Malaysia’s P&C market heats up as Liberty bags AmGeneral
July 21 2021 by Andrew Tjaardstra
Following Generali’s announcement in June that it is acquiring Axa Affin General Insurance, another big name in Malaysian P&C is set to be taken out of circulation.
Malaysia’s Liberty Insurance, which is 100% owned by the US giant Liberty Mutual, is applying for regulatory approval to acquire 100% of its local P&C rival AmGeneral, according to a July 19 announcement on the Bursa Malaysia.
AmGeneral is 51%-owned by AmBank Group — Malaysia’s sixth largest financial services provider including retail banking and Islamic finance — and 49% owned by Insurance Australia Group (IAG). The total consideration for 100% of the shares is for RM2.29 billion (US$542.1 million).
In a statement, IAG said it will receive around A$340 million (US$249 million) in cash, while AmBank will receive the remainder via a combination of cash and shares. As a result, the AmBank Group will hold a 30% interest in the combined Liberty Insurance and AmGeneral businesses. The 70% foreign holding to be owned by Liberty is in line with the most recent foreign ownership rules for insurers.
The decision by Sydney-headquartered IAG to leave Malaysia — after first entering the market in 2006 — has long been trailed and follows other Asia exits. The Australian insurer exited India in October 2019 as part of a wider strategy to focus on its core markets of Australia and New Zealand.
The deal is part of an ongoing trend of P&C businesses in South-East Asia seeking greater scale to help mitigate the impact of increased digitalisation and capital rules. Another factor driving this need to increase in size is competition from cash-rich digital platforms such as Grab, many of whom are also eyeing expansion in the insurance space.
Another recent deal in Malaysia saw Generali move to buy 53% of Axa Affin General Insurance and the remaining 51% of MPI Generali from its joint venture partner MPHB Capital. Generali is planning to merge the two entities as it seeks to become a dominant P&C player in what is now a fast-growing market.
As part of the deal announced this week, AmGeneral will enter an exclusive 20-year bancassurance partnership with AmBank Group to distribute general insurance products. The combined entity will become the largest motor insurer and second-largest general insurer in Malaysia based on 2020 data.
AmGeneral has around 1,400 employees at 33 branch locations and is the larger business — Liberty employs around 450 employees at six regional offices and 24 branches. AmGeneral distributes products under the AmAssurance and Kurnia brands via 6,000 agents, brokers, car dealers, franchises and affinity partners, in addition to digital platforms. By contrast, Liberty has a 2,000 strong agency force.
“Expanding and investing in international insurance markets is instrumental in our aspiration to become a leading global property and casualty insurance company,” said Matt Nickerson, Liberty Mutual’s global retail markets east president and chief operating officer.
“Combining Liberty’s global capabilities with AmGeneral’s leading market share in motor and a growing business in additional product lines will create a best-in-class insurance operation,” he added.
In addition to Malaysia, Liberty’s Asia operations are located in China, Hong Kong, India, Singapore, Thailand and Vietnam.
After these two high-profile deals, the pressure will now be on the remaining P&C players in Malaysia to follow suit.
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