Over the past 10 years, Allianz (life) is still on rapid growing phase, where capital required is much more intensive, vs its yearly profit. Obviously as of now, as the 4th largest life insurer, it will no longer have this issue. AFAIK, Pru and AIA will pay maximum amount of dividend that is allowed under RBC framework yearly.

*Dividend is not depending on IFRS17 profit, even though profit is expected to spike under IFRS17, dividend will still still be in similar range, 85sen + 10-20% growth yearly.
**IFRS17 implementation cost is expensive (easily >10mil/year, over ~200mil PBT), but it will go away in 2023.

Zurich Insurance Group AG has emerged as the frontrunner to buy a majority stake in the Malaysian insurance business of US insurer MetLife Inc and Kuala Lumpur-listed AMMB Holdings Bhd, according to people with knowledge of the matter.

A deal could value AmMetLife Insurance Bhd at about US$400 million and would need approval from the Malaysian central bank, said the people, who asked not to be identified as the process is private. Singaporean insurer Great Eastern Holdings Ltd also remains interested in buying the roughly 70% stake, the people said.


Allianz size (from financial statement) is ~3x-4x of AmMetLife, but reputation wise and future new business sales are much more promising vs AmMetLife. 1.7bil MYR * 3 is already higher than Allianz market cap (with GI).

1 year ago FBMKLCI 1514, Allianz RM12, today KLCI 1478, Allianz RM13.74, with RM0.79 dividend.

NBV cannot compare with 2021 (sales in Q12021 very high because sales in 2020 very low). NBV 9M22 vs 9M19 +25.6%, annualized ~8%.

AmInvest report: The group’s stronger focus in investment-linked (IL) products with protection riders will put its life insurance business to be less significantly impacted by FRS 17, which will be implemented on 1 Jan 2023.
(wrong statement, IL is positively impacted under IFRS17)

Upon the adoption of FRS 17, the negative revaluation on the group’s life insurance investments, which has dampened the group’s net profit in FY21 and FY22, will no longer have any P&L impact from FY23F
(correct, to some extent)

Allianz (Global) IFRS17 presentation, similar level of operating profit vs current IFRS. But not very representative, Prudential & AIA (Asia focus, more on protection) IFRS17 presentation will be more representative vs Malaysia business.

https://www.allianz.com/content/dam/onemarketing/azcom/Allianz_com/investor-relations/en/conferences/ifrs/221122-ifrs9-17-allianz.pdf

Takaful limit up tomorrow?

https://www.lowyat.net/2022/289084/daixin-airasia-hack-databreach/

BAT limit up on Monday

#AIAGroup (Hong Kong) Update on #IFRS17 Adoption
"...the adoption of these accounting standards does not affect the underlying economics of our business with no material changes expected to the Group’s VONB, embedded value, solvency, capital, cash generation and the established prudent, sustainable and progressive dividend policy.

Operating profit after tax (OPAT) and shareholders’ allocated equity will remain the Group’s key IFRS performance indicators following adoption of the new standards. Our preparation for adoption is on track and we intend to provide a further update on the 2022 full year position in our annual results and the Group’s full restated consolidated financial statements for 2022 in the second quarter of 2023, prior to announcing the 2023 interim results.

For clarity, the adoption of IFRS 17 will resolve a large part of the non-economic accounting mismatch that is created between assets and liabilities in the Group’s consolidated financial statements under IFRS 4. In particular, the adoption of IFRS 9 and 17 will eliminate US$1.4 billion of the US$1.552 billion negative non-economic fair value movements on interest rate derivative financial instruments included within the net profit reported in the 2022 interim results. The Group uses these derivative financial instruments for risk management purposes. "

KUALA LUMPUR (Oct 31): Tune Protect Bhd said its wholly-owned subsidiary Tune Protect Ventures Sdn Bhd (TPV) has received conditional approval from Bank Negara Malaysia (BNM) to participate in the Financial Technology Regulatory Sandbox.

This will allow TPV to test a digital life insurance business for the Malaysian market in the Sandbox for a period of 12 months from the date of meeting certain conditions set out by BNM, the group said.

The Sandbox environment, it said, will allow TPV to innovate and offer a differentiated value proposition to the unserved and underserved communities, in line with its aspiration of providing simple and affordable pure life and health protection, particularly for this market segment.

TPV will leverage technology to simplify the process of buying, self-service and claims for customers, and is expected to introduce its first proposition in the coming weeks, upon meeting BNM’s conditions, said Tune Protect in a statement.

Its chief executive officer Rohit Nambiar said the group had 18 months ago, set in motion a plan to establish a bolt-on business that leverages the strong engagement it had with Gen Z, millennials and small and medium enterprise (SME) customers.

“This business idea stems from our fundamental belief that these segments are under-penetrated, under-insured and traditional forms of distribution has not worked to reach them. We believe they are now more open to buying simple life protection solutions, above and beyond their lifestyle; health, and SME package solutions from us.

“As a Malaysian homegrown digital insurer, we believe we can target them with a digital-first approach on a Sandbox mode (Test and Learn), where one can buy all day-to-day retail insurance solutions, service or claim through an app or website. The next few weeks will be exciting for us, as we will be rolling out our solutions and we can’t wait to show you what and how,” Rohit said.

TPV principal officer Koot Chiew Ling said the company is going back to the fundamentals of insurance, focusing on pure life and health protection.

“We are excited to showcase our flagship product, which will be a first of its kind on our shores. Our first proposition will be for SMEs and their employees. Being a startup and new, we will also be bringing about new technology and end-to-end digitisation,” Koot added.

Tune Protect’s share price closed up half a sen or 1.89% at 27 sen on Monday (Oct 31), giving the group a market capitalisation of RM203 million.

Tunepro has free cashflows, but fail to generate much profit from it. It is just so doomed.

Same shit speech about illicit cigarettes this year in budget

April 2020: 5.32%
Nov 2020: 5.539%
Dec 2021: 6.46%
Sep 2022: 7.25%
~2% increase in holding, total value ~47mil (is relatively nothing if comparing with EPF size)

52 weeks high now, despite a poor market sentiment, thanks to EPF.

（吉隆坡28日讯）据知情人士透露，美国联邦航空管理局（FAA）将把大马的航空安全恢复为第一级；预计美国当局将在月杪前就此事发表声明。

（吉隆坡28日讯）据知情人士透露，美国联邦航空管理局（FAA）将把大马的航空安全恢复为第一级；预计美国当局将在月杪前就此事发表声明。

Japan and Taiwan province reopen soon. Good for AAX, but even better for KLIA2.

That is a very general statement. Under IFRS17, there are 2 key measurement models (VFA/GMM). Assets hold can also further split into "assets backing liabilities" and surplus assets (excess assets above liabilities, mainly to support required capital). Only assets backing VFA liabilities will have 0 P&L impact on change in fair value. GMM business and surplus assets will still subject to the usual change in fair value impact.

The 2.1b deposit, 1bil in Family takaful, 0.6bil in General takaful, both doesnt belong to Takaful at all, only 0.5b in operator fund, and even that portion, is to back a portion of liabilities.

It is very true that Tune Protect has no direction. PreCovid TunePro wanted to move away from travel insurance, then during Covid, back top focus on travel insurance, and now wants to focus on health? "lifestyle" insurance that underwrite by TunePro, real cost of 40, markup to 100 to sell to policyholders, where a big portion of profit go to those "fintech" intermediaries. And what? How many of those "fintech" will survive next 3 years?

Taiwan:COVID-related claim payouts total more than 14 times premium income received
https://www.asiainsurancereview.com/News/View-NewsLetter-Article/id/82191/Type/eDaily/Taiwan-COVID-related-claim-payouts-total-more-than-14-times-premium-income-received

Sunlife IFRS17 investor education:
1. Traditional insurance business has higher impact driven by deferral of new business gains.
2. Higher expected profit recorded in early years for VUL products in Asia. (VUL here not exactly ILP, but ILP is much more profitable vs VUL)


https://www.sunlife.com/content/dam/sunlife/regional/global-marketing/documents/com/sun-life-may-31-ifrs-17-education-final.pdf

In general, profit will be slower, that is super general. Allianz Life has a very special concentration on ILP. This is from the AGM.

The Group do not provide forecast/estimates for financial results. It is observed that retained earnings would be higher under MRFS 17 as compared to the current MFRS 4 mainly contributed by faster profit emergence for investment-linked products, and deferral of acquisition cost.

Products measured under VFA will have minimal impact from investment fair value gain loss. Most of the products sold by Allianz will be under VFA.

exclude one off impact, higher interest rate always better for Insurer.

Most of the liability measure with latest interest rate assumption, except a particular block of business. Another issue is that, there are reserve that floored to 0, so in comparison, less sensitive to interest rate movement. e.g. bond value drop, but reserve still floor to zero.

All these will be gone under IFRS17.

594 should be assets side impact only, whereas 69 is net position. Interest rate up will reduce bond MV and reduce liability concurrently.

General liability shorter term, life liability longer term.

ALLIANZ-PA 1 year high now, albeit mainly due to thinly traded

Exclude one off fair value impact, interest rate hike is good for insurance industry.

In 2011, ING Malaysia, with TEV of 952mil USD, VNB of 48mil USD, sold to AIA at 1.73bil USD. Allianz Life now with MCEV of 3.5bil MYR, VNB 275mil MYR, but Allianz market cap (with GI) = 4.47 bil MYR.

GE donated the 2bil in a smart way, that's why you don't see a P/L impact of -2bil for GE, and why they opt for this donation. However, the same way is not possible for AIA and Pru. There is no way they will just donate anything. JV is more likely than IPO. Previously in 2018, Pru was exploring JV with KWAP. In term of big GLC, we still got KWSP and PNB. Khazanah already own Sunlife, not sure if will still keen to have a bigger stake.

AIA and Pru are more well established and have been constantly paying dividend, IPO is still OK option. Tokio Marine is much smaller size, and Zurich is still loss making, which make it hardest to fulfill the new regulation.

If you only looking at ILP, then yes is discounted with risk free rate, but if you looking at conventional products, at the second half of the policy term, outgo will > income, using risk free discount rate, it is actually more conservative. Another point to add is, for ILP, Allianz also project the fund return with risk free rate, whereas AIA (using TEV basis) project the fund return with high return (much higher than 8.56%). Overall, Allianz's MCEV basis is more conversative, not aggressive.

There are reason why GE and Pru appear to be cheap. For Pru, there are a couple reasons:
1. The EEV tripled in past 3 years (Asia business), but share price didn't catch up
2. There are many corporate activities recently, e.g. spinoff US/UK business, the investor base might change.
3. IFRS profit is on downwards trend for Pru. This shouldn't be a concern due to the flaw of existing IFRS, but again most investors with limited knowledge and only look at IFRS profit.

AIA/Prudential/Tokio Marine/Zurich might force to IPO/local JV/donation. For some reasons, donation is very unlikely. Regardless if IPO or local JV, there will be public disclosure of price/EV of the transaction (it will be more than 100% for MY market). Hope by then public can notice how deeply undervalue Allianz is.

Embedded Value for Allianz Life as at 31 December 2021 was at the range of RM3.5 billion. Embedded value is calculated based on the best estimate assumptions (i.e mortality, persistency, morbidity etc) discounted at risk free rate. https://www.allianz.com.my/content/dam/onemarketing/azmb/wwwallianzcommy/pdf/investor-updates/2022/OTHER_48TH_AGM_QA.pdf

The Group do not provide forecast/estimates for financial results. It is observed that retained earnings would be higher under MRFS 17 as compared to the current MFRS 4 mainly contributed by faster profit emergence for investment-linked products, and deferral of acquisition cost. https://www.allianz.com.my/content/dam/onemarketing/azmb/wwwallianzcommy/pdf/investor-updates/2022/ANNEXURE_2_48TH_AGM_QA.pdf

https://www.theedgemarkets.com/article/malaysia-said-set-2023-cutoff-foreign-insurer-stake-sales

Not very familiar with GI business, but AmG/Liberty or AXA/Generali, only AXA is slightly reputable due to online presence, the rest are more or less like local company (Liberty = ex-Uniasia, Generali = ex-MPHB/Magnum) instead of real MNC. Combined entity should have cost saving advantage, but that will take years to materialize. Not foreseeing more competition due to lack of awareness of both Liberty & Generali branding in Malaysia. I aslo don't think UW loss will ever happen again.

AIA 283m is in USD.

AIA uses TEV basis (more aggressive assumptions), Allianz uses MCEV basis. Also, Allianz prices its ILP to age 70 only, to get bigger market share, so lower premium and lower profit, whereas AIA (at least used to, not sure about now) prices its ILP up to 100.

Yes you are right. Not sure how those data are being compiled.

Some in force block, you might have products that stop paying premium, especially saving products. Hence can't just look at annual premium. Furthermore saving products with bigger premium size but much lower margin whereas traditional protection products with lower premium size but much higher margin. E.g. HLA is well known for selling saving plans. Its ordinary life maybe is 33% of total, but probably generate less than 10% or even 5% of total profit.

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.

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.

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.

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.

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.

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.

Thailand will abolish Thai Pass on 1st July