Foreign insurers get more time to lower shareholdings

KUALA LUMPUR: All foreign insurers operating in Malaysia have about two more months to submit their plans on paring down their shareholdings in their local units.

According to Bank Negara governor Datuk Nor Shamsiah Mohd Yunus, the foreign insurers are required to submit their respective plans by early April this year.

She added that each plan submitted by the foreign insurers would be assessed individually on a case-by-case basis.

“The deadline goes on a bilateral basis. It will be based on their plans as to how they intend to comply with the conditions that they have accepted when they entered into corporate exercises.

“The central bank will look at it on a caseby-case basis based on their plans,” Nor Shamsiah told reporters during the briefing on the fourth-quarter 2018 gross domestic product results yesterday.

To allow local ownership in insurance companies, Malaysia previously had set a June 30, 2018 deadline for foreign insurers to reduce ownership in their units operating in the country to 70%. The foreign insurers can undertake stake sales or initial public offering exercises to comply with the requirement set by the central bank.

In February last year, Bloomberg reported that the Employees Provident Fund was in talks to buy a stake in the Malaysian unit of Singapore’s Great Eastern Holdings Ltd.

The report also mentioned that Prudential and Tokio Marine were also in discussions with bankers.

Meanwhile, in May 2018, former governor Tan Sri Muhammad Ibrahim said that five foreign insurers operating in Malaysia were at significant stages of discussions with domestic buyers to sell stakes in their local units.

However, an exemption was granted to Great Eastern Life after the insurance giant pledged a minimum RM2bil contribution to “mySalam”, a health scheme for the bottom 40% of the population.

Finance Minister Lim Guan Eng had said the fund contributed by Great Eastern Life was an alternative to it letting go of the 30% shares, as the foreign ownership limit for Malaysian insurers was set at 70%.