Changes in Accounting Standards for Insurance Contracts: Allianz and LPI Compliance

BO7921
SPECIALISED
FINANCING
ACCOUNTING

Table of Contents
1. Introduction of Allianz and LPI:..............................................................................................3
2. The changes and development on the related accounting standards of insurance contracts
and their differences including the disclosure requirements:..........................................................4
3. Standard Compliance by Allianz and LPI:...............................................................................7
4. Impact of changes on companies’ performance:................................................................12
SUMMARY...................................................................................................................................14
REFERENCES..............................................................................................................................15

1. Introduction of Allianz and LPI:
Allianz: Allianz Malaysia Bhd was established in 1890 as a transport and accident insurer. It is
a diversified insurance company that provides life and general insurance in Malaysia. The major
source of sales revenue for the company is insurance premiums, investment income as well as
fee and commission income.
Name and Address: Allianz Malaysia Berhad; Level 29, Menara Allianz Sentral 203, Jalan Tun
Sambanthan Kuala Lumpur Sentral 50470 Kuala Lumpur Malaysia.
Main Activities: Life and General insurance
Products and Services: Automotive, home, and personal insurance, fire, engineering, and
liability insurance.
Financial Highlights: Market capital RM 2.646 billion, Number of shares 176.89 million,
Earnings per share 278.41 cent, Price to earnings ratio 5.37, Dividend 65 cent, Return on equity
13.40%, Par value RM 1, Net earnings (2019) RM 360 million.
LPI: LPI Capital Bhd also known by London & Pacific Insurance Company Berhad, it is an
investment holding company and has enhanced insurance agency that gives a wide scope of
items. It was incorporated on 24 May 1962 as a private limited company. It got insurance license
on 9th April 1963 under Malaysian Insurance Act, 1963. LPI Capital’s business insurance
product portfolio develops its own line items by including. The organization offers adaptability
to its corporate clients by giving customized plans to little and fair size undertakings.
Name and address: London & Pacific Insurance Company Berhad; 6th Floor, Bangunan Public
Bank, 6, Jalan Sultan Sulaiman, 50000 Kuala Lumpur, Malaysia.
Main Activities: Composing premiums on protection arrangements that it offers to people and
organizations

Products and Services: General Insurance such as Marine, glass and burglary insurance
Financial Highlights: Issued Share capital of the company is RM 398,382,753 out of which
398,382,753 are ordinary shares. Earnings per share 80.92 cent, Return on Equity 16.44%,
Dividend 70%, Price to earnings (P/E) ration 17.77. Profit before tax (2019) RM 414,719,000.
2. The changes and development on the related accounting standards of
insurance contracts and their differences including the disclosure
requirements:
Insurance contracts: It is contract in which two parties involved; insurer and policy holder.
Insurer covers the significant insurance risk of policyholder in the event of uncertain future loss
[Cremer, Lozachmeur & Pestieau, (2016)].
Below is the report which signifies what changes and development made in insurance contracts
from 2018 to 2021:
From upcoming year 2021, will change whole analyses and reporting process of revenue and
profits from insurance contracts. Currently Malaysia is applying MFRS 17, the basic difference
between IFRS 17 and MFRS 17 is discussed below:
MFRS 17 IFRS 17
In this accounting method, primarily premiums
and net income earned from insurance contract
recognized upto coverage period. Insurers use
to amortize unearned profits on straight line
basis for lifetime of contract.
On the other hand in IFRS 17, divides revenue
and profit over lifespan of the contract.
Burden of tax is for one time only Burden of tax is for period of time until
contract is completed.
Scope:
A company should apply this Accounting standard to:
2018 2021