INSURANCE M&A DEALS AT A NEAR STAND STILL
Source: The Malaysian Reserve, 22 November 2013
In the last year, Malaysia has seen eight corporate merger and acquisition (M&A) deals that brought in new players from Canada and South Africa to the local market, but the pace of insurance mergers remains glacial in the country. For example, it’s been nearly two years since Zurich Financial Services Group was said to be selling its 40 per cent stake in MCIS Zurich Insurance Bhd and there is still no announcement on a buyer. In a reply to queries, the Zurich Financial Services Group said it is still looking to rationalise its shareholding in Malaysia. The group has bought into Malaysia Assurance Alliance Bhd (which is not Zurich Insurance Malaysia Bhd or ZIMB). In June, South African financial services group Sanlam Ltd was reportedly in negotiation to purchase MCIS Zurich’s shares. Sanlam is neither confirming nor denying the rumours, though owning a life insurance company would fit well for Sanlam, which made its maiden foray in Southeast Asia with its RM270 million acquisition of a 49 per cent stake in Malaysian general insurer Pacific & Orient Insurance Co Bhd. The market is also waiting for AMMB Holdings Bhd’s divestment of some shares in AmLife Insurance Bhd and AmTakaful Family Bhd. AMMB’s MD Ashok Ramamurthy. The last insurance transaction to be concluded was in April, when Khazanah National Bhd partnered Canadian firm Sun Life Financial Inc in a RM1.8 billion deal to acquire 98 per cent of CIMB Aviva Assurance Bhd. The new company, called Sun Life Malaysia Assurance Bhd, was launched in late August, when it announced a growth target of 2.7 per cent market share for new business premiums by 2015 and to improve its ranking from 12th currently to eighth. Uni.Asia Life Assurance Bhd was finally sold about a year after majority shareholder DRB-Hicom Bhd announced to Bursa Malaysia that the company was acquired by the Prudential Insurance Co of America and Bank Simpanan National in a RM518 million deal to be concluded before year-end. Persatuan Insurans Am Malaysia reported in April that Malaysia’s general insurance sector is expected to grow between 6 per cent and 9 per cent in earned premium income this year from the RM12.4 billion recorded in 2012, while Life Insurance Association of Malaysia has projected a new business growth of 10 per cent for 2013. The growth potential of insurance coverage in Malaysia, in addition to the big protection gap, present opportunities for insurance companies seeking better returns to satisfy the demand of shareholders.