US life insurers mostly are annuities (more towards saving/investment type of product, think saving plan offer by Malaysia insurers), rising interest rate will reduce chance of any guarantee biting of annuities. Takaful is mainly MRTA, beneficial slightly under interest up scenario.

There are personal insurance and group insurance. Group insurance is like, Tunepro sold PA to Selangkah Vax, or Tunepro sapu all complimentary travel insurance by AirArabia. You can easily get a big block of business, but of course much lower margin. And of course, if people stop the renewal, e.g. when Selangkah Vax is rolling off, or when AirArabia stop the complimentary travel insurance, you will see a big drop in premium and hence losses due to non renewal.

From the presentation, travel premium in FY2021 = 101mil, 93% mix in middle east (pg7), total count of policies = 6.73mil (pg31), per policy (travel insurance in middle east) = RM14. The quotation that you get yourself is like retail customers, naturally come with higher margin, whereas Tunepro negotiated a deal with Air Arabia, all Air Arabia (low cost airline) customers automatically get insurance coverage.

"When you book your Air Arabia flight, you will be covered for 31 days from the first day of your travel. You can book via our website, mobile application, sales shop, travel agent or third party websites selling our tickets."
https://www.airarabia.com/en/covid-19-global-assistance-cover

Tunepro reliance on Air Asia has been reduced significantly is solely just because of minimal international flights by AA. In fact despite effort to move away from travel insurance, its travel insurance mix (% of premium) is only getting higher and higher. Travel insurance as a % premium: 16% (2018), 14%, 17%, 25%（2021).

Looking back at Tunepro strategy, pre-covid era, Tunepro wanted to reduce its motor business, understandable, since margin is slim and many operational costs involved. Motor mix reduces from 41% (2018) to 20% (2021). In early 2021, when Covid hit hard, Tunepro changed its strategy to focus on health/lifestyle. That has failed miserably, basically no new take up at all, health business mix reduces from 6% (2018) to 4% (2021) instead. Branch out to health insurance is a good and sustainable idea (there are big insurers that solely focus on health in Sg and US), but sadly no customers trust Tunepro.

Back to Tunepro current business mix, it is still pretty much same as any traditional general insurer, traditional block of business is still >50%. Whereas for the travel insurance, pre-covid yes, fat margin from there, but during covid-era, might not be. The current mandatory travel insurance for international tourists to middle east will not last forever, can expect a big drop once government drop the mandate. Not to mention the premium size is damn pathetic, ~RM16 per policy.

Tunepro is just selling dream la. Rohit's previous plan was to focus on health insurance but seems like fail miserably. Who you know in Malaysia will buy health insurance from Tunepro? Ended up until now still heavily focus on travel insurance. Yes, in the next 1 year, pretty much everyone that travel internationally will buy travel insurance, Tunepro likely will pocket a sexy margin (assume no new variant), but travel demand wont rebound immediately. When travel demand rebound to pre-covid era, it means that it is so safe to travel and travel insurance is not necessary anymore. All those fintech related partnership will not come cheap. In FT21, overall commission ratio increases from 12% to 16.7%, which is damn pathetic considering Tunepro combined ratio of near 100%. Yes, there are many M&A ongoing, there might be economic of scale in the future, but that is too far to tell. There are many better alternatives even if you believe this fintech dream that Tony/Rohit trying to sell.

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.

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.

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.

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.

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.

gold 1900 already

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-value-set-over-668-bln-says-govt-official-2022-02-03/

GI will play the long term game, if accumulated floor insurance is a loss (after reinsurance), the future floor insurance premium will increase to recoup back previous losses. Looking at flood insurance alone, over say 20 years horizon, sure need to be profitable to ensure long term sustainability.

PIAM is deliberating a proposal to make it compulsory for motorists to have such insurance (flood) coverage.

Which analyst is that? Yup, Malaysia typically just underinsured.

https://www.orientaldaily.com.my/news/nation/2022/01/15/462160

The current dividend yield is ~4.7%, so with ICP u getting ~0.9% more, assume price gap no change, and 0 fee, you can pocket this 0.9%. but in reality, no, just not worth any efforts.

the gap is never more than 1%, even if you sell after dividend, pocket the additional ~1% dividend, so much effort for so little return? not completely risk free either.

Insurance market is not difficult yet, Malaysia still in honeymoon phase (for life). This 63 sens dividend sort of indicated that Allianz is very well protected by reinsurance for its flood losses.

definitely will have provision. can expect Allianz to have a much lower profit (maybe even losses) from GI for Q4. but who knows, Allianz only serves rich customers, and maybe only a few affected. Poor people typically under insured.

there can be multiple reinsurance arrangements. for flood, very likely the arrangement is reinsurer will absorb all losses above a certain threshold.

1. Not that many people purchase flood add-on
2. There is reinsurance/retakaful arrangement to cover scenario like this

Probably ya

https://www.enanyang.my/%E8%A6%81%E9%97%BB/%E9%A6%96%E7%9B%B8%E5%87%8F%E8%BD%BB%E4%BA%BA%E6%B0%91%E8%B4%9F%E6%8B%85-%E6%9A%82%E7%BC%93%E8%BF%98%E8%B4%B7%E5%86%8D%E5%BB%B6%E9%95%BF2%E5%B9%B4

https://www.thestar.com.my/business/business-news/2021/12/14/grab-holdings-to-acquire-malaysian-supermarket-chain-jaya-grocer

https://www.sinchew.com.my/20211206/%e8%b5%b0%e7%a7%81%e7%83%9f%e9%85%92%e5%8d%81%e4%b8%87%e7%81%ab%e6%80%a5-%e5%80%aa%e5%8f%af%e6%95%8f%ef%bc%9a%e6%af%8f%e5%b9%b4%e6%8d%9f%e5%a4%b150%e4%ba%bf/

For those that keep thinking Covid related insurance is a good idea. https://udn.com/news/story/6811/5925747

The fair value you typically saw in analyst briefing slides coming from the assets side. For core PBT, some insurers (not sure with allianz) will assume a long term interest rate/no change in interest rate when calculate the liability. The impact is generally relatively minimal.

no more loss under IFRS17

No one will care about PBT margin, that doesn't reflect anything remotely close with how life insurance operates, and hence this PBT margin will be gone in IFRS17. For core PBT, yes that will be helpful, however as mentioned before, new business sold will incur losses in early period. Say a profit pattern of -100, 20, 20, 20, 20, 20, 20...., stack up for multiple years of new business, it will be -100, -80, -60, -40, -20, 0, 20, 40, 60, 80..... Say on the year where the profit = 60, the profit coming from existing block is actually 160, but drag down to 60 due to first year acquisition cost of new business. This is still on the assumption that new business volume doesn't increase. In reality, new business typically grow with 10% a year.

Under/overstatement of EV/NBV very unlikely for MNC like AIA, Pru, Allianz.

Yup, GI book value of 3b (before multiplier), Life EV of 3.3b and Life NBV of ~300m (before multiplier), get the market average multiplier and do the math.

You still don't understand the issue. Takaful currently enjoying a unfairly high valuation due to current flawed accounting standard, which allows it to recognize big profit upfront. In Q1 2023, when analysts or normal investors look at the first IFRS17 financial statement, the valuation will be downgraded immediately.

IFRS17 only for insurance liabilities

https://www.allianz.com.my/content/dam/onemarketing/azmb/wwwallianzcommy/pdf/investor-updates/2021/2021_Q3_AMB_Analyst_Briefing.pdf

Takaful owns life and general business (90% profit from life), MNRB owns reinsurance (mainly general) + Takaful Ikhlas (50/50 life/general).

For Allianz and Maybank, even if close for new business immediately, no new policies sold, or no new loan/deposit, the existing business can still continue to generate reasonable profit (insurance margin/net interest margin) for up to 10+ years. This is not the case for STMB, where it has a very low recurring profit. Any analysts that try to compare STMB directly with Allianz or Banks are just too naïve.

No one will know the real impact unless you are the insiders in STMB. Not to mention the impact is up to management decision, they can set diff size of CSM where they deem fit (higher CSM = higher reduction in equity, in exchange for higher future profit). IFRS17 ultimately is just presentation, and will make insurance industry more comparable with other industry. STMB fundamental will not change, and will continue rely on MRTA. It is definitely way overpriced now due to recognition of large day1 profit, and its business will unavoidably fluctuate with MRTA sales, and indirectly home sales among bumis. With no more MOT next year, new home sales got limited prospect, and so is STMB profit.

Allianz never rely on online sales (they should), and typically people that renew online will buy direct (-10%) instead of through MYEG (without reduction of comm).

IFRS17/MFRS17 is finalized, there will be some details up for debates but the overall impacts will not change much. Yes, cashflow the same, business the same, EV the same. If people value STMB with EV, then valuation will not change. But too bad, no one value STMB with EV, not even sure if STMB calculate EV on their end. As long as local analysts still using traditional P/B or PE to value STMB, IFRS17 will definitely impact the valuation.

General business only ~10% of total profit. For life business, in 1H21, credit related contributions (MRTT including LPPSA MRTT and personal financing) made up a significant 75.2% of the total gross contributions for the group’s family takaful business.

is mrta, people typically buy full term. house loan typically 25-35 years, convert to average about 30y

EPF can be wrong as well, ultimately people making the call behind can be as young as just a fresh graduate. Even top analyst will not understand IFRS17 as well, and to be honest even among actuarial people, majority only have understanding of IFRS17 at preliminary level.

The 1.2bil surplus cant be touched and will just stay there forever, or to offset future losses. It will donate to charity once STMB closed down. In any circumstances, that 1.2bil will never ever belong to shareholders.

There is no cash flow impact, yes, and impact to takaful is small. The key impact on STMB is because the heavy focus on single premium policies. Reduce profit by 16%? That is so optimistic. IFRS17 requires spread of profit to entire policy term. Typically MRTA is like 30+ years, considering the reducing balance, profit allocated to Y1, at best should only be around 15%. Assume 80/20 split on day1 gain/recurring profit, the reduction in profit should be at the range of 65%+.

lol what potential tunepro has? Covid travel insurance can be a double edged sword, mandatory travel insurance wont be sustainable. Either the Covid situation improves, no more mandatory insurance, or worsen, and loss due to claims. There is like 0 scenario where tunepro can just shake leg and make money.

That cost impact is minimal. Operationally, that will depend on how you want to set the transition CSM (there are multiple approaches). You can set it to super high, normal, or super low. For STMB, since the BEL & CSM both always positive, so doesn't matter how they set CSM, confirm will be a hit to equity. For Allianz, BEL for ILPs almost always negative. Unless the CSM is set to be artificially super high (unlikely), otherwise BEL+CSM will still be a negative for Allianz, and hence higher equity value. Typically, conventional insurers aim to just be balance.

Insurance liability will change to BEL + CSM. For STMB (heavily on single premium), BEL will almost similar with existing, but additional component for CSM (can only be positive), hence downward adjustment for book Value. Basically undo day 1 gain previously, and release it over time in future. For Allianz, heavily on ILP, the contract liability currently (floored at 0) will change to negative BEL + positive CSM. It will be positive adjustment instead (release profit faster).

https://www.asiaone.com/money/integrated-shield-plan-riders-now-require-co-payment-what-you-need-know

Quite poorly written, and she seems just clueless about IFRS17. For the medical inflation and ability to reprice, yes that will be a key concern, but wont be a big issue. Insurers will just exit if not allow to reprice when combine ratio > 100%, and no one will allow this to happen. Recently, Singapore mandatory all insurers abolish cashless medical plan and that's more likely will be the approach BNM is going to take. *Premium for 5% co-pay plan can be 20-30% cheaper vs cashless plan.

EV wont change due to IFRS17. EV is EV, IFRS17 is IFRS17. "20% reduction of EV due to IFRS17" that is a wrong statement.