INSURANCE M&A DEALS AT A NEAR STAND STILL

Insurance - - INDUSTRY UPDATES -

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.

Newspapers in English

Newspapers from Malaysia

© PressReader. All rights reserved.