (section on new policies issued - individual). I focus only on new policies issued in 2021.
Under the sub-heading of total (for current year), under the Investment-Linked column, total premium = RM175,844,735 (single premiums) + RM520,438,603 (annual premiums) = RM696,283,338.
Under the Ordinary Life column (I suppose ordinary life means traditional products, right?), total premium = RM9,146,117 (single premium) + RM82,263,788 = RM91,409,905.
This is how I've arrived at the conclusion that Etiqa also sells a very high proportion of new ILP policies (RM696 million premium) as opposed to traditional policies (just RM91m premium)

I also check the section "Policies In Force at End of Year - Individual" under page 122-123.
For Allianz Life, the annual premium under "Ordinary Life" is RM1,528,13,953, versus RM2,070,966,065 under "Investment-Linked". Yes, the proportion of Allianz ILP (within in force policies) is higher, but not very much higher.
On the other hand, take Prudential for example. Annual premium under "Ordinary Life" is RM2,746,671,221. Under "Investment-Linked" is RM7,515,202,224. Prudential ILP (within in force policies) is almost triple the size of its ordinary life!
Even HLA ILP is more than double the size of its ordinary life.
It seems that the high proportion ILP is quite common across insurers, where some have a lot higher concentration of ILP.
Have I interpreted the data correctly?

1 hour ago

Post a Comment