For­eign in­sur­ers can’t choose al­ter­na­tive ini­tia­tives for di­vest­ment

The Star Malaysia - StarBiz - - News - — Ber­nama

KUALA LUMPUR: For­eign in­sur­ers, who have repa­tri­ated about RM16.5bil be­tween 2008 to 2017 in the form of div­i­dends but didn’t con­trib­ute as much as ex­pected for the de­vel­op­ment of the do­mes­tic in­dus­try, can’t choose al­ter­na­tive ini­tia­tives with their prom­ise to di­vest stake, said Bank Ne­gara.

De­spite a long pres­ence in Malaysia, the con­tri­bu­tion of for­eign in­sur­ers to the over­all de­vel­op­ment of the do­mes­tic in­surance in­dus­try has not been at the level ex­pected.

For ex­am­ple, there has been min­i­mal im­prove­ment in in­surance pen­e­tra­tion, com­pounded by the lack of breadth in prod­ucts (es­pe­cially for lower in­come seg­ments) and con­cen­tra­tion of high-cost dis­tri­bu­tion mod­els, Bank Ne­gara said in a state­ment yes­ter­day.

“The bank wel­comes any ini­tia­tive by in­sur­ers that would ben­e­fit the Malaysian econ­omy and the gen­eral pub­lic, as ex­pected of any or­di­nary re­spon­si­ble cor­po­rate cit­i­zen that op­er­ates in the coun­try,” it said in re­ply to a report that for­eign in­surance com­pa­nies will set up health­care trust as an al­ter­na­tive to ful­fill­ing their com­mit­ment to pare down their share­hold­ing by 30% be­fore a June 30 dead­line.

Bank Ne­gara also noted that the bank had not re­ceived such a pro­posal.

The bank stressed that the agreed for­eign share­hold­ing level was a com­mit­ment pro­vided by the for­eign share­hold­ers in be­ing granted a li­cence to op­er­ate in the coun­try. The for­eign in­sur­ers were given the li­cence to op­er­ate in the do­mes­tic mar­ket on the ba­sis of the spe­cific com­mit­ments and as­sur­ances given.

“A li­cence would not have been given if the com­mit­ments were not made.” Over the years, am­ple op­por­tu­ni­ties and flex­i­bil­i­ties have al­ready been con­ceded to ac­com­mo­date ac­tions that should have been taken by share­hold­ers to de­liver on their com­mit­ments.

The cen­tral bank there­fore fully ex­pects share­hold­ers to hon­our an ex­plicit prom­ise made, and to op­er­ate in Malaysia in a man­ner that ben­e­fits the de­vel­op­ment of the do­mes­tic in­surance mar­ket and the econ­omy gen­er­ally.

This should be com­men­su­rate with the sig­nif­i­cant re­turns ac­cru­ing to for­eign in­sur­ers from the Malaysian mar­ket.

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